December 7, 1998
Health Insurance Companies Join
Auto, Life Insurers on the Internet
By TERRI CULLEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
Consumers have long embraced the idea comparison shopping on the Internet to get the best price for auto and life insurance policies. Now that health insurance companies are finally embracing the Web, finding the right health-care plan just became less of a chore for individuals and small businesses.
On Thursday, Healthaxis.com, a unit of Provident American Corp., launched a health-care insurance Web site that will not only provide visitors with free insurance product and health information for insurance providers in 19 states, instant health-plan price quotes and a customer hotline, but will also allow consumers who apply online and purchase plans to pay premiums, update personal information, and track billing and claims status on its site.
What makes the Healthaxis.com site different from other online insurance agents is its use of the Internet as a complete distribution channel. Consumers have long been able to plug in pertinent information about themselves and their health-coverage requirements on online insurance agencies such as Quotesmith Corp. and Insweb Corp., and instantly receive price quotes and policy information from a number of health insurance companies for purposes of comparison shopping.
But that's where the interactivity ends. The actual application process takes place offline. After a user has chosen a plan, application forms are mailed to the user days later to be filled out once again, by hand, and mailed back to the underwriter for approval.
Resources
Healthaxis.com
www.healthaxis.com
Quotesmith
www.quotesmith.com
Insweb
www.insweb.com
Quicken Insurance
www.quicken.com/insurance
An individual shopping for auto and life insurance is currently able in many cases to conduct the complete process -- from application to premium payments -- via the Internet, says Michael Ashker, president and chief executive officer of Healthaxis.com. His company's mission is to make the process of choosing and purchasing health insurance almost entirely electronically based.
"On our site, once the decision is made you go right to the online application, and that goes directly to our underwriting staff that can literally approve it right online," he says. "If your application is questionable for any reason or we have additional questions about your personal information, you'll be contacted by phone."
The site provides quotes from health-benefits company First Health Group Corp.'s preferred provider organization network, and plans that offer complete freedom in choosing their physicians and hospitals. The site currently offers health insurance quotes for individuals in Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Missouri, Mississippi, Nebraska, Ohio, Pennsylvania, Tennessee, Texas, Virginia and West Virginia.
The Web site will be the exclusive direct marketer of individual and small-group health insurance on several Internet portals, including America Online Inc. and Lycos Inc.
Even as sales growth for auto and life insurance has exploded online, health insurers have remained wary of the Web, with only the largest players incorporating the Internet into their business strategy. Even then, many set up Web sites that primarily serve as public relations and marketing tools, including company contact information and physician directories but no access to personalized billing or account information.
"The industry has moved at a glacial pace," said Healthaxis.com's Mr. Ashker. "The thing most consumers want is to conduct the entire process of researching and buying insurance online, and insurance industry has been slow to address that."
Indeed, a February 1998 survey by consulting firm Booz Allen & Hamilton in Chicago found that 76% of insurance companies say their consumers want online quotes, and 60% of those carriers said their consumers want to purchase insurance online.
The reasons for the health insurance industry's hesitancy have been many. Steven Aldrich, president of Quicken Insure Market in Alexandria, Va., says one of the main reasons online insurance agents have been slow to include health insurance is the incredibly complex nature of the products. "There's a lot of data input and variables to consider, unlike a product that's more straightforward like term life, which was the first to take off on the Internet," he said. "But as Web technology has become more sophisticated, it's become easier for agents to create models that can be accurately priced."
Robert Bland, president of Quotesmith in Darien, Ill., adds that regionalism has also been a hurdle. "Not all companies sell in all states," he says. "The prohibitive regulatory environment in states such as New York and New Jersey deter companies from selling insurance, and thereby limit the amount of choices you might get in you lived, for example, in states like California, Ohio, Illinois or Texas."
But companies such as Healthaxis.com are finding their way around such obstacles, and many experts believe in as little as five years sales of health insurance policies online will far outstrip that of either auto or life insurance. Each year, Americans spend more than $240 billion on personal lines of insurance, according to A.M. Best, an insurance-rating and information service based in Oldwick, N.J. Of that amount, Internet insurance sales are expected to approach $155 million in 1998 and to gradually rise to $4 billion within five years, according to research firm Forrester Research of Cambridge, Mass.
And Mr. Aldrich of Quicken Insure Market says that as the population ages and people become more comfortable with shopping for basic health insurance online, the types of policies available will greatly expand. "Boomers are going to find that besides primary health care they're going to need other policies to fill coverage gaps," he said. "We've seen a tremendous consumer interest in disability and long-term care insurance."
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