Here's a link to a new story on HealthAxis.com:
phillynews.com
An insurance firm is born anew on Web
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Provident American Corp. reinvented itself on the Internet as HealthAxis.com.
Executives Alvin Clemens (left) and Michael Ashker are in front of the traditionally styled headquarters. (Laurence Kesterson / Inquirer Suburban Staff)
By Reid Kanaley
INQUIRER STAFF WRITER
This is the story of a buttoned-down insurance company with 110 years of gray-flannel history that packed up for a move into cyberspace.
That's what health-coverage provider Provident American Corp. of East Norriton did this year after it sold the bulk of its traditional underwriting business, severed ties with 20,000 shoe-leather agents and reinvented itself online as HealthAxis.com.
HealthAxis.com Inc. has begun to sell policies directly from the Web in what it believes is a $73 billion annual market in health insurance for individual consumers and small businesses with fewer than 25 employees.
The HealthAxis offices are inside the stately old Provident American building - a columned, red-brick Colonial edifice on a grassy, shaded campus complete with pond.
The setting is "the antithesis of everything I learned about technology companies. It just doesn't seem to fit," admitted HealthAxis president and chief executive officer Michael Ashker, a Silicon Valley veteran who wore a pullover shirt during a recent tour of the facility.
Ashker, 46, the former managing director of Lynx Capital Group, a technology investment company with a $100 million portfolio, said he began investing in Provident American in 1997 on a hunch that the business was ripe for electronic commerce.
When he started buying the stock, Ashker said, it was trading at about $5 a share. The share price fell to $2.75 in October, but rose to $42.25 in mid-May as the HealthAxis Internet strategy began to unfold. The stock closed at $29.25 a share Friday.
Ashker said he set out in late 1997 to convince Provident American officials that they needed to move online. He invited America Online to make an e-commerce presentation at a meeting in the somber Provident American boardroom, where the walls are lined with portraits of craggy-faced chairmen of the board going back a century.
Alvin Clemens, the current chairman, sat in on that meeting. He said the realization it brought to him - that the Internet was about to change his industry - was like "an earthquake."
But Clemens wasn't rattled. He was used to trying new things. In 1970, he had founded Academy Insurance Group. Academy pioneered sales of supplemental life insurance via television with celebrity endorsements from Burl Ives, Michael Landon, Bob Barker and others.
On TV, Clemens said, he had to give out a phone number, hope people would call, then send out information kits and hope, again, that they would sign up. But on the Web, he said, consumers can just click into the site. "There they are," he said. "Now, give them the product."
The insurance industry, weighed down by generations of corporate layering, and regulated by 50 separate states, has moved at a "glacial pace" and is a relative latecomer to the world of e-commerce, Ashker said.
But things are moving fast now at HealthAxis.
On Jan. 5, the company sold 80 percent of its traditional underwriting business - worth $129 million in annual premiums - and transferred agents to the Ceres Group Inc., a Strongsville, Ohio, insurance holding company, for $3 million. The remaining 20 percent of the traditional business - a line of funeral and life insurance for military personnel - is also for sale.
Instead of selling its own line of health insurance, HealthAxis is signing up other insurance companies, including Ceres and Fortis Health of Milwaukee, Wisc., to underwrite the policies it sells.
And in the last year, HealthAxis has forged agreements that will cost the company $61 million over the next three years to be the exclusive vendors of health insurance on major Internet gateway sites, or portals, including America Online, Lycos, Cnet and Snap.
On the Internet "you have to be rather aggressive in building a brand name," and that's what such agreements help to do, said Joseph W. Garner, analyst at Emerald Research Co., investment advisers in Lancaster.
Getting in early is also important, said Garner, and HealthAxis has done that. "They have the only site on the Internet right now where you can go through the whole process of getting a policy," he said.
Other sites, such as InsWeb and QuoteSmith.com, refer applicants to traditional brokers. "You're not taking the cost out of the equation," Garner said.
HealthAxis says it is taking that cost out, and Garner said that seems to be the case.
"We've actually gone to their site and got 'click quotes,' and we've compared that to traditional insurance providers. We found the average [premium] to be 15- to 20-percent less" than the comparable providers, Garner said.
The industry's traditional model does not favor the consumer, Ashker maintained. And "agent distribution wasn't going to be the wave of the future," he said.
Unless the agent were a digital one, he said.
The maze of cubicles sprouting inside HealthAxis' building now hold bustling teams of Web designers and Java programmers. Key executives - including chief financial officer Bruce Johnson and chief technology officer John Tulk - were recruited from N2K Inc., the Internet music seller that merged this year with CDnow.
Provident American announced in May that it intended to merge with its subsidiary, HealthAxis.com Inc., and have its shares trade under the HealthAxis name. The merger is expected to become effective in the fall.
And the company's virtual storefront is now a World Wide Web site hosted by heavy-duty Internet servers installed in an upstairs enclosure dubbed "the iron room."
Ashker said he visited about 50 insurance providers in six months to pitch the idea of selling their policies online. Early on, he said, reaction was "lukewarm, at best."
Now, however, "the question is: What is our Internet strategy? Because every company has to have an Internet strategy," he said.
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