It's all about distribution.

Reaching consumers where they are most receptive and ready toengage increasingly means having multiple channels fordistribution, including robust online-sales capabilities.

Let's take a quick look at somecommunications statistics.

• Wireless penetration in the United States hasincreasedfrom 34 percent in 2000 to 93 percent in 2010, according toCTIA, an association for the wireless industry.

• Use of phones is changing, too, according toNielsen, which says U.S. mobile subscribers exchange an average of357 text messages per month while talking on only 204 phonecalls.

• The younger the individual, the more likely they areto text rather than call.

These statistics probably do not come as a surprise.

Lines of communication are changing. In addition to using mobiledevices, a growing number of adults, and particularly the nextgeneration of homeowners, are conducting their personal businessonline. Regardless of the industry, a robust online presence is amust.

Certain industries made the transition long ago. Stock trading,for example, moved online in the 1990s and created an entirely newconsumer base of individual traders. In the last few years, asonline banking became the norm for many consumers, full-servicewebsites presented myriad options for depositors to expand theirrelationship with their banks.

While insurers have had an online presence for years, theofferings have been somewhat limited. And the concept of a websiteenabling consumers to easily compare homeowner policies andpremiums online is in its infancy.

Insurers' websites generally provide information on the types ofpolicies available and how to file a claim. Some sites lead thehomeowner through the quoting process, but few actually deliver abinding quote upon its completion. Even the most popular insurancewebsites are designed for lead generation and do not allow theconsumer to comparison shop or bind and purchase a homeownerspolicy online.

According to the Wall Street Journal, 92 percent of retail shoppers surveyed have more confidence ininformation obtained online than from an individual or other source(see Jan. 8, 2009 WSJ article titled “New Info Shoppers.”)We should expect no different from homeowners contemplating aninsurance policy purchase.

For most homeowners, the insurance that protects what is likelytheir largest single investment is currently a mysteriousproduct.

Most homeowners don't understand how to select appropriatecoverages or even what their current policies cover. As homeownersshift to making most purchases online, they will look for websitesthat enable them to more knowledgeably comparison shop forinsurance and they will become more sophisticated consumers of theproduct.

A growing number of insurers are realizing the value andnecessity of utilizing robust online distribution systems tosatisfy today's consumers and to generate sales and growth. Whileimproving one's own website helps, homeowners do not want to entera lot of personal information into multiple insurance companywebsites in order to comparison shop. An online insurance agencyenables easier comparison shopping along with educating homeownerson important coverages they might not have purchased in thepast.

For example, online distribution can helphomeowners understand the importance of fully insuring their homesand possessions, and it encourages purchasing enough Coverage A tofully replace destroyed homes in the event of a disaster.

The problem of underinsurance has been rampant in the industryfor over a decade. Marshall& Swift/Boeckh still estimates that more than 60 percent ofhomeowners do not have enough insurance to fully replace theirhomes.

Homeowners can be educated on better ways to control premiums,such as increasing deductibles rather than skimping on theirCoverage A amounts. They can also be educated on additionalcoverages they may want to purchase that do not cost too much andcan give them further peace of mind.

By partnering with an online agency, insurerscan access a valuable demographic of knowledgeable homeowners whowant to fully insure their homes and possessions and who willtherefore be more satisfied and profitable policyholders. Sitesexist today that inform homeowners on the value of proper insuranceand enable them to compare quotes, customize a policy to fit theirneeds, and even purchase a policy and obtain an insurancebinder.

Use of an online agency distribution system offers a number ofother benefits for insurers:

• More accurate data

Applying for a policy online at their convenience, a potentialpolicyholder can access information needed to complete a policyapplication more accurately. Home and policyholder details can beeasily stored and delivered to partner insurers in a formatsuitable for catastrophe and predictive modeling.

• Lower reinsurance costs

Along with underwriting and rating rules, today's insurers needto monitor catastrophe exposure and where they are writing businessgeographically. Online distribution enables geographical portfoliomanagement rules to be automatically implemented for partnerinsurers so they can control exposure and reinsurance costs.

• More sales

There is no question that online sales will continue to increasefor all products, including insurance. Insurers that harness thecapabilities of the Web to make it easy for consumers tounderstand, compare and buy their products are likely to see moresales along with higher premiums per policy.

• Higher retention

Online distribution can enhance the insurance buying experiencefor homeowners and the communication between insurers andpolicyholders. Satisfied customers can easily renew policies yearafter year, remaining loyal to their insurer.

• Higher profits

Faster growth, lower reinsurance costs and higher retention alllead to higher profits for insurance companies.

As noted, homeowners insurance is not sufficiently valued orunderstood by most consumers. Partnerships between insurers andonline agencies can help change that and greatly enhance thehomeowner's insurance experience. An online platform bringstogether a number of disparate, but essential, tools forpolicyholders and is the next step for consumers looking to makeinformed insurance buying decisions.

As online purchasing continues to grow, so too does interestamong both direct writers and independent agency companies inbolstering online sales. Increasingly, insurers are realizing theyneed to be agnostic with respect to product distribution, and theyneed to reach out to consumers in multiple ways.

Enhanced online communication creates a more cohesive andefficient network of insurers and policyholders, providinginnovative insurers with a competitive advantage and helping thembuild more profitable books of business.