The reality is that the PAMC model (Healthaxis) will change distribution for insurance in a way that benefits the consumer, insurance companies that embrace it and Healthaxis. As with any new distribution model or medium, some players will cling on to the past fearing what problems might occur from making significant changes. If Wellpoint won't offer the discount, but would rather pocket the savings over giving it to the consumer, they will lose in the end. The web has taught us a lot about the consumer, competition and other success factors. One thing is for sure, the consumer will find the best price for a product on the net.
E-trade and Ameritrade have been around for some time, but they have not caused many brokers to lose their jobs. Maybe some of the marginal guys are no longer in the business or can't make enough money because their customer base also has an account at a discount broker. The insurance broker has far more to fear. They are needed only a few times a year if that for advice or to offer another insurance product. With health insurance, you might only meet or talk to the broker once and after that you are on your own. Insurance brokerage is ripe for being webified and many brokers will be out of jobs in the coming years. As the insurance industry moves up the technology ladder as a whole, many jobs beyond the broker will be lost from efficiencies gained and processes streamlined.
Wellpoint will likely sell less insurance over Healthaxis than other competing carriers that embrace the Healthaxis distribution model. At one point, they will be forced to compete and they won't have to worry about their brokers revolting. It will become painfully obvious that this is the future. Unfortunately, a gatekeeper at Wellpoint is trying to preserve the status quo of insurance distribution. This is one of the stodgiest, slow to change industries in the country. To think that every company will make the choice to jump into the online distribution world with an offering that is cheaper than what their brokers sell is a bit silly. Some will and have. Some won't, but will. It is a very big step for these insurance companies just to agree to the online sales and servicing aspect of the Healthaxis offering.
These slow movers will learn quickly that their competitors will be selling far more policies on line than they are because they are giving back the brokers commision to the consumer and saving even more money through the efficiency of the online sales and claims processing. Eventually they will all adapt.
Only a handful of institutional investors are in this stock. It is still early, but the real game is about to start. Healthaxis will become well known to the e-commerce community shortly after the roll up and they will be operating with the next version of their web site which will include many of the products they have announced deals for over the past 6 months. That is when this stock will really move. There is not much of a float and as has been seen, the stock can move 10 or 15 points in a week with no more than 500,000 in cumulative volume. If one or two more invsetors take up another 5 to 10 percent of the float, the stock will be poised for a major move toward e-trades target.
There will be lots of coverage for this company 3 to 4 months from now. It will trade north of $50. But if you have been trading, it has been pretty easy. Buy in the low 20's and sell in the mid 30's. That range will be busted sometime in the next 12 weeks. This company and model are winners. Good luck. |
