Insurance sites vie for share of growing category

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Buena Venture Associates, convinced of the Web's potential to sell insurance, this summer will launch

The Web site, backed by the venture capital group whose owners include Texas billionaire Sid Bass, is billed on Buena Venture's site as an "insurance superstore" that is to link to undisclosed "nationally known" insurance carriers and allow completion of transactions online.

An estimated $5 million advertising campaign--including TV, radio, outdoor and online--is to introduce later this year, an executive familiar with the plan said.

Pickett Communications, San Francisco, won the account in a review that included USWeb/CKS, Dallas, and AdHoc, San Francisco. The campaign is under development, as is the site.


The potential for online insurance sales is large, said Michael Weiksner, manager of finance strategies at Cyber Dialogue, New York, an interactive database marketing company. Cyber Dialogue and consultancy Booz-Allen & Hamilton recently completed a joint study on usage of online finance sites.

"It's a perfect medium [for insurance shopping] because one of the most important features people want is the ability to compare quotes, and the Web helps that," Mr. Weiksner said.

There are now 6.7 million people who shop for insurance online, according to Cyber Dialogue's research (based on a telephone survey of 1,500 U.S. residents), and they are a valuable demographic with average annual income of $74,000 and a net worth of $145,000.


The Web is at a crucial stage, Mr. Weiksner said. A large base of users has been using the Internet for two years or more, a crucial comfort threshold most people need to cross before engaging in financial transactions online, he said. And most insurance Web sites have offered live quotes and processed transactions online for just nine to 18 months, he said. will compete with Quicken InsureMarket, which has ties with more than 16 major carriers, and InsWeb Corp., a leading Web insurance site that links to 35 insurance carriers. Coverage ranges from health and term life to auto, homeowners' and renters' insurance.

The market remains fragmented, said Mr. Weiksner.

"There is an opportunity to do some aggressive marketing and gain market share," he said.

People don't go to insurance sites frequently, as they do with brokerage Web sites, so they will need incentives to click through, Mr. Weiksner said.

His research found insurance company Web sites account for 20% of online insurance shopping; America Online's insurance channel covers another 15%; broker sites handle 12%; Quicken's InsureMarket, 5%; other online insurance sites (including InsWeb), 7%; and other online sources, 25%. The remaining 15% didn't know or remember at which site they shopped.


InsWeb, which has partnered with Yahoo!, Infoseek Corp. for the Go Network and E*Trade, among others, launched a national cable TV and radio effort in May from Bozell Worldwide, San Mateo, Calif. Spending was undisclosed; InsWeb is in a quiet period prior to an initial public offering of stock.

In the spots, a dog shows a young man how to buy insurance over the Web. InsWeb uses a tag of "Where you and your insurance really click."

Shopping online for insurance may not eliminate what many consider a torturous but necessary act.

Peter Butler, partner in Arellano & Butler, a San Francisco financial services company, said term and auto insurance are commodity items. But he warned that signing up for insurance on the Web without personal advice might result "in grievous errors in trusteeship and payee provisions" with serious tax implications.

"If you want sophisticated [insurance] instruments, buying over the Web would be the equivalent of buying medical services over the Web. It's not a good idea," Mr. Butler said.


Mr. Weiksner agreed, sort of.

His research found that while 6.7 million people shopped online, just 1.3 million applied for insurance on the Web.

People use the Internet's ease to cull information from many sources and call up multiple quotes, but "when you make the final decision, you want a person to walk you through the process."

Copyright June 1999, Crain Communications Inc.

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