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What works online: Some insurers have found the key to unlocking online sales. (E-Commerce: Cover Story).

Insurers face a difficult challenge when it comes to building online sales. They must meld the disparate goals of selling complicated products online and meeting consumer demands for immediate gratification, while making sure the Web site doesn't clash with their agent distribution channel.

As a result, although online insurance selling has been around since the late 1990s, its potential hasn't blossomed much beyond auto and term life. Gomez Inc., an Internet quality measurement company, reported in a recent survey, "State of Online Insurance: Property and Casualty 2001," that of the 30.3% of respondents who said they search for property/casualty products online, 72.5% look for private-passenger auto information.

"Most agency writers are flying blind in figuring out how to provide Web experiences that meet customer needs without creating the perception that these efforts are designed to cut the agents out of the customer relationship. There are so many complicated issues to consider that it has made it difficult to effectively promote Web services that will ultimately be required for agents to compete effectively for business," said Greg Davies, a senior analyst for Gomez.

Measuring the success of online insurance sales also is a complicated task. It's not easy, because it entails taking into account issues like how any online research--such as using a Web site's calculator or questionnaire tools--eventually leads to a sale. "It's important to know what you should be basing your measure of success on. If you are measuring success with a click to close, you're going to be disappointed," said Davies.

The quoting function on a Web site is a serious hurdle to successfully attracting buyers, because about 50% of users jump to another site if the quoting mechanism is too complicated, Davies said. While insurers don't want to encourage price shopping, which commodities products like auto insurance, they must offer it to keep in step with the competition, especially online aggregators. "It's a quagmire," he said. One insurance professional cautions the industry that the biggest failure is setting an expectation about quoting on the Web site that the company can't meet. "You shouldn't offer a button that says 'buy now' and that information goes out to an agent five days later. You can't mislead consumers. You don't want the Web to be another thing to pester them," said Howard Witkin, president and chief executive officer of IdentityWeb.

One of the main drawbacks to online quoting is the need to educate applicants about the importance of providing accurate information, Davies said. Not only will giving inaccurate history about one's driving record result in an inaccurate quote, but insurers must address the problem of requiring applicants to complete lengthy and sometimes complicated applications forms online. "People don't like to read fine print," Davies said.

Gomez recommends that insurers post messages on their sites to tell consumers how much longer it will take to complete the application. American International Group's AIGDirect has incorporated a process meter into the part of its site that offers small-business insurance. The meter is especially helpful for guiding customers through lengthy forms dealing with more complicated products, such as business owners or workers' compensation insurance.

Shopping Around

Results from a class project at a U.S. university indicate that insurers aren't successful in meeting the needs of the computer-savvy younger generation. Weili Lu, director of the Center for Insurance Studies at California State University, assigns an Internet insurance shopping project to her students every semester. They must collect online quotes for a variety of personal insurance products and evaluate their experience. "The face of insurance customers is changing and getting younger. They like to spend time on the Internet and prefer that way to shop," Lu said.

Lu reports that her students were put off when it sometimes took weeks to get an e-mail response from insurers. Lu said her students preferred to go to aggregator sites like Quotesmith and InsWeb, because they offer a variety of products and one-stop shopping. Lu advises insurers to improve customer relationships online to build sales.

This theory is reflected in a recent study by the Independent Insurance Agents of America and 26 insurers. The study reveals that consumers who use the Internet for financial transactions are looking for new insurance relationships online. The study also reveals that over the past two years, 27 million consumers shopped online for insurance, including 21 million who were researching and requesting quotes and more than 2 million who were seeking an agent or broker. The study found that online shoppers aren't satisfied with their shopping experience and actual purchases are rare. "Many respondents feel that insurance sites are not yet as good as banking and investment sites. Many respondents don't perceive cost savings from buying insurance through the Internet, and they lack faith in the quality of online customer service. Policyholders still want to have personal interaction with an agent or broker," said Madelyn Flannagan, IIAA vice president of education and research.

Insurers have been criticized for not jumping into e-commerce with the same exuberance as banks and brokers, but that's changing. Gomez data show that 18 months ago few insurers were offering policyholder self-service capabilities, such as change of address or viewing a policy online. Now 12 of the 18 major U.S. insurers on Gomez's scorecard allow policyholders to view or make changes to their policies through a password-protected interface. In Gomez's fall scorecard of insurance company sites, the top five companies were Progressive, Allstate, Safeco, Amica and GE Financial Network. The rating is based on on-site resources, ease of use, relationship services and customer confidence.

Giving the Agent a Hand

It is a balancing act to create a direct sales channel that doesn't conflict with agents. Most U.S. insurers are approaching online selling with an integrated strategy that gives product information through a Web site while directing customers to an agent, although a handful of insurers like Hartford Financial Services Corp. and AIG are selling direct. Witkin advises insurers and agents to use online selling to develop relationships, saying, "the Web is a phenomenal tool to manage a communication stream." Witkin theorizes that online buying is so low because consumers aren't sure if buying online is a good fit. He sees e-mail which is cheaper than a phone call, as the ultimate relationship tool. Once agents discover the demographic of prospective clients, they can use e-mail to touch the consumers with articles about their situation in an effort to develop a trusted adviser role.

The largest property/casualty insurer in the United States, State Farm Group, is a huge proponent of integrated selling, because it meshes with the company's philosophy of being what customers expect the company to be. Vice President of Enterprise Internet Services Ann Baughan said State Farm looks at the Internet as another way to make information available and believes policyholders still need a personal touch when buying insurance. Besides packing its Web site with 60 calculators and assessment tools, State Farm provides instant online quotes for auto, renters and life insurance products. State Farm also allows existing policyholders to access their policy information and is currently developing customer relationship segments for its site. "Everything is incremental. What you see on the site today isn't what you'll see next week," Baughan said.

Bringing the power of online sales to independent agents is another integrated approach to selling. More than a year ago, Ceres Group Inc., a health and life insurance company, created and invested in QQLink, an online connective point for agents and companies, because "many insurance companies don't understand Web site sales," said Peter Nauert, chairman of Ceres. QQLink allows agents to sell insurance products from several companies through a personalized Web site that links them to the insurers. Of the nearly 7,000 applications submitted last year, Nauert said fewer than 5% were submitted without the help or advice of an agent. Consumers can use the site to research products and either work with an agent to buy the coverage or buy the policy direct and have a servicing agent in their area assigned to them. QQLink has about 2,500 agents hosting sites and plans to expand to 5,000 by the end of the year.

E-Commerce Challenges

Financial-services entities like banks and securities brokers raced to get online, but insurers held back because their business wasn't dependent on daily transactions. When Progressive Corp. began selling auto insurance on the Internet in the late '90s, however, other insurers followed suit. But their baby-step entry onto the Internet created an opportunity for aggregators like InsWeb and Quotesmith to step in and take over online brand presence.

William Pieroni, general manager for global insurance for IBM, said it wasn't such a bad thing for insurers to take the conservative approach to selling online, but he stressed that the time to get on board is now. Currently, the majority of online buyers have price, risk and retention profiles that make them unattractive for most carriers, Pieroni said. However, longer term, Web-based distribution and servicing are going to become a materially significant channel that carriers will need to leverage to be viable competitors. This longer-term transition should not be seen as an opportunity to wait but rather to begin the arduous task of digitizing the enterprise.

Compete Inc.'s recent survey of clickstream data of more than 10 million active Internet users underscores that online insurance shoppers are focused on price at aggregator sites. The survey segmented the market between carriers and distributors such as InsWeb or Quotesmith. The data reveal that although consumers are flocking to insurers' Web sites to research and manage policies online, aggregators' sites are encouraging consumers to select insurance policies based almost exclusively on price. "Insurance carriers need to discourage price-focused consumer behavior and begin developing deeper, service-based relationships that lessen the effects of price sensitivity over time," said Derick Sutton, vice president of advisory service for Compete. Compete reports that distributor sites are attracting more visitors than carrier sites. InsWeb attracted nearly 400,000 monthly, while Allstate and State Farm averaged fewer than 250,000 visitors per month.

Compete's analysis uncovered two distinct customer types emerging in the insurance market--churn-prone, price-focused purchasers who view insurance as a commodity and service-oriented, brand-focused customers who see their policies as a differentiated service. "Clearly, the challenge for insurance carriers is to enable the latter, without jeopardizing their channel," Sutton said.

Totally Direct

Because of their relationships with captive and independent agents, few insurers offer a purely direct route to buyers. AIG, one of the largest writers in the world, sees selling directly through the Internet as an extension of its business model. AIG began its online foray in 1998, offering auto insurance information and providing a mechanism to obtain a quote through e-mail. In 1999, AIGDirect was launched, and currently the site offers an instant quote for auto insurance only, although the site can provide quotes via e-mail for homeowners insurance and small business coverage. AIGDirect also offers a suite of commercial products geared to the small-business owner, said Diane Sparks, a senior vice president for e-business. The site attracts business people who are just getting started and who don't think of going through a broker for coverage, but go online to see what a large company like AIG offers, she said.

Because typical commercial products like business owner's policies are complicated coverages, AIGDirect offers online quotes in an estimate format and then queries whether the consumer would like a full-fledged quote. An e-mail follows a day later with a more exact quote.

Since AIGDirect's inception, the company has seen increases in online sales, but "the percentages are small. We're not selling a significant amount over the site," Sparks said. Although there has been steady growth--auto insurance policies increased 12% so far in 2001 over the previous year, homeowners insurance is up 27% and small-business coverage jumped 87%--AIGDirect is focused on building out the site's customer service areas that will allow customers to store information and access and store quotes. "The site is ever evolving," Sparks said.

Hartford began offering quotes via the Internet in 1999, but its latest niche venture is to sell auto and homeowners insurance directly online to AARP members. Hartford is the exclusive provider of homeowners and auto insurance for the group. George Thacker, senior vice president of marketing for personal lines, said the 55-plus age group is the fastest-growing segment adapting to using the Internet. "They have more time to research on the Internet," Thacker said.

Once AARP members receive a quote online, they can complete the four-page application on the Web site or through a call center or send it in the mail. Thacker said about 90% of site visitors use the AARP/Hartford site to research prices and products, and most use the toll-free number to buy the policy. Hartford is being rewarded with growing online sales from AARP members--$55 million in premium for auto and homeowners last year, up from about $22 million in 2000. Hartford plans to add marketing incentives to the site, such as tying a discounted auto rate to buying homeowners coverage. As Thacker explained, "It's the same story as selling the burger and going for the fries."
Why People Buy Car Insurance Online

Price is the prime reason survey participants switched auto insurers.


Price-Driven 33.5%
Event-Driven 30.1%
Unswitched 24.7%
Service-Driven 9.2%
Other 2.4%

Source: Gomez Inc.

Note: Table made from pie chart
Insurance Information Online

Consumer interest in buying insurance online remains in the formative
stage. Only 28.9% of participants in a Web-based survey said they had
sought information about personal vehicle insurance online.

Type of Insurance Percentage of Participants

Personal Vehicle Insurance (*) 28.9%
Health Insurance 9.3%
Home Insurance (**) 8.3%
Life Insurance 8.0%
Travel Insurance 1.3%
Other Type 1.8%
Have never searched online for
 insurance information 62.8%

Note: (*)Includes automobile, motorcycle, boat, RV, etc.

(**)Includes homeowners, renters, condominium and personal property.

Source: Gomez Inc.

Note: Table made from bar graph


RELATED ARTICLES: Progressive's Goal: Make Online Buying Easy

Progressive Corp.'s e-commerce strategy is straightforward: Make it easier for people to buy insurance. To that end, the fourth-largest U.S. private-passenger auto insurer uses the Internet, a toll-free phone number and 30,000 independent agents to sell.

"Our efforts are on producing a solid experience and making it easy for the customer to buy insurance' said Toby Alfred, Progressive's Internet general manager. Easy navigation through the online auto insurance buying process is key, because auto insurance is a low involvement product. "The consumer doesn't want to spend a lot of time on something they don't think they are going to use," Alfred said.

Progressive launched its Web site in 1995 and added the functionality of paying online, quoting technology and an agent locator in 1997. Progressive was able to sell online in every state by the end of 1998. That same year, Progressive enabled policyholders to go online to check the status of a claim or add an endorsement to a policy By 2000, Progressive policyholders had wireless access to agents, claim reporting, quotes and account servicing.

Progressive has seen a steady increase in Internet sales since 1998, when Internet-generated sales were 2% of the direct channel's net premiums written, That grew to 7% in 1999 and 15% in 2000, according to company annual reports.

In 2001, Progressive said it would stop breaking out the Internet portion as a percentage of direct sales, because it considered that channel's sales cross-functional. For example, a customer may begin a sale by getting a quote online, but purchase through a call center. In 2001, Progressive reported its direct sales produced earned premium of $1.8 billion, up 46% over 2000, and increased auto policies in force by 18%. Direct sales for the first quarter of 2002 showed continued growth--a 58% increase over the same period a year earlier. Progressive ties that continued growth to successful advertising, particularly an act campaign it launched last year. Another campaign is being developed, as is a marketing plan targeting teens.

A recent survey on insurance e-commerce shows that most online insurance shoppers are looking for price quotes. The challenge, according to Compete Inc., a marketing consulting firm, is to bridge the gap between brand-focused customers a company already attracts and online shoppers who are interested only in price. Compete reported that Progressive is the carrier that can meet this challenge. The pricing transparency seen in Progressive's Web site's scrolling of competitors' quotes coupled with its strong brand is the reason its Web site sees the most consumer traffic among both carriers and distributors--more than 475,000 unique visitors in November 2001, Progressive continually tweaks its Web site. "We constantly work on it to make it easier to use for the consumer. That's how we'll see increased value," Alfred said.

Lynna Goch

Progressive Corp.

Web site: www.progressive.com

Results: Direct sales, including those conducted electronically, produced earned premium of $1.8 billion last year. Net income for the corporation for 2001 was $411.4 million.

Primary business: auto, motorcycle and recreational and water vehicle insurance

Headquarters: Mayfield Village, Ohio

Founded: 1937. Web site launched in 1995

Alliances Help American Life Harvest Sales

The American Life Insurance Company of New York says good, solid partnerships are the cornerstone of its success, because these alliances are helping the company build multiple distribution channels, including the Internet.

American Life has alliances with several distributors to market life insurance and annuity products. Its current partners include E*Trade Group Inc., Quotesmith, Annuity.com, InsureRate, Meltzer, Secure Future Services, Continental Five Insurance Group, Conseco, Pivot, Reliaquote, Berger Funds and CMIdirect. Since last April, the company has sold about 1,000 policies through its partners' Web sites. In March 2001, Inviva Inc. acquired American Life from Mutual of America.

Todd Solash, American Life's marketing director, believes the key to successfully selling insurance online lies with product marketing. "We're very focused on partnership marketing by working with high-quality partners who are aggregating audiences or who have already established good solid customer bases."

Having the right product for Internet shoppers is important. American Life issues its Instant Term policies immediately online. The term life product is fully underwritten, and customers can apply, access and maintain the policies online. After inputting an electronic signature, setting up payment and scheduling a medical exam, customers receive a 90-day policy based on their application responses. "We call our underwriting 'validative underwriting,' where if what customers have told us through a Web site or an intermediary is correct, we fully expect they will continue their coverage at the same price," he said.

American Life recently began offering Instant Term to customers of the online personal financial-services provider, E*Trade Group Inc. "Reaching people, highlighting their insurance needs and offering immediate fulfillment/purchase at the time of a life event or a purchase triggering an insurance need...is a really powerful way of driving sell-through," said Solash. "Certainly, the Internet has unique properties as a marketing medium that help in this process.

"Our platform is really well developed to sell small bites of insurance, because we're focused on both the cost side and flexibility side," said Solash.

As a result, American Life is targeting what it believes is a largely untapped middle market with a real demand for "little bites" of insurance. "We have a product we're happy with--it's a very slick process; it's immediate, easy and cheaper than what's out there," he said.

American Life believes that while the Internet is an important tool for selling life insurance, there also needs to be a blend of various distribution channels to comprise a successful selling initiative. Other such channels include insurance agents and brokers, banks, securities brokers, financial planners and other branded providers of financial products.

"We use the Internet in much the same way we use FedEx services," said Solash. "It's a very cheap medium for exchanging and processing information. However, it's hard to argue that it is the only selling medium we'll be dependent upon." He said this is particularly true for life sales, in which more than 90% of sales are still generated from direct agent-consumer interactions. "The agent doesn't go away, and we and everyone else can't ignore that."

--Lori Chordas

The American Life Insurance Company of New York

Web site: www.americanlifeny.com. Products are sold through online aggregators.

Results: About 1,000 policies sold online since April 2001, following its acquisition by Inviva Inc. in March 2001

Primary business: life insurance and annuities

Headquarters: New York

Founded: 1955

Inreon: Setting the Stage for Reinsurance Deals

It may seem as though reinsurance is an unlikely product to be sold online. The business of reinsurance can be complex, with contracts that focus on the minutiae of risk and coverage limits. Deals often require multiple conversations among brokers and underwriters, resulting in a back-and-forth of offers, revisions and contract drafts between insurers and reinsurers.

Inreon--whose motto is "where insurance meets reinsurance online"--was designed to facilitate reinsurance transactions via the Internet, said Chip Adams, managing director of Inreon USA, the U.S.-based subsidiary of Inreon Ltd. "What we are doing is providing a more efficient, more transparent means of documenting these reinsurance transactions," Adams said. "It's really, truly an electronic file supporting each transaction."

The transactions involve a primary insurance company, or "buyer," and the reinsurer, or "seller." A typical transaction begins with the buyer sending a request for reinsurance to one or more sellers with an e-mail notification and link back to the Inreon platform for each risk submission. Reinsurers that wish to offer coverage respond with a price and a limit to the Inreon link, where all correspondence is collected and made accessible to those involved in the transaction.

"What makes us different from an open, billboard marketplace," Adams said, is that the buyers identify the specific companies from which they would like to secure reinsurance. The transactions are targeted to a specific placement, and bidding is by invitation only, he said.

The idea for Inreon began outside the realm of insurance. Internet Capital Group, one of Inreon's founding partners, had created Web-based trading platforms for several other industries. ICG recognized the potential for sales of reinsurance via the Internet. The company took its proposal to the two largest reinsurers in the world, Swiss Re and Munich Re, and shortly thereafter, Inreon was born.

That was in December 2000. Since then, Inreon has signed on about 50 trading partners--including primary insurers, reinsurers and brokers--from around the globe. Among the registered buyers are Fortis, Winterthur and Liberty Mutual. Partner Re, Scor and Mapfre Re have signed on to provide reinsurance products. Willis and Benfield Greig are two of the big-name brokers that find and place reinsurance contracts through Inreon. Adams said the company also is beginning to recruit smaller insurers and reinsurers to join the ranks. He said the company has identified several small European insurers as potential members.

Unlike many online insurance vehicles, Inreon was not designed to replace the traditional players in reinsurance transactions.

"The technology supports the trade," Adams said. "It does not replace the expertise of the underwriters."

Inreon provides a collection of Web-based tools to aid in the trading of various reinsurance products. The technology behind Inreon is ahead of the marketplace, Adams said. He credits this to the prowess of Accenture, one of Inreon's founding partners. But the distinction is also a challenge for the fledgling company. "We're bringing technology into the business," Adams said. "There's a huge resistance to change at the front-end level."

To break clown this resistance, Inreon positions itself as the provider of three core services: long-term expense reduction, portfolio transparency and access to capacity. Adams said the real-time access to trading between global markets is a huge advantage for participants. He also pointed to the continuous development of products in response to demands from insurers and brokers around the globe.

From the beginning, Inreon has been focused on transactions of property and catastrophe reinsurance products, Adams said. But the product line is expanding as demand increases. A key event for the online reinsurance portal occurred in December, when Axa Corporate Solutions signed on.

"Axa Corporate Solutions made a commitment to work with Inreon in 2002 to bring a good block of their reinsurance purchasing onto the reinsurance platform," Adams said. The arrival has spawned the development of liability and casualty products that soon will be available through Inreon, he said.

Inreon also sees the Bermuda market as a source of future business. The company already is talking with Montpelier Reinsurance Ltd. and Renaissance Re's Glencoe Insurance Ltd. about joining the online platform. "I think there's a huge source of global capacity that is being deployed," Adams said. "We do expect to see trading increase from a variety of markets to Bermuda."

--Sue Johnson

Inreon

Web site: www.inreon.com

Results: 250 transactions to date; 50 registered primary insurers, reinsurers and trading companies and brokers

Primary business: online reinsurance platform; lines sold include property facultative, European catastrophe product, U.S. industry loss warranty product

Headquarters: London; offices in Zurich, Hong Kong, Bermuda and Jersey City, N.J. Regions served include Asia, Europe, United Kingdom, United States.

Launched: Dec. 18, 2000; began selling insurance on Oct. 15, 2001

Founded: 2000; Began selling insurance in 2001

Choice Is Key to Quotesmith's Selling Strategy

One essential ingredient of successful insurance sales online is giving customers what they can't get anywhere else, said Quotesmith.com's founder and chairman, Robert Bland.

"Just as Amazon.com doesn't show one book to customers...Quotesmith.com has dedicated itself to offering at all times the largest panorama of instant, real-time insurance quotes," Bland said. "It's all about giving customers what they want, including choice."

Bland believes marketing techniques, coupled with the variety of products offered to customers, are what have brought 100,000 customers to the company's Web site over six years. With quotes from more than 300 companies for 12 lines of insurance, customers can comparison shop for price, options and benefits at Quotesmith.com.

Last year, Quotesmith.com sold 20,300 policies to online purchasers. While that's fewer than the 38,000 policies sold in 2000, Bland is hoping to sell more than 25,000 policies this year. And he is counting on increased demand and less supply. "The recent exodus or demise of many of our competitors has strengthened our competitive position," he said.

Much of the appeal is linked to the wealth of information housed in the company's database. "The beauty of a database is that it takes the needs of each visitor, and within seconds, produces a market search that would otherwise take thousands of hours to do by hand and would never be engaged in a [typical] agency," which represents from one to three companies, said Bland. Quotesmith.com has reversed the balance of power and gives this knowledge to buyers via its Web site in most lines of insurance without even asking their name. "And consumers love that" he added.

Quotesmith.com's operation model is similar to the one used by the Charles Schwab Corp. All employees are salaried, and the company doesn't conduct business with any outside agents and brokers, said Bland. "We're direct to consumers and provide customer service at our facility 12 hours a day in order to service both coasts."

Online selling to consumers has been a central part of the company's strategy since 1996. Prior to that time, the company was an automation vendor to the independent agent and broker community from 1984 to 1992. However, in the early '90s, Quotesmith's leaders recognized consumers' desire to receive comparative quotes, and in 1991, the company began offering consumer quotes through the mail. The company later placed its term life database on the Internet to see whether there was a demand for quotes from self-directed shoppers. "There was, and with 95% of our business generated from the Web site, we recognized the importance of adding dot-com behind our name and offering comparative quotes to consumers," said Bland.

The company expanded in December 2001 with the purchase of Insure.com "Our company was very strong in offering instant quotes and buy-online capabilities, but we were weak in offering contextual news articles, information and calculators that people could use...in the decision-making process," said Bland. "We were attracted to [Insure.com] because we felt the marriage of content with transaction capability would result in a much stronger offering for consumers and further distance ourselves from our competitors."

Bland said recent events, particularly the Sept. 11 attacks, have been a wake-up call for self-directed insurance shoppers. "In the fourth quarter, we saw a significant increase in the size of the average term life policy. For example, the average size was running about $400,000 for the first three quarters. However, by the fourth quarter, that number increased to $460,000," said Bland.

--Lori Chordas

Quotesmith.com

Web site: www.quotesmith.com

Results: 20,300 policies sold in 2001

Primary business: Online insurance aggregator; owns two online consumer insurance information services, lnsure.com and Quotesmith.com. Lines of insurance sold online include auto, motorcycle, life, individual and family medical, group medical, short-term medical, dental, Medicare supplement, long-term care, homeowners, disability, travel insurance and annuities.

Headquarters: Darien, III.

Founded: 1984; began selling insurance online in 1996

IdentityWeb: Linking Agents and Customers

Potential insurance buyers use Internet sites for research, but very few are willing to pull the trigger on a purchase. The theory is that most people prefer to meet live with a person before buying.

Los Angeles-based IdentityWeb Inc. has used that reasoning to sell life insurance, annuities and health insurance through--but not on--its Web sites. The company serves as a matchmaker to facilitate a relationship-based sale between consumers and agents.

Founded in 1996 and profitable since 1999, the company in March maintained about 30 Web sites with strong domain names, including LifeInsurance.net, Annuity.net, Lead.net, 4BestQuotes.com and HealthPlan.net. Like the sites of other companies, LifeInsurance.net provides lots of information about products and customer needs. But IdentityWeb also helps visitors select and contact a participating agent near them. Agents participating in LifeInsurance.net report about a 30% close rate on a 120-day close cycle, with a "huge boost in closes" occurring in the 75- to 120-day period, said Howard Witkin, president and chief executive officer of IdentityWeb. Those statistics tend to validate IdentityWeb's business model, he said. "No one fills out a long application form unless they are serious, but you still have to get to know the agent," said Witkin. "That's opposed to most agents either closing a lead immediately or dropping it."

After an agent meets with a prospect, IdentityWeb's ClientMaker program contacts the prospect on behalf of the agent up to 18 times over the next year. The contacts begin with an e-mail welcome note on Day Three and a brochure about the agent on Day Seven. Subsequent contacts depend on how participating agents "define the rules on how they want to relate to each prospect," said Witkin.

Witkin's partner in the company is Richard Horowitz, a life insurance agent for 40 years who specializes in the needs of the extremely wealthy. Witkin said that Horowitz, well-known in the industry, has "tremendous insight" and helped to create the sales model. "The industry is not set up for clicking a button and being done, but if you try to bring a guy into the system, you can sell a policy," he said. "Self-identified consumers are coming to us telling us to solve a problem for them."

After the early contact, the ClientMaker program can contact prospects with a variety of messages on such topics as financial planning and taxes. These contacts are tailored to the prospect--married or single, high or low net worth, for example--and can be in the form of common issues and answers or what to consider at a particular stage in life. Witkin said these communications should occur about once a month. For the agents, the contacts are cost effective and allow them to carry a much larger client base, he said.

The company so far is happy with its sales as a percentage of revenue, and it is moving toward a revenue-sharing model with its agents, Witkin said. "When we do that, we're expecting a significant revenue boost," he said. But IdentityWeb's biggest conundrum is how to pump up the volume. "To the extent you actively advertise, the harder you push a consumer in, the less likely a consumer will be serious," he said.

The company is on the lookout for one or more strategic partners that could benefit from IdentityWeb's skills. "We understand technology really, really well," Witkin said. "We recognize that as a percentage of the insurance market in our niche, we're doing phenomenally well. As far as lead generation, we're one of the big players, for sure."

IdentityWeb's next new Web sites will feature workers' compensation and auto insurance, and it anticipates several other product lines.

--Ron Panko

IdentityWeb

Web site: www.lifeinsurance.net, one of 30 Web, sites maintained by IdentityWeb.

Results for LifeInsurance.net: About 15,000 policies sold; 280 participating agencies; Web site hits include 50,000 unique visitors a month; 2% to 3% of hits result in sales; average face amount of policies is $270,000

Primary business: technology for e-business, connecting consumers and agents

Headquarters: Los Angeles

Founded: 1996
COPYRIGHT 2002 A.M. Best Company, Inc.
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Comment:What works online: Some insurers have found the key to unlocking online sales. (E-Commerce: Cover Story).
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Publication:Best's Review
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Date:May 1, 2002
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