Nationwide Expands Discover Alliance, Tests New Agent System

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Nationwide Insurance Cos., Columbus, OH, is expanding its marketing alliance with Discover Financial Services, Riverwoods, IL, into new states and is planning to begin testing a new system to avoid conflict between its own direct sales efforts and its sales agents.


The Discover partnership is designed to combine the marketing expertise, brand recognition and 48 million-member cardholder database of Discover with the underwriting, claims and administration expertise of Nationwide.


Although Nationwide has been testing direct marketing by advertising toll-free phone numbers in several Western states where it has no agent presence, the agreement with Discover will bring the company into Texas, where it does have sales agents.


"That is particularly challenging for us," said Mark Youngkin, a spokesman for Nationwide. "So far, we haven't brought 800 numbers in a big way into states where we have agents."


Discover, a division of Morgan Stanley Dean Witter & Co., began mailing offers for Nationwide auto insurance to prospects in California and Texas last month. Additional mailings, statement inserts and Internet marketing efforts are planned; although, Discover declined to discuss details about its marketing efforts. The company also plans to offer Nationwide auto insurance through its Web site, www.discovercard.com.


The companies also plan to expand their marketing efforts into Arizona, Colorado and Oregon in the near future and into other states by the end of the summer, Youngkin said.


In addition to marketing to its database and to other consumers, Discover also will query its customers who call concerning other financial services products about their interest in automobile insurance. Those callers who express an interest will be forwarded to the Nationwide call centers in so-called "warm transfers."


The companies plan eventually to offer insurance products that carry the Discover brand.


Meanwhile, Nationwide will begin testing a program in September in Texas, Indiana and Illinois designed to keep agents in its system. Customers who buy policies through the Internet or by contacting a Nationwide call center will be assigned to an agent, who will have the opportunity to earn a commission by providing service to those policyholders.


Youngkin said the test was unrelated to the Discover marketing agreement.


Nationwide's foray into marketing through multiple channels comes as other insurers also are trying to leverage the Internet to sell and service their policies. On May 1, Allstate began marketing insurance to Oregon residents through the Internet as part of a sweeping restructuring of its operations. Allstate plans to add direct sales channels in additional states throughout the next two years.


Nationwide, too, recently began offering insurance through the Internet in Oregon. Youngkin said he was unaware of anything special about Oregon's insurance laws that made it attractive to direct sellers.
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