Revolution or Evolution’ The Internet Goes Mainstream

By Ellen Coffey Sarti | March 11, 2002

The insurance industry is notoriously reluctant to change. So it was little surprise that the Internet—a tool that has the power to introduce cost-saving efficiencies into the insurance process for carriers and agents alike—met with such stiff resistance less than a decade ago. First viewed as a threat, then as an obnoxious fad, the Internet has now achieved widespread acceptance in today’s insurance agency. In a process more evolution than revolution, the Internet has gone mainstream.

The early Internet champions, the more radical revolutionists, were a bit enthusiastic in their predictions. It’s easy to dismiss some of their more overblown claims, but they didn’t entirely miss the mark: The Internet is changing the way we do business. From electronic interfacing between agents and carriers to actual online policy sales, the Internet is enabling agencies to operate more efficiently and more profitably than ever before.

These early web advocates overestimated the adoption rate both within the industry and among insurance consumers. But even so, they weren’t off by much in the evolutionary scheme of things.

A little over two years have gone by—a mere blink of an eye. Yet agents overwhelmingly agree that the Internet is changing the way they do business. And, although the online shopping boom has not been as seismic as the early dot-comers predicted, millions of consumers are shopping for insurance online. If that’s not a revolution, it is pretty rapid evolution.

Over the past two years, an estimated 27 million consumers shopped online for insurance, including 21 million who conducted research and requested a quote, and more than two million who sought an agent or broker online, according to the just-released Independent Insurance Agents of America Future One Technology Study.

These findings coincide with the results of a recent Gomez Advisors study, which found that more than 28 million consumers—or 30.3 percent of the U.S. adult active online population—have sought P/C insurance information online. Approximately half (54.4 percent) of the Internet users polled said they intend to use the Internet the next time they shop for automobile insurance coverage, and a similar number (50.9 percent) are interested in managing their policies online.

Just how large is the potential market for online insurance sales? The most recent research we’ve seen, a report published last month by Celent Communications, Online Insurance Sales & Marketing, estimates that online insurance shoppers currently account for 19 percent of personal lines premiums, and predicts that this number will grow to 37 percent, or $200 billion, by 2005.

The gap is shrinking
Looking at the disconnect between consumers’ apparent interest in shopping online and the industry’s present capability to sell and service online, it is difficult not to agree with the Future One survey’s conclusion that “Internet marketing opportunities are being missed.” However, the gap between potential and reality is narrowing every day.

Consider the case of AllCorp Insurance Inc. Just over two years ago, the Bakersfield agency didn’t even have a Website. Today, provides instant online quotes for more than 10 lines of business, including auto, home, earthquake, personal umbrella, workers comp and BOP. In addition, the Website has attractive request-for-quote forms for 40 additional coverages.

Taking it one step further, customers can actually purchase an auto or home policy with a credit card and print out insurance ID cards, request an endorsement and report a loss, all online.

AllCorp’s Website has it all. Not bad for a one-man shop. That’s right: AllCorp president Don Pickard runs the show. Literally. It’s no wonder then that he is using technology to make him more efficient. Thanks to his Website, Pickard can quote a workers’ comp policy while he sells an auto policy. Thanks to his Website, he can “compete with any larger shop, and be even more successful.”

When Pickard first launched his Website two years ago, it was an informational tool. But not in the brochure ware “informational” sense. This site consisted of useful information – PowerPoint presentations on environmental insurance for lenders and borrowers, applications, sample policies and useful reports. Pickard would direct his customers to visit the site, so that rather than having to fax and mail everything, he could just point and click and take care of business instantly over the phone.

His new, mega site came about because “I just wanted to use technology to the fullest,” Pickard said. “There were more components that I wanted to bring in, such as quotes and certificates, and this was the best way to do it.”

Seamless for consumers
The result is a virtually seamless menagerie of various vendors’ offerings.

“No one carrier offers all the different products and services that I as an agent need, but that doesn’t mean that the consumer needs to know that,” Pickard said. “If you’re a consumer, you just want to click on the tab that takes you to the page you need,” he reasons. If you need an additional insured certificate, you’re not going to mind that the “certificates” tab links to a separate provider.

On the one hand, it may seem unusual for such a small agency to make such a large investment in technology. But as Pickard points out, having a professional Website is a powerful tool. “It brings a lot of credibility to my agency,” he said. “It shows that I’m cutting edge, on top of the latest and greatest technology advances that are out there. And it doesn’t just look good, it works.”

Another agency that has taken a creative approach to piecing together a comprehensive, customer-centric Website is Professional Choice Insurance Services in Los Alamitos, Calif. The agency has three different Websites:, and Development of a fourth site,, is underway.

Currently, five products can be accessed from the agency’s main site—auto, home, life, contractors and earthquake insurance—but like AllCorp’s site, not all components are really under one roof, so to speak. Not an ideal solution, but the best practical solution given today’s technology.

Until technology catches up, with a flexible multi-product solution, agency president Doug Cohen said, “I will just keep building one site at a time and linking them together for the benefit of the consumer.”

‘It blows me away’
A true believer in technology, Cohen has been keeping pace with all the new tech trends and tools since he opened his agency in 1996. He launched in 1999, after years of planning and research.

Today, Cohen estimates that 20-30 percent of his agency’s entire book of business has come from the Internet. “It continues to blow me away every day when I think about how easily the Internet has allowed us to grow,” Cohen said.

“From a policy count basis, has taken our book of business from being 7 percent personal lines to 48 percent personal lines,” Cohen said. The Website has also expanded the agency’s geographic reach. “As a result of demand from visitors, we have expanded our licensure outside of California to Arizona and Washington, and plan to continue with this expansion.”

Although the Internet has had the greatest affect on Professional Choice’s personal lines policy sales, Cohen is gambling that small commercial accounts will also migrate toward the Net. “The Internet has helped and will continue to help us grow and develop our commercial client base,” he said.

“People told me I was crazy to build a self-service Website for contractors,” he said. But for one month he asked every contractor he talked to one simple question: Do you use the Internet much? The answers were surprising. “I don’t think there are many groups of customers who use their computer today more than contractors, despite what people may think,” Cohen said.

Like consumers, businesses are becoming more comfortable using the Internet to shop for goods and services, ranging from office supplies to insurance.

Meeting consumer demand
“There are just too many people out there today who know the best deals are often on the Net, have no reservations about shopping there anymore, prefer the ‘hassle-free environment’ shopping online provides, and who will not log off until making that purchase,” Cohen said.

“I think there is a growing population that is very comfortable buying online, and you have to represent that segment,” agreed Anthony Wright, president of You Choose Auto Insurance Network in Gig Harbor, Wash.

Although Wright says he is quite pleased by the sales his Website,, has generated—it has more than paid for itself—he also pointed out that it serves a valuable purpose as a marketing and prospecting tool. “Not everybody that logs on and completes a quote actually buys, but they do leave a footprint,” he said. The ability to mine the database of quotes and follow up on these leads, Wright believes, may be a bigger benefit than the actual sales.

Additionally, his Website is saving him time on the customer service end. Customers can manage many aspects of their account online, including checking their payment or policy status and requesting an endorsement. Although he hasn’t received much feedback from customers about these services, he takes the silence for a sign that these tools are being utilized. Online customers “are not calling here with those types of questions, and traditionally we would receive multiple calls. The assumption is they’re using the Website,” he said.

Alandale Insurance Agency’s system administrator, Jeff Smith, isn’t so sure that customers are as ready for online self-service as they appear.

“I have read studies that a large percentage of customers would prefer their agent have online interactive capabilities,” he said, but so far he’s yet to see any signs that Alandale’s customers are that interested. “Even though we try to get customers to use e-mail because it’s more efficient, they still pick up the phone and call us. I think these studies reflect that people would like that ability to do things online, but they still prefer to pick up phone.

“But as long as they indicate they want to do more online, we will try to accommodate them,” he said.

Alandale has been experimenting with its Website,, since 1997. Initially it was an electronic brochure with no interactive capability. Today the Los Alamitos agency offers online auto and home quotes.

Now that the Website has the wherewithal to satisfy customers looking for an online quote, “it really comes down to how much traffic you can drive to your site,” Smith said. To date Alandale, like most companies, has been trying to figure out the most cost-effective way to get visitors including listings with search engines, experiments with banner advertising and including their URL on all their material.

Where will they buy?
The agency has begun exploring partnership opportunities with local banks. “Not all banks are interested in crossing the lines and getting into other businesses, such as insurance,” Smith said. Small to mid-sized banks that hadn’t had plans to sell insurance, but would like to offer it as a benefit to their own customers, are a great opportunity for agents, he said.

“I still think there’s more potential here than we’ve realized yet. There are people shopping on the Internet, buying on the Internet. Where are they going?”

Mill Valley Insurance Services hopes that they are going to affinity sites. The agency’s Website,, is still under construction, but already President Ron Gurewitz is exploring a partnership with the Golden Gate Restaurant Association.

Mill Valley Insurance writes a lot of restaurant business, so an endorsement by the association—which represents close to 700 Bay area restaurants—would be a powerful marketing tool. Although excited about the potential for the partnership, Gurewitz is cautiously optimistic. “I don’t know how much a Website will affect our business,” he said. At the same time, he acknowledges that more and more customers are choosing to interact with his agency by email, so using his Website may be the next step.

Affiliate marketing relationships represents a promising opportunity for agents and brokers interested in using their Website to acquire new customers. Internet users have favorite Web sites or “favorite vendors” whose sites they frequently visit. Agents who are able to partner up with the “favorite vendor” sites in their community have access to every web marketer’s dream: repeat visitors. These visitors may not be actively looking for insurance, but they will see that the option is available and will know where to look when they’re ready to shop.

It is conceivable that the industry’s slowness to adapt to the online consumer could work to the wired agent’s advantage. The IIAA’s Future One study found that insurance shoppers have not been satisfied with their recent shopping experiences online. Yet they continue to express a desire to shop online. If the traditional channels are unrewarding, where will they turn?

Evolving with a goal in mind
It is difficult to say. One thing is certain though, even the most diehard Internet fans agree that insurance is still about people.

The ability to talk to a live person “is becoming more critical for people than ever,” said’s Cohen, “even if it’s only to hold their hand as they finish up the online purchasing process.”

Agents are wise to remember that technology is not just about creating efficiencies, but about creating a process that is easy for their customers.

“At the end of the day, insurance is still a relationship business,” agreed AllCorp’s Don Pickard.

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