Insurance that Clicks
Selling insurance on-line is the wave of the future.
It used to be that insurance agents set up shop, networked by playing golf, and waited for walk-ins or for the telephone to ring. OK, so it wasn’t quite that easy.
Then along came 1-800 numbers, banks of telephone operators, and heavy advertising schedules that drove customers directly to insurance companies. The marketing strategy lowered costs and increased margins by bypassing traditional agents. So it’s not surprising that insurance firms would take the next logical step: selling insurance products on the Internet. According to Internet research firm Forrester Research, last year on-line sales for home, life and auto insurance totaled approximately $200 million. But the firm predicts that by 2003 sales will skyrocket to $4.8 billion.
A handful of insurance companies sell policies directly through the Internet, and a host of Web sites, such as Quotesmith.com and Insweb.com among others provides consumers with instantaneous quotes. Quotesmith.com, by Entrepreneur.com, touts its reach to all 50 states. Insweb.com, ranked No. 1 on-line insurance marketplace by the research firm, the Lafferty Group, works with big brick-and-mortar businesses such as AIG, John Hancock Financial Services and MetLife. Hallman says Web-based sales are part of an industry-wide shift away from traditional insurance sales toward fee-based financial planning. The business he has lost to the Web is business that has been slowly phased out anyway. But if insurance firms is reinventing itself, the core business remains, say a number of leading industry executives. “It’s just another medium of distribution,” says Robin Campaniano, president and CEO of AIG Hawaii. “Since everybody’s going to be doing it, it’s just another way of getting in contact with the customer.”
Campiano doesn’t see online insurance sales overtaking face-to-face sales because there will always be people who will need the help and advice of an agent.
“I think there’s still going to be a place for people to talk with an agent,” says Prudential’s John Anderson, a retired agent who believes that it’s only a matter of time before insurance Web sites play a larger role in product sales.
Anderson says that the Web sites should be used for cut-and-dry insurance needs. “I think if people are just looking for term insurance or a specific temporary need, they can purchase over the Internet.” Anderson believes that traditional insurance agents can help consumers target what kind of insurance they really need as well as walk them through proposed policies, which aren’t the easiest documents to understand.