It’s the so-called necessary evil: insurance. Yes, it’s one of those
products that you buy and pray you’ll never have to use.
Insurance, though, is a complex thing. It’s pretty easy to fall asleep when
thinking about such things as unappropriated earned surpluses, band
grading, stop-loss provisions, or such somber things as accidental death
and dismemberment riders. The complexities make it awfully difficult to
comparison shop.
So, it is no surprise that there are wide differentials in insurance rates.
For example, according to the California State of Insurance, several major
metropolitan areas had price differentials of 160 percent for homeowners policies
and 408 percent for auto policies.
Also, the insurance industry has been known to engage in high-pressure
tactics, perhaps selling products you don’t need.
On the Web, though, there are a myriad of insurance sites to make your life
easier; however, only a few of are high quality.
One that stands out is InsWeb (INSW)
, which is rapidly becoming the one-shop source for insurance.
The model is similar to Auto-By-Tel. That is, when searching for an
insurance policy, you fill out a form (indicating such things as if you
smoke and so on).
Then, InsWeb will search out different policies for your
needs. You will then indicate if you want to be contacted by any of these
insurance firms. For this service, InsWeb gets a referral fee.
InsWeb has also been smart in developing an XML (Extensible Markup
Language) standard to allow its insurance carriers to more effectively
communicate with each other. Also, the XML system will make it much easier
to add new features. In all, 40 insurance companies are part of the
network.
InsWeb provides services for automobile, term life, homeowners, renters,
and individual health insurance, and even motorcycle insurance and fixed
annuities. Actually, the largest part of InsWeb’s revenues derive from its
auto policies.
The site also has lots of content, such as background information on
carriers, glossaries, articles, and interactive tools.
According to Forrester, the market for online insurance looks bright. In
1998, the Net generated $1.5 billion in premiums. This is expected to grow
to $11.1 billion by 2003.
InsWeb has also been aggressive in distributing its presence across the
Web, signing deals with ZDNet, Yahoo!, Snap.com, and E*TRADE.
What’s more, the company plans to spend a minimum of $75 million over the
next two years on marketing initiatives. InsWeb will advertise on “Monday
Night Football” and other prime-time programs.
Finally, InsWeb recently launched its so-called eCare customer service
system, which is staffed by service reps. With eCare, you can ask general
questions about insurance. This is absolutely critical for generating a
strong customer base.
InsWeb sells at $23-1/8 and was as high as $44. The market cap is about
$755 million. In a market that values Net leaders in the billions, InsWeb
definitely looks very cheap by comparison.
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