Shh! Don’t Tell Anyone, but E-Insurance is Alive and Well

Progress continues as Internet technologies integrate into sales and service process.

Let the critics think that online insurance won’t survive the dot-bomb shakeout. Let them say that consumers aren’t interested in buying insurance online or that nobody’s making money on the Internet. The numbers tell a far different story, as does personal experience.

Despite the well-publicized failures of several e-insurance ventures, the industry-wide movement toward integrating Internet technologies into sales and service processes continues to gain momentum.

There’s been a lot of progress in the last two years. More companies and agents have websites than ever before. And, whereas two years ago most insurance websites were little more than informational brochures, today they are becoming increasingly functional.

Good news for agents
Part of the progress can be attributed to the fact that companies that held back from going online for fear of alienating their producer force have figured out ways to include agents and brokers in their web initiatives.

Roughly 70 percent of company websites have agent locators to direct consumers to appointed producers for product sales and information, according to a recent survey by IVANS. This is certainly good news for agents and brokers, who just two years ago were on the fence about whether the Internet was a threat or an opportunity.

So far, there has been little threat of direct sales, as carriers have focused their efforts on customer service rather than selling. Of the 110 websites reviewed by IVANS, 20 percent allow customers to file a claim directly online, 16 percent allow customers to check the status of a payment, and another 16 percent allow the insured to make policy updates and changes directly on the website. Over the next three to four years, these numbers will surely increase.

For most insurance companies, actual online transactional capabilities have taken a backseat to service, but we expect this to change as the potential for online market share gains becomes impossible to ignore.

Industry surveys show that only 7 percent to 20 percent of websites offer online quoting, and fewer than 5 percent offer consumers the ability to buy a policy online. By contrast, 54.4 percent of Internet users intend to shop for their next auto insurance purchase online, a recent Gomez study found.

There’s no doubt that consumer demand and competitive pressures will force companies to enhance their online sales capabilities—but not before the more responsive online insurance providers have gained a strong toehold as market leaders.

$13 billion and counting
After jumping out to an early lead, the select companies able to sell online are not standing still. There have been marked improvements in their offerings. Rating engines are less clunky and are more likely to give a quote at the end than the old “someone will get back to you shortly” message.

These leaders are locking up market share with innovative distribution strategies, forming partnerships with banks, major e-tailers and even other online insurance companies. For carriers still a long way off from online sales, the ubiquity of some of these early leaders will be difficult to overcome.

One telltale sign of the health of e-insurance is that analysts keep revising their online sales projections upwards. Two years ago, Forrester Research projected online sales of life, auto and homeowners insurance would grow to $4.3 billion by 2003 and $6.3 billion by 2006. Today, Forrester has revised that to $13.5 billion by 2004. You can bet that as the number of carriers able to sell insurance online rises, so too will these projections.

So let cynics say the e-insurance fad has run its course. The fewer seats at the table, the bigger the feast.

Kieran Sweeney is president and CEO of YouZoom.com. A pioneer in the “agent inclusive” online model, YouZoom was the first company to deliver online quoting and binding for multiple carriers, and the only to do this for independent agents. Based in San Diego, YouZoom is an affiliate of Arrowhead General Insurance Agency.

Topics Agencies