The Standard is a rapidly growing magazine following the internet economy. The Standard claims circulation of 160,000 and has writers from the Wall Street Journal, U.S. News, Wired Magazine, Inc. Magazine, San Jose Mercury and others. Following is more excerpts from the article "Run for Coverage" The full ten page article can be found at thestandard.com under current issue (Dec 6, 1999).
The first wave - consumer sites such as InsWeb, Intuit's Quicken Insurance, Quotesmith.com and eHealthInsurance.com - are all free, comparison-shopping sites. Though traffic on these sites is up, their value as infomediaries - and hence, their business model - will likely become increasingly tenuous as more carriers shift gears to the Internet. Some individual carriers such as Progressive already offer comparative rates on their sites and others are likely to follow. Second, the fact that insurance is purchased infrequently makes it more difficult for stand-alone insurance sites such as InsWeb and Quotesmith.com to build brand loyalty among consumers.
James Punishill, a senior analyst at Forrester Research [feels that a] fundamental problem with these early insurance sites seems to be that they merely provide a new channel to conduct business as usual. Unfortunately, comparison-shopping sites do little to simplify or illuminate the process. "That's why InsWeb and Quicken are struggling. They haven't addressed the problem. The new guys are right on track."
The new guys - like InsureZone, eCoverage, Ebix, InsurePoint and ePolicy - are doing what the old guys refused to do: simplify the products and the process. Their businesses are based on three key principles: automate core processes, eliminate the intermediaries and outsource everything else.
In September, Delphi Information Systems, a 23-year-old agency-management software provider, fielded its entry into e-insurance and promptly changed its name to Ebix. The cobranded site, a Web-based insurance exchange, was developed with Hewlett-Packard, which will supply the hardware and software and comarket the service through its insurance solutions and marketing business unit. "Our goal is to become a market maker by helping to automate the entire insurance process," explains Ebix CEO Robin Raina, who was the visionary behind the system.
Ebix combines both consumer- and business-to-business e-commerce in a single online service. The site has two components: Ebix.mall, a consumer shopping service, and Ebix.link, which provides business-to-business tools that let agents and insurers transact consumer and commercial insurance online. The service was recently endorsed by the Council of Insurance Agents and Brokers, whose members handle the bulk of the $300 billion to $400 billion of commercial insurance sold in the U.S., and the Certified Professional Insurance Agents Society. Both organizations are promoting the service to their members.
"Selling policies over the Web is only the first step in the process," says Doug Chisolm, HP's director of insurance solutions and marketing. He bets that as online insurance sites drive price differences out of the market, service will become the key differentiator. "Ebix made some tough internal decisions to change their entire business model," he says. "Instead of selling software to agents, they're now selling service." In essence, the company acts as an application service provider, and is positioning itself to provide agents with a stream of new tools and applications over the Internet.
Ebix faces some major challenges. First is Ebix.mall's chicken-and-egg problem of building consumer traffic while simultaneously soliciting a critical mass of agents to bid on the business. In its first month of operation in September 1999, Ebix signed up only 150 agents. As a result, some early users never received a single quote. Ebix.link's challenge will be to convince insurers to climb aboard. In order to quickly build up its base, Ebix plans to set up carriers on the system at no charge.
Though it will undoubtedly take time, Chisolm and others say insurers now recognize that they'll have to transform their businesses if they are to survive. |
