Tim Madden Dan Peshkin Monica Sargon
March 24, 1999 Team Three
Internet Insurance Companies
Industry Background Looking at the insurance industry as a whole, it is no wonder that many internet savvy entrepreneurs are tripping over each other to create a presence in this field. Insurance premiums paid in the United States in 1998 were an estimated $670 billion. Premiums paid around the world were over $2 trillion. In the United States alone, 80m households have auto insurance, 75m have renters insurance, 10m have short term/individual medical insurance, 4m have term life insurance. The companies that we are focusing on in this paper are InsureMarket, InsWeb, Quick Quote, and Progressive. These companies have figured out that the traditional insurance companies such as Farmer’s, Travelers, and All State, are in a tough position when addressing the internet as a sales channel. Currently, these traditional insurance companies are using independent agents to find their customers for them. The agents will then get paid based on what policies the customer takes out with the insurance company. Technically, the agent owns the relationship. Deciding to use the internet to sell policies, we found that the insurance policies are afraid that their agents will not continue to send them customers. This is where the internet companies along with the insurance companies who do not rely independent agents can take away business. The internet insurance companies have found that by selling a policy through the internet drives down the acquisition costs anywhere from 40% - 85% depending on the type of policy being purchased. Looking at this aspect, we found that the independent agents are the ones who will get squeezed by the new internet insurance companies, not the insurance companies. The new internet insurance companies do not want to underwrite the policies; they want to refer the business onto an existing insurance company for a fee. The insurance companies are excited by the chance to reduce their “acquisition costs” via the qualified referral. We looked at four internet insurance companies and we focused on what was working, what wasn’t working, and what we felt could be improved with each of the companies.
InsWeb
We found InsWeb to be the strongest site amongst the four. They appear to have created their site with all types of prospective clients in mind. When you arrive at their home page you find a well-laid out page that has distinct sections which will take you to different areas of the site. If you are only interested in getting a quote as quickly as possible, the home page directs you to the left hand side of the page where you can click on the insurance policy type you are looking for. From there, InsWeb does an excellent job of letting you know exactly how long it will take for you to get your quote, whether it takes three minutes for a life insurance quote or 15-20 minutes for an auto quote, the client is having their expectations set early. If a client is interested in learning more about ways to save money on their insurance, InsWeb has created a number of tools that help the client learn more about the different types of insurance or alternative ways to
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Madden, Peshkin, Sargon structure their insurance to help reduce the cost of a policy. Other tools that are included on the site are a glossary of insurance terms, research reports on the different insurance carriers from Zack’s Research, a FAQ section, and special reports on topics such as “Cell phones and driving, a deadly mix?” Another nice feature is that the client has the ability to save the information so that if they come back to the sight to get additional quotes they will not have to re-enter the information. The strong points greatly outnumber the weak points although InsWeb needs to improve in a few areas. It does not appear that they have a strong customer service area. They do include a “help” button but it only lists answers to a limited number of possible questions a client might have. They do not have any phone number for someone to call if they get stuck and the “help” button does not answer their question. Also, when we attempted to get life insurance quotes from the different companies, InsWeb came up with the highest quotes (see table). Overall, we liked the InsWeb site the best in terms of ease of navigation, useful information, and letting the client know how long it will take to get a quote. It appears that InsWeb was really thinking of the client when it designed their site. Thinking of areas that management could improve, we felt that they needed to have an 800-telephone number to offer additional customer service. We were not as concerned with them having the highest prices. Individuals using this using will find the additional services, such as the Home/Rent coverage quiz and Life Insurance needs analyzer, beneficial, which will foster loyalty among their clients. One area that InsWeb should be able to improve is by having more advertising done on their partner’s sites. We found that InsWeb sends a portion of their auto insurance referrals to Progressive Auto Insurance. Looking at Progressive’s web site, we found that there was no mention of InsWeb at all. This is especially surprising when you realize that Progressive only offers auto insurance.
InsureMarket
Quicken InsureMarket is a unit of Intuit. Quicken has become well known for supplying financial software for both individuals and for small businesses for a number of years. The InsureMarket is an attempt to cross sell many of those same clients. Quicken does a nice job of directing the client through their site. They do provide a number of areas where the client can find ways to save money, learn about insurance terms, read about the basics of different types of insurance, as well as determining what the clients’ needs might be. InsureMarket does include information on how long it will take to get a quote and it also goes into some details on what information they will be asking you to provide. If the client is still confused on what to do they can call the 800-phone number that is listed on numerous pages. InsureMarket does a very good job at explaining what the experience will be like from beginning to end. A unique feature to the InsureMarket site is the “Risk Evaluator”. This feature asks you a number of questions about your health and lifestyle to come up with a suggested framework for a clients’ needs. This would prove to very valuable to the client who is possibly purchasing insurance for the first time and does not know how much insurance, or what type, to get. InsureMarket does a good job of offering a variety of insurance policies types to a number of different clients. They Madden, Peshkin, Sargon
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were the only sight to offer insurance to small businesses. InsureMarket does a good job of understanding who their existing Quicken clients are and offer products to meet their needs. Where InsureMarket falls short is in the layout of their sight. Looking at their home page, we found that you needed to scroll down almost three pages to see all the information that is listed. This may cause confusion and frustration for clients especially if they have been using InsWeb’s sight. Although they tell you how long and how many screens to expect, it takes too long to get a quote. Looking at the table, one can see that it took the longest and had the most screens of the companies that we tested. Yes, it is only the difference of a few screens and one minute, but when we looked at the auto insurance section it was over ten minutes longer than the other sights. We felt that if management was able to consolidate the information, similar to how InsWeb has created their site, they would see more success. InsureMarket is in a unique situation where they have a large existing client base as a result of the Quicken financial products. They should continue to leverage this relationship as much as possible by cross selling products and services to these clients. We were impressed by the vision shown by Intuit and we believe they will be a leader in this segment in the years to come.
Quick Quote
QuickQuote is the oldest internet insurance company starting in 1995. Unfortunately, being the first out of the gates does not always mean that you will finish first. QuickQuote is doing a few things very good. The customer service section of their site is by far the strongest of the four companies we looked at. The client is able to handle a number of different service issues including changing the face amount of a policy, changing the premium billing address, changing the beneficiaries, changing the contact information, as well as checking the status of an application. If the client has other issues beyond these, they can call the 800-phone number. No other site comes close to this level of customer service. QuckQoute was the quickest when it came to getting quotes for life insurance (see table) as well as having the least expensive quotes. Where QuickQuote had problems is with their insurance offerings. They do offer health insurance but it is only for students and travelers. The do not offer any traditional health insurance for individuals. The mix of product offerings does not seem to have the same client in mind. QuickQuote offers student health insurance, which led us to believe they are targeting young adults, but they also offer life insurance, and annuities, which led us to believe they also wanted to target the older client. QuickQuote has the experience but they do not appear to have a distinct vision of who they want to target. We felt the site was laid out nicely ad the customer service was extremely strong but they need to create a focused target. If they want to target all age groups they need to expand their product offerings and offer a complete package for their target clients.
Progressive Auto
Progressive Auto is an existing insurance company that only gives quotes on auto and motorcycle insurance through the internet. Their sight is very simple and straightforward. Madden, Peshkin, Sargon
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Progressive does a good job of giving the client the opportunity to do a comparison of other insurance companies alongside themselves. Progressive is the only site that has an option to view their site in Spanish. Progressive needs to help the client better understand how long it would take to get a quote. They do not have any other information that would help the client find answers to any possible questions they might have. The reason behind this appears to be that they list all of their independent agents on the website. This led us to believe that they are tentative to cut off the agents from the selling process. Our team was also confused with the overused company mascot- E.T. Yes, the extra terrestrial!! The impact that the internet insurance companies will have on this industry will not be huge, from a percentage standpoint. Although the percentage is small, it is estimated that $4.1 billion of insurance policies will be purchased though the internet by the year 2003. We believe you will see more insurance companies move towards the internet as legitimate sales channels and the traditional independent insurance agents’ role will begin to change. ________________________________________________ References- Business 2.0 Magazine – March issue , Cover story – Are You Next? By Jeffrey Davis. Excellent article on a number of industries that will be radically changed by the internet. You can view the article at www.business2.com.
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Madden, Peshkin, Sargon
Life Insurance Quote
Screens Time to Quote to Quote Quote Industries Most Unique Ease of Use
InsWeb
4
3 min
$283-354
HI, LI, HO, R AT, M A, HO. HI, AT LI, SBI, DIS
Savings Suggestor
Very Good
InsureMarket
6
4 min
$305-354
Risk Evaluator
Good
QuickQuote
3
2 min
$267-312
HI(for students/travel)) Depth of Cust. Service LI, A AT, M E.T. mascot
Average
Progressive
N/A
N/A
N/A
Not Complex site
Industry Symbols: A=Annuities, DIS=Disability, HI=Health Insurance, HO=Home Insurance, LI=Life Insurance, M=Motorcycle, R=Renters Insurance, SBI=Small Business Insurance
Parameters for life insurance quotes: Single female, San Francisco Demographics, no health problems, 30 year- $300k policy
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