From The State Journal-Register 8/24/98 Illionis:
An idea whose time has .com
Company selling health insurance over the Internet
TONY CAPPASSO
STAFF WRITER
To all the stuff you can buy already over the Internet add this: health insurance.
Internet companies Lycos Inc., America Online and CNET will team with a health insurer named Provident American Life and Health Insurance Company this fall to sell insurance through cyberspace, said executives familiar with the plan.
The goal: Corner the market for health insurance sales to individuals and small groups and save money by doing it without sales agents.
"This is the first time anyone has tried to sell health insurance via the Internet," said Provident's head of finance and communication, Craig Gitlitz.
Gitlitz said a subsidiary, HealthAxis.com, will handle the sales.
Provident American is licensed in Illinois, said Illinois Department of Insurance spokeswoman Nan Nases. She said the company has had very few customer complaints in relation to the number of policies sold in the state.
Provident American markets its products almost exclusively to individuals and groups of 50 or less, said Gitlitz.
That accounts for about 25 percent of the $150 billion health-insurance market nationwide, he said.
HealthAxis.com hopes to sew up that market segment in a few years by direct-to-consumer sales on the Internet.
"We want to be the electronic agent of the future," said HealthAxis.com president and chief operating officer Michael Ashker.
Ashker estimated buying a health insurance policy via the Internet could save customers 10 percent initially and up to 15 percent long-term.
"As we get more efficient in eliminating paper from the process, savings go up," he said.
The company has even come up with a trendy name for agentless selling - "disintermediation" - said Gitlitz.
Ashker said HealthAxis.com paid around $8 million for the Lycos deal, which is for three years.
He said the company signed agreements earlier this year with America Online and CNET. He declined to provide dollar figures for those deals.
The deals give Provident American a lock on health insurance marketing and sales on the three Internet content providers, Ashker said.
"We own that Internet space," said Gitlitz.
Provident American had $102 million in revenue in 1997 and earned $60 million in the first six months of this year, said Gitlitz. It is rated "B" by A.M. Best.
When the system is up and running fully, Internet customers will be able to fill out insurance applications on their computer screens and send them electronically to a 24-hour customer service center for processing, said Ashker.
The service center will have licensed agents standing by to help deal with complex policies, he said.
Nases advised consumers to proceed carefully when buying any type of insurance via the Internet.
"It's a good idea to call the Department of Insurance and make sure the company is licensed here and check on consumer complaints," she said. The number to call is 782-4515, she said.
Checking out an insurance company out with a rating service, such as A.M. Best or Moody's Investor Service, is also a wise precaution, she said.
Sending information such as bank account and credit card numbers through the Internet can be risky, she said.
"Ask Internet companies if they have a telephone number you can call to pass on this information," she advised.
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c Copyright 1998, The State Journal-Register |
