AIG’s Homegrown Solution

WHAT HIGH-PRICED system did American International Group buy in 1998 when it needed a way to shovel leads to commercial insurance brokers in the United States?

None. It turned to QuickStart, which AIG developed in house for marketing insurance to Japanese consumers. And it’s worked so well that the $107 billion insurance giant recently deployed the system globally, said Eugene Raitt, AIG’s executive vice president for direct marketing.

QuickStart manages all the up-front elements of a campaign and then performs back-end analysis. It relies on SAS software and various workbench modeling and analytical tools.

“It’s capable of developing what we refer to as an offer algorithm — an intelligent stream of offers that starts with the first product purchase and ends with the ultimate product the client should have and is most likely to buy,” Raitt said. “It’s intelligent enough to learn from the actual results and apply them to future modeling and campaigns.”

In Japan, QuickStart was used mostly for cross selling to consumers. “At its simplest level, the system would look at a brand-new sale that came in and determine at least three elements: the person’s gender, age, and the initial product bought,” he explained.

The resulting marketing was based on the actuarial tables. For example, if a 32-year-old woman had an accidental death policy, the system might suggest that the next offer should be cancer coverage, Raitt said. And then it would “send the message to a fulfillment center and it would automatically generate a personalized solicitation to that person right after we delivered that initial policy,” he continued.

Does the system operate any differently when selling to businesses?

“We use the same discipline and the same tools to look at commercial clients,” Raitt said. “We determine which [types of coverage] they purchased, when they joined AIG and what policies are most appropriate as their next purchase.”

AIG writes commercial policies in many areas, including property, casualty, identity theft, group health, group life, kidnap and ransom. But it often has to “make a market” for its policies with independent brokers.

“The typical broker represents anywhere from three to five different [insurance] companies, and maybe they consider two or three their core or primary carriers,” Raitt said. “We’re not always in that group. So we’re trying to develop these tools and find other ways of nurturing brokers to gain more of their production.”

How does AIG do that? One way is by using analytics to develop leads. It might look at variables like business classification, sales volume, number of employees, where the firm is located, whether it’s purely domestic or has international operations and whether it has company vehicles.

QuickStart also considers what kinds of coverage similar customers have. It then prints out a report stating, “‘In addition to property coverage, companies like this generally will be interested in this, this and this,’” Raitt said.

This is all done with what he called “a certain degree of certitude.

“If all similar companies buy property insurance and they also have four other types of coverage, the prospect of going back and making a sale is quite high.”

Once AIG develops leads, it sends them directly to its regional offices, which passes them on to brokers. But that’s not the only service it renders. For instance, a broker might ask AIG to look at his client portfolio and tell him what coverage he’s missing.

“We can say: ‘Companies or clients similar to yours typically have these types of policies and are paying this much in premiums.”

Thus the broker ends up with products to cross sell. But AIG expects a return.

“In exchange for performing that work, we’re going to be looking for more production and more commitment from that broker,” Raitt said.

For their own part, brokers get leads from many sources, even ones as simple as the Yellow Pages.

Raitt noted that selling to companies is a long-term process that requires a high degree of specialization and knowledge. It often requires assistance from engineers and other professionals, making it inappropriate for simple direct marketing.

Some AIG divisions focus on large Fortune 500 companies, others on medium-sized firms or even small businesses. Some specialize in specific industries and risk categories.

In the largest organizations, brokers are likely to target risk-management executives, according to Raitt. “For smaller companies, they probably could be anybody. Our broker penetration in the Fortune 1000 is very significant.”