| By Jim Bruene on May 15, 2000 9:46 PM | Comments (0) |
Similar to electronic bill payment, online distribution of insurance has a promising future, but results so far have been disappointing, especially to investors. Witness the slide in share price at popular provider: InsWeb, whose stock has fallen from its July 1999 peak of $44/share to the $2.50/share (5/31/00). But also like electronic bill payment, the economic advantage of Web-based delivery make online insurance a sure winner. What we don’t know is whether it will be a few years or a few decades for it to take hold (Table 3).
Table 1
Web Traffic at Top Insurance Sitesunique monthly visitors (thousands)
Source: PC Data Online www.pcdataonline.com ; Gomez Advisors Spring 2000 Insurance Scorecard; rank among 56 providers, www.Gomez.com ; 5/00 n.r.=not rated.
Table 2
Online Insurance Application Volume, 1999application volume
| Company |
Q3 |
Q4 |
Qtrly Growth |
|||
|
Num |
Share |
Num |
Share |
Num |
% |
|
| InsWeb |
680,000 |
34% |
610,000 |
27% |
(70,000) |
(10%) |
| Quicken InsureMarket |
450,000 |
23% |
460,000 |
20% |
10,000 |
2.2% |
| QuoteSmith |
250,000 |
13% |
390,000 |
17% |
140,000 |
56% |
| Others |
620,000 |
31% |
840,000 |
37% |
220,000 |
35% |
| Total |
2.0 mil |
100% |
2.3 mil |
100% |
300,000 |
15% |
Source: Piper Jaffray, 4/00
Table 3
Online Insurance Sales by Type, 1999 – 2003$ in millions
| Type |
1999 |
2000 |
2001 |
2002 |
2003 |
CAGR |
|
|
$ |
% Tot |
||||||
| Auto |
$194 |
75% |
$351 |
$681 |
$1,419 |
$3,198 |
200% |
| Term Life |
$52 |
20% |
$78 |
$130 |
$256 |
$601 |
180% |
| Home |
$11 |
4% |
$24 |
$53 |
$128 |
$335 |
235% |
| Total online |
$257 |
100% |
$453 |
$864 |
$1,800 |
$4,130 |
200% |
| Influenced online, sold off-line |
$1,640 |
n/a |
$1,850 |
$2,640 |
$3,900 |
$6,970 |
143% |
| Grand Total* |
$1,900 |
n/a |
$2,300 |
$3,500 |
$4,750 |
$11,000 |
155% |
Source: Forrester Research, 1999
*In comparison, total industry premiums were approximately $700 billion in 1999
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