Close
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Menu
Search
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home IT Management
    • IT Management

    Policy Plays

    By
    eWEEK EDITORS
    -
    October 29, 2001
    Share
    Facebook
    Twitter
    Linkedin

      When it comes to obtaining financial services on the Web, consumers have embraced brokerages and banks, but not insurers.

      Despite its relatively poor showing — less than 1 percent of all consumer insurance is sold on the Web — the insurance industry hasnt given up. In fact, insurers are rolling out a spate of offerings in both the business-to-consumer (B2C) and business-to-business (B2B) markets in an effort to reach more customers and reduce costs.

      Insurance “is not as sexy and glamorous as online brokerage,” says Paul Lockmiller, a principal of consulting firm Booz-Allen & Hamilton who recently co-authored a study of the online insurance industry. People might check their online brokerage or bank accounts several times per week. By contrast, they consider their insurance coverage once or twice per year. That lack of interest has dissuaded many insurance carriers from making big investments in their online sales channel, he says.

      This year, insurers will write about $3.1 billion worth of policies on the Web. But by 2005, Booz-Allen expects that figure to rise to $12.5 billion, or about 1.5 percent of the $800 billion domestic market for auto, home, renters and life insurance.

      Toby Alfred, Internet site manager of Progressive Casualty Insurance, a leading auto insurance carrier, says a key factor in getting consumers to use the Web is reducing complexity. “It may take you five pieces of information to trade a stock or make a balance transfer at your bank. Comparatively, an insurance transaction may take upwards of 50 pieces of information,” she says. Because of that, consumers will often pick up the phone and let a company specialist guide their purchase and input the necessary information, she says.

      That inclination is reflected in usage statistics. In July, about 6.1 million users visited the top 10 insurance sites, according to Nielsen//Net Ratings. By comparison, about 10.9 million people visited the top 10 bank and credit union sites.

      To combat that, companies are continually trying to make their sites more useful and user-friendly. “Its all about trust and comfort,” Alfred says. The average premium for an insurance policy is $1,000. “You arent going to put down $1,000 on a purchase if you arent comfortable. This isnt like buying a book on Amazon.com,” she says.

      In addition to big insurance carriers such as Allstate Insurance, Geico and Progressive, which sell their coverage directly to the public, there is stiff competition among independent agents that use the Web to sell coverage from many different carriers. Insurance.com and InsWeb Insurance Services are leading examples of companies that offer auto, home, health and renters insurance, and even health insurance for pets.

      Although InsWeb provides many types of coverage, auto insurance is by far the most popular online coverage, says Mark Guthrie, president and chief operating officer of InsWeb, which sells coverage from 26 different carriers. A key challenge is integrating the computer networks of the insurers with its own. “We have to take information from one form on our site, then tap into many insurers systems and show quotes to you in under a minute,” he says. If consumers wait longer than that, Guthrie says, theyre likely to go elsewhere.

      B2B Use Increases

      For the last few years, most insurers have focused their energy on consumers. But theres a growing effort to use the Web as a B2B channel. “We are seeing movement of emphasis among the insurers, from revenue generation to cost containment,” says Kimberly Harris, a Gartner senior analyst who tracks the insurance industry. That has resulted in growing use of the Web for online claims adjusting, settlement and other paper-intensive insurance matters, Harris says.

      Another growth area is the use of the Net as an information conduit from carriers to insurance brokers and agents. Rather than send snail mail letters to agents with information about how much the carrier owes them in commissions, insurers are using the Web. Companies have realized that its more about customer service, and use the Net to support traditional sources such as agents.

      Another interesting B2B play is a Web site called Quomp, which sells workers compensation coverage to small and midsize businesses. Workers compensation is a fairly standard coverage that is mandated in almost every state, which makes it a natural candidate for online sales, says Rob Fruend, Quomps COO.

      Launched last month, Quomp was created by re-insurer American Re, insurance broker Arthur J. Gallagher & Co. and workers compensation insurer Safety National Casualty. It is one of the first pure online B2B plays in the insurance sector. Quomp currently offers coverage in just four states: Georgia, Illinois, South Carolina and Wisconsin. And the companys not in a hurry to add more states — at least not yet, according to Fruend. “We are intentionally not growing ahead of the market. We are going to see how well we do in these states, make sure they go well and then expand regionally from there,” Fruend says.

      That cautious approach makes sense to InsWebs Guthrie. “The insurance industry moves slowly — and it should,” he says. “We are talking about peoples financial security. You dont want to get that wrong.”

      Avatar
      eWEEK EDITORS

      MOST POPULAR ARTICLES

      Android

      Samsung Galaxy XCover Pro: Durability for Tough...

      Chris Preimesberger - December 5, 2020 0
      Have you ever dropped your phone, winced and felt the pain as it hit the sidewalk? Either the screen splintered like a windshield being...
      Read more
      Cloud

      Why Data Security Will Face Even Harsher...

      Chris Preimesberger - December 1, 2020 0
      Who would know more about details of the hacking process than an actual former career hacker? And who wants to understand all they can...
      Read more
      Cybersecurity

      How Veritas Is Shining a Light Into...

      eWEEK EDITORS - September 25, 2020 0
      Protecting data has always been one of the most important tasks in all of IT, yet as more companies become data companies at the...
      Read more
      Big Data and Analytics

      How NVIDIA A100 Station Brings Data Center...

      Zeus Kerravala - November 18, 2020 0
      There’s little debate that graphics processor unit manufacturer NVIDIA is the de facto standard when it comes to providing silicon to power machine learning...
      Read more
      Apple

      Why iPhone 12 Pro Makes Sense for...

      Wayne Rash - November 26, 2020 0
      If you’ve been watching the Apple commercials for the past three weeks, you already know what the company thinks will happen if you buy...
      Read more
      eWeek


      Contact Us | About | Sitemap

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Property of TechnologyAdvice.
      Terms of Service | Privacy Notice | Advertise | California - Do Not Sell My Information

      © 2021 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×