Aggregators Beef Up Tech For Survival
Awarning in a 2001 Meridien Research study that the ranks of onlineinsurance aggregators would be thinned unless those organizationsbeefed up their technology and offerings to consumers, appears tohave been heeded.

Aggregators, aware of their shortfalls, have initiated changesthat seem to have firmly established their presence.

Agents and brokers, now accepting this marketing technology, arealso claiming their share of the business, according to industryexperts.

Stephen Ross, analyst on a customer relationship management teamat Meridien, based in Newton, Mass, said insurance industryaggregators are seeing “a pickup of traction.” The insurancesegment, he said, “is starting to catch on to the idea of a[customer relationship management] strategy and the technologysolutions that support that strategy.”

According to Mr. Ross, the Internet “is a viable means todistribute products,” though not as a unique business model.

“There is still an increase in volume with respect to [online]insurance sales, auto in particular, and we expect it to increase,”he said, adding that much of the increase will be the result ofadded services.

Last year, Meridien found that aggregators “were missing theclose, or the ability to execute online in real time,” Mr. Rossnoted. These capabilities now exist, “but the consumer still willnot necessarily be the one to take advantage of that. It will bethe agent or the advisor who will execute” the sale, heexplained.

Lou Geremia, president of Insurance.com, headquartered inNewton, Mass., said his company was established in 1999 and isbacked by Fidelity Investments.

Insurance.com, he said, “made some big plays early last year” toexpand distribution, “which means relationships with big portalslike AOL, MSN, Yahoo and Google.” Since the expansion, he said,“our business has more than doubled across the board.” He addedthat Insurance.com brings in more than a half-million visitors eachmonth.

Auto remains the most popular online insurance to buy, Mr.Geremia said, “because people have to have it.” Another factor israte discrepancies in auto insurance, “especially now that somecarriers have increased rates.” Insurance.com, he noted, represents10 core carriers for auto insurance in most states.

These include Travelers, The Hartford, Met Life and LibertyMutual. Term life is another big seller and interest in health isalso high, Mr. Geremia stated.

The challenge aggregators now face, Mr. Geremia said, is tobring in traffic “at a cost that enables you to make money from afulfillment perspective.” Aggregators operate by selling insuranceand earning a commission or a lead fee, “depending on your businessmodel,” he explained. Marketing partners also must be paid forbringing potential customers to the site.

Business has steadily improved for some aggregators, he said,because of bigger marketing relationships that are beingformed.

Mr. Geremia noted that closing techniques online have alsoimproved over last year, because of increased telephone support.Insurance.com, for example, now has “buy online” capabilities withmost carriersenabling a sale to be closed with a credit card, “muchlike Progressives Web site has been offering over the last fewyears,” he said.

Progressives Web site, he added, “provides a good benchmark interms of the success” and possibilities of online business.

“Meridien said there will be winners and there will be losers,”Mr. Geremia said, referring to the aggregator survey. “I think overthe past several years, the firms that haven't been successful tooka lot of the carriers' time.” Now, he said, carriers are focusingon one or two of the largest aggregators.

Mark P. Guthrie, president and chief operating officer ofSacramento, Calif.-based InsWeb, said that aggregators are “here tostay.” Relationships with carriers have matured to the point that,“we feel like we are part of their growth and the days ofexperimenting with aggregators, from a carrier perspective, aregone.”

InsWebs model, he explained, is “consumers and insurancecompanies with us as facilitators in-between.”

Through the first two quarters of this year, InsWeb hasexperienced “record” growth, Mr. Guthrie said. “From ourperspective, it's probably around 20 percent. It's a lot ofgrowth.”

That number translates to “tens of thousands and sometimeshundreds of thousands more consumers coming to InsWeb.” But thosenumbers are “still small if you think about 130 million householdsout there,” he said.

About 80 percent of consumers visiting InsWeb are interested inpersonal lines auto insurance, 5-to-10 percent are interested interm life and 2-to-3 percent are interested in the “other productscategory,” which includes homeowners, renters, condo and healthinsurance, Mr. Guthrie explained.

Hits to the site are up “because of a combination of things,” henoted. More people are familiar with the Internet and are“comfortable with self-directed household management,” heexplained. Also, higher rates from some carriers are anotherfactor, “and I think it is becoming easier to find the playersonline than in the past, in that there are fewer [aggregators] outthere.”

InsWeb's marketing techniques haven't changed much, said Mr.Guthrie. InsWeb markets through online messaging to consumers andin the past has used other techniques, such as static banner ads.Now the organization uses marketing technology available fromYahoo, Lycos and other search engines, he noted.

In general, he said, “we have been consistent with our belief ofhaving InsWeb be there close to the life event that is makingsomebody think about insurance.”

The main improvements to closing techniques are actually off theWeb, Mr. Guthrie said. Though the expectation was that customerswould want to close a sale online, “I think we have all seen therealities of that.”

Because of the complexity of insurance, he explained, callcenters have become more important. “There has been a lot ofimprovement in call center technology and techniques,” so there isno longer “a giant gap between a Web experience and a telephoneexperience.”

InsWeb, he added, represents more than 40 carriers and offers avariety of insurance products.

And what does Meridien see in the future for aggregators? “Idon't see [aggregators] being such a viable model in the long-run,”Mr. Ross said.

“Why? Because you have the agent, which is still the mostsought-after channel provider, and you have the carriers, whichwill start taking advantage of aggregation capabilitiesthemselves.”

Similar to the dot.com bust of the late 1990s, he said, “I seethat trend happening to some insurance aggregators, if they rely onsimply the Internet as their sole means to attract revenues.”

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, July 1, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.