update on e-commerce and its use by insurers
DESCRIPTION
Update on E-Commerce and its Use by Insurers. CAS 2000 Spring Meeting Las Vegas Tony Alfieri, eCoverage. Introduction. Insurance industry has survived the onslaught of new technology practically unchanged…until now - PowerPoint PPT PresentationTRANSCRIPT
Update on E-Commerce and its Use by Insurers
CAS 2000 Spring Meeting
Las Vegas
Tony Alfieri, eCoverage
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Introduction
Insurance industry has survived the onslaught of new technology practically unchanged…until now
First it was online trading and other financial services. Now online insurance is expected to take off as well
Who will be the winners and losers?– Consumers will reap big rewards
– New pressures on industry already enduring unprecedented price competition
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
What do the experts say?
"Online offerings are increasingly important to financial services institutions, with consumers conducting a significant and growing percentage of all financial transactions online. There is a substantial opportunity for the player who can put the right ingredients together to create a truly powerful Internet insurance offering.''
Booz Allen & Hamilton
3rd Annual Internet Insurance Survey
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
What are the opportunities?
Recent study by Booz Allen & Hamilton estimates that the internet and technology could cut expense for insurance companies up to 60%, particularly in areas of distribution and customer service
Estimates for online sales vary; recent Forrester report estimates $14B online market by 2004
No dominant online brand today
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
“Online insurance is wide open.”- Ben Black, Harris Interactive
84%
58%
54% 53%
48%46%
42%40%
20%17%
15%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Books Auctions Music/Video Software Hardware Travel Electronics Clothing Toys Health Fitness Insurance
Is there a dominant brand?Among online users, percent who could name a web site by product category
Source: Harris Interactive
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
What is happening today?
Brick and Mortar companies discover the web (finally)
Insurance Marketplaces
New Challengers
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Brick and Mortar Companies
Informational Only
Lead Generator– Application is forwarded to agent for quote
Online Quotes– Referral to agent for binding of coverage
Online Quotes, Binding of Coverage, and Claims– Progressive as an early leader
– Allstate
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Brick and Mortar Companies
General consensus among analysts is that most large personal auto carriers will be offering online quoting within the next 12 to 18 month
Unclear as to how many will be offering coverage binding online during that timeframe
In general, most carriers business plans only consider the web as simply an additional distribution channel
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Insurance Marketplaces Quote aggregators and lead generators
Often more than just personal auto
– Homeowners– Renters– Life– Annuities
Examples:
– InsWeb– Quicken Insurance– Insurance.com– Quotesmith
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
New Challengers
Internet Only Carriers– View the internet as more than just a distribution
channel
– See opportunity to build more efficient ways to sell and service insurance products
– Changing the paradigm of control in the insurance purchasing process
Examples:– eCoverage
– ePolicy
– Esurance
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
A Challenger’s Perspective: eCoverage
Formed about 1 year ago Based in San Francisco Began selling personal auto online in California in
September, 1999 Currently offering auto product in about 8 states Plans to offer product to approximately 25-30 states
by end of Q2 Blue Chip Investors and Board of Directors
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
SOFTBANK Venture Capital
E*TRADE Group
RRE Ventures, co-founded by Jim Robinson III (American Express)
David Coulter, (Bank of America)
Ken Langone, (EDS, Home Depot)
Chris Larsen, (E-LOAN)
Accel Partners
Investors & Board
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Business Model
Issuing Carrier
Brand Name Reinsurer
MGA
Captive
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
What is eCoverage doing?
Complete overhaul of traditional insurance company processes
Building company around the technology and business practices of the internet
Staffing with innovators from within and outside of the industry, willing and motivated to break the mold
Key Point: Innovation can only happen if you provide the proper platform to
support it.
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Three Key Areas:
It is critical that a company have ownership of 3 key areas of the business:
1. Technology
2. Customer Experience
3. Product
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Technology
Core technology developed entirely in-house
Seven patents filed on technology allow for unprecedented flexibility in product and business development
Superior data quality and accessibility
APL not spoken here
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Customer Experience
eCoverage takes responsibility for the customer experience, from quote to claim
Licensed, non-commissioned professionals online or by phone 24x7
eCoverage branded claims process
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Product
Unique sales environment brings new challenges
Current industry products assume agents touch
Proprietary personal auto product designed exclusively for sales over the internet
Superior understanding of data facilitates continuous updating of risk management operations in order to minimize risk and maximize profitability
CAS 2000 Spring Meeting, Las VegasUpdate on E-Commerce and its Use by Insurers
Conclusion: Who will win?
Consumers, for certain (better customer service, lower prices)
Companies who can :
1. Differentiate themselves via Superior Customer Service and real value-added product innovation
2. Leverage new technologies to create more efficient and cost effective processes throughout entire organization
3. Keep up the pace in a continuously evolving environment