Interest grows in online auto insurance quotes.

Insurers that view the Internet as secondary to other, more traditional ways of reaching customers may want to reconsider. A new study from customer research service Keynote Systems has found that among people who are shopping online for automobile insurance and are willing to switch carriers, 87% visit insurers' Web sites intending to get premium quotes, and 58%, are willing to buy a policy online.

Keynote's report found that insurers sites that weren't able to deliver quotes, give detailed information on premiums and deductibles or guide consumers through their transactions were frustrating to customers. Web sites that provide comparative quote information and in-depth research "have a significant advantage over competitors," Keynote said.

The study evaluated the Web sites of 11 insurers and found that Progressive Corp., Allstate Corp. and State Farm led the overall customer experience ranking with "superior online quote and research processes." Progressive earned high marks for its detailed quote comparison chart, customer service and customizable coverage options, Keynote said. Geico, State Farm and Liberty Mutual Group had the leading sites in overall service level rankings and "high site quality," the study found. Keynote said it ran 5,000 simulated transactions on each site and examined 2,000 consumers as they used the sites to collect the data for the report.

"We're certainly pleased with the report," State Farm spokeswoman Natalie Hirt said. "We thought the report was very well done."

Hirt said State Farm "certainly understands the growing need" for good Web sites, especially in light of the Internet-savvy younger generation.

"The younger demographic have a greater and greater desire for ease of research and ease of use, and that's definitely a demographic our Web site seeks to serve," she said. "We're really working hard to make sure that it's there for our customers."

Some insurers, such as White Mountains Insurance Group Ltd.'s Esurance, are Internet-only direct writers. Esurance, which targets a younger market, has said by cutting out the middleman, it's able to offer a more competitive rate and be a low-cost operator.

Research by Frost & Sullivan estimates the insurance industry spent more than $25 billion on information technology and telecommunications services in 2004, with the majority of the spending coming from the property/casualty segment.

A special report by A.M. Best Co. said the expected "revolutionary takeover" of Internet-based business in insurance "did not occur and is unlikely to transpire in the future:'

"As we now know, these IT theorists were more than a little off base. Clearly, the independent agent remains a critical component in the distribution of insurance products in both the personal and commercial lines sectors," the A.M. Best report said.

However, the A.M. Best report found that cost savings, sophisticated pricing and tiering algorithms that better match price to risk, and the elimination of duplicative data entry gained from information technology initiatives such as Web sites can lead "to improved customer retention and enhanced profitability" and "a sustainable competitive advantage."

Technology Notes is compiled by Senior Associate Editor Lori Chordas.

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