Customers of Overstock.com can now furnish their home or office and insure them through the same source. The online retailer this week began selling small business, auto and home insurance along with furniture, rugs, beauty products and electronics.
The mega-“etailer” launched Overstock.com Insurance Agency through a partnership with Insuritas, a provider of private-label insurance agencies whose CEO believes online shopping is replacing traditional insurance agencies because it is what consumers want. He urges agents to start installing their services in other businesses.
According to CEO and founder of Overstock.com, Patrick Byrne, the Salt Lake City-based company’s mission is saving people money and it is always looking for new niches where it can do so for its large customer base.
“A lot of our customers are home buyers and are either buying, furnishing or refurnishing homes or apartments so it seemed like a natural fit for us to offer a home insurance product,” says Byrne.
Now listed at the top of the Overstock.com website is an “Insurance” tab where customers can click and receive a personalized auto, residential or business insurance quote. Insurance purchases are paid for in the same shopping cart as other Overstock.com home and beauty products. Customers can also manage their policy through their Overstock.com accounts.
Coverage is provided through major carriers, including Safeco, that have been secured through Insuritas, which handles all of the agency and policy details for Overstock, including the technology, call center and policy binding.
Insuritas has been providing insurance agency functions to banks and credit unions nationwide for the last 15 years but this is the first retailer it has worked with. Jeff Chesky, CEO of Insuritas, says what is different about this arrangement compared to its partnerships with banks and credit unions is that Overstock.com owns the agency and policies while Insuritas provides the backroom services, operational infrastructure and products.
Customers will connect with Insuritas’ agents in its call center in Hartford, Conn., but the policies will come from Overstock.com Insurance Agency. Insuritas will be compensated by the retailer a portion of the gross income of the agency.
Carriers on Overstock will be paid directly by the consumers who purchase a policy from Overstock.com and then remit the commission to the retailer.
Overstock announced its insurance venture the same week that giant retailer Walmart announced it would be offering insurance through its website.
Unlike the Overstock deal, Walmart will not own the agency; it is simply directing customers to the website AutoInsurance.com through its own website. AutoInsurance.com will provide Walmart customers with comparison quotes from national insurance carriers including Progressive, Esurance, Safeco, Travelers and 21st Century.
Chesky of Insuritas says it was no problem getting its carriers to sign up because Overstock’s customers are primarily women between the ages of 34-55 who have high credit scores –a prime target group for insurers.
“The customers we bring in for insurance shopping are very attractive risks to carriers,” he said.
“Our carrier partners are thrilled to underwrite the customers of Overstock.com, just like they are thrilled to have us distribute their products in banks and credit unions because [the financial institutions] are giving them loans so there is a good claims risk there,” Chesky said. “Carriers are increasingly recognizing credit score as indicator of claims risk.”
Chesky thinks Overstock customers are more desirable to insurers than those of Walmart.
“We are looking for very attractive segments of the marketplace that our carriers have a very strategic appetite to write,” he said, adding that he is “not sure how Walmart will align its customer base” with carriers’ models.
As for consumers, Chesky says they are not only looking for but also demanding the “no-hassle” online insurance shopping experience like Insuritas and Overstock.com have created. He says this is being proven by the organic growth his company sees every day.
He believes the traditional insurance sales model of customers sitting down with an agent and discussing policies is dying.
“Consumers don’t want a relationship with an agent or even a carrier,” says Chesky. “They just don’t want to spend money on something they didn’t use but still want to protect their investments and assets.”
That doesn’t just go for personal lines insurance. According to Chesky, 62 percent of the small businesses Insuritas’ quotes end up buying their coverage from the financial institution or bank that offered the Insuritas online product.
“The traditional agency system doesn’t make sense to customers…The relationship has gone digital,” he says. “Agents keep saying their model will work but they are tone deaf to this radical transformation. Consumers are voting with their fingers.”
Chesky says it is imperative for insurance agents and brokers to step out of the carriers’ control and recognize what consumers want and work with new insurance models like Insuritas.
“The successful agents will lead the transformation. They will listen to what the consumer wants and deliver that experience to them rather than listen to what the carrier wants,” he says. “The new generation of agents needs to say that it doesn’t have to be about me or my name and will make a wonderful living by installing their products and their business in someone else’s store.”
Overstock founder Byrne says his firm doesn’t have any set goals for the first year and expects it could take a few years for the agency to take off. Overstock.com also plans to expand into the life and health insurance space later this year through the Insuritas system.
Insuritas is prepared to offer any and all insurance that is available, says Chesky.
“The consumer is looking for a store or aisle in a store where the shelves are stuffed with every risk management product they need and that’s what we will keep doing for Overstock,” he says.
Chesky says this is an opportunity for his company to become familiar with the worldwide retailer’s customer service strategies.
“We will learn how to do adopt the best practices of e-commerce and retailing from Overstock and apply that to other partnerships,” he says.
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