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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

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update on e commerce and its use by insurers

Update on E-Commerce and its Use by Insurers

CAS 2000 Spring Meeting

Las Vegas

Tony Alfieri, eCoverage

  • 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
what do the experts say
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

what are the opportunities
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
is there a dominant brand
Is there a dominant brand?

Among online users, percent who could name a web site by product category

“Online insurance is wide open.”

- Ben Black, Harris Interactive

Source: Harris Interactive

what is happening today
What is happening today?
  • Brick and Mortar companies discover the web (finally)
  • Insurance Marketplaces
  • New Challengers
brick and mortar companies
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
brick and mortar companies1
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
insurance marketplaces
Insurance Marketplaces
  • Quote aggregators and lead generators
  • Often more than just personal auto
    • Homeowners
    • Renters
    • Life
    • Annuities
  • Examples:
    • InsWeb
    • Quicken Insurance
    • Insurance.com
    • Quotesmith
new challengers
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
a challenger s perspective ecoverage
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
investors board
Investors & Board
  • 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
business model
CaptiveBusiness Model

Issuing Carrier


Brand Name


what is ecoverage doing
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.

three key areas
Three Key Areas:

It is critical that a company have ownership of 3 key areas of the business:

  • Technology
  • Customer Experience
  • Product
  • 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
customer experience
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
  • 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
conclusion who will win
Conclusion: Who will win?
  • Consumers, for certain (better customer service, lower prices)
  • Companies who can :
    • Differentiate themselves via Superior Customer Service and real value-added product innovation
    • Leverage new technologies to create more efficient and cost effective processes throughout entire organization
    • Keep up the pace in a continuously evolving environment