Survey Notes Only 12 Percent of Companies Sold Policies Online in ’99
San Diego’s Arrowhead General Insurance Agency Inc. has launched an Internet subsidiary one of its officials said will help independent agents compete with big insurance companies selling policies online.
YouZoom Inc., the subsidiary, is up and running on 11 of its Web sites in California, said Kieran Sweeney, president and CEO of YouZoom. The sites are the beginning of a planned nationwide network that will allow consumers to buy insurance online through their independent insurance agents, he said.
One San Diego insurance industry executive sees the new network as a good opportunity for independent agents to get more business.
Dan McCarthy, sales vice president for ConfirmNet Corp., which provides certificates of insurance to customers via the Internet, also said the new business is another sign the insurance industry is moving to make itself more efficient.
“The insurance industry has been a highly inefficient mechanism for doing business,” McCarthy said. “Opportunities are prevalent on the Internet for the industry.”
One of the main stumbling blocks to a more efficient insurance industry has been the lack of a standard industrywide language to provide consumers with information, he said.
“The Internet brings one common language worldwide to the business of conducting insurance services,” McCarthy said. “I think it is a new service that is exciting.”
As the insurance industry moves into online sales, YouZoom gives independent insurance agents a turnkey entry into the world of E-commerce without a heavy investment of time and money, Sweeney said.
For independent agents, the network offers the opportunity to be selling through their own Web site in less than 60 days with minimal expense, he said. It also allows them to establish a business identity online.
“Many insurance companies advocate using the Internet to sell directly to the consumer, bypassing the agent. We see the consumer’s ability to access an agent as an enhancement to the transaction of insurance online,” Sweeney said.
“YouZoom Network sites offer quoting and purchase capabilities that match or exceed the best direct (insurance) sites and add greater value by offering product selection and the assurance that if a customer needs help in selecting coverage or resolving a claim they can turn to their professional agent.”
The service can be accessed locally at (www.instantautoquote.com), he said.
Nearly 60 percent of independent agents surveyed in July 1998 by a technology service organization said they were interested in E-commerce to increase sales.
However, finding the right way to do it remained a problem, according to the survey conducted by IVANS Inc., a national technology services organization that provides electronic communications and business solutions to the insurance industry.
A 1999 study by insurance industry survey firm Forrester Research found that only 12 percent of insurance companies sold policies online. The research company estimated about $4 billion in net sales will be transacted online by 2003, but that accounts for only 2 percent of the overall insurance market.
Not For All
While the Web page sales mechanism may work for some independent agents, it won’t work for all, said Richard Hardy, owner of Hardy Insurance Services in San Diego.
“It didn’t fit what I was doing,” Hardy said. “Arrowhead’s business is at least 70 percent non-standard auto insurance and that’s less than 2 percent of what I do.”
Hardy said he frequently uses Arrowhead for contractor’s insurance, but that feature is not yet available for sale on the site.
“People still want to talk face-to-face with their insurance agent. Banks have been trying for years to sell insurance at their branches,” Hardy said.
“People don’t want to buy (insurance) at a car lot or at a bank. They want their Farmers and State Farm agents to nurture them, and when they have a business, they really need an independent agent that has a whole spectrum of insurance available.”