Insurance Companies Slow to Embrace E-commerce

Strategic Insights -

The insurance industry has been hesitant to fully adopt the Internet for selling their products, citing concerns over "channel conflict" and the need for real-time interaction with customers. However, technology companies are working to build systems that allow for instant quotes and simplify the process of buying insurance online. Analysts predict that by 2004, $13.5 billion of insurance will be sold online, a fraction of the annual total of about $900 billion. Insurance carriers like Allstate have announced plans to sell online, but the industry is expected to grow gradually as companies work to overcome technological hurdles and integrate their old software with new systems.

Key Takeaways:

  • Insurance companies have been slow to adopt e-commerce due to concerns over "channel conflict" and the need for real-time interaction with customers.
  • Technology companies are working to build systems that allow for instant quotes and simplify the process of buying insurance online.
  • Analysts predict that by 2004, $13.5 billion of insurance will be sold online, a fraction of the annual total of about $900 billion.
  • Insurance carriers like Allstate have announced plans to sell online, but the industry is expected to grow gradually as companies work to overcome technological hurdles and integrate their old software with new systems.
  • Companies like InsWeb are creating revenue streams through referral fees and the sale of technology that allows carriers to provide quotes online.
  • Insurance marketplaces like Intuit's Quicken Insurance, Insurance.com, and InsWeb are expected to thrive as consumers become more comfortable with online shopping.
  • Some insurance executives are considering following the lead of companies like United Airlines, which provides prices for its own flights and competitors, to give customers a more comprehensive view of options.
  • Online insurance sellers have generally kept their prices consistent with those of their offline counterparts, but this may change as companies save on operational costs.

Statistics:

  • $13.5 billion of insurance will be sold online by 2004 (Forrester Research)
  • $900 billion is the annual total of insurance sales (annual total not specified in the source)
  • 6 months or more is the time it takes for carriers to integrate their old software with new systems (InsWeb)
  • 50 questions is the number of questions consumers have to answer on individual carrier sites (Forrester Research)
  • 20% is the reduction in premiums that ePolicy is able to offer customers online compared to CalSurance (ePolicy)
  • $13.5 billion is the revenue generated by InsWeb through referral fees (InsWeb)

Sources:

  • Forrester Research
  • InsWeb
  • Intuit
  • Insurance.com
  • ePolicy
  • CalSurance