THE NEW YORK TIMES, SUNDAY, NOVEMBER 15, 1998
By Joseph Treaster
During a lunch break at work this summer, Allen Crane tapped into the Internet on his desktop computer, looking for life insurance.
Within half an hour, Mr. Crane, a recently married computer programmer in Fort Worth, had looked at prices from more than two dozen companies. Later, he talked with his wife, Laura, and then, on another lunch break, went back to an Internet site called Ouickquote and bought a $500,000 policy.
"I liked being able to comparison-shop" Mr. Crane said.
Internet shopping is booming these days, and shares in companies like Amazon.com which peddles books, and Ebay an on-line auction service, are surging. But it is not just books, collectibles and electronic gear that are popping up on computer screens. As Mr. Crane's experience shows, more and more people are searching the Internet for good deals in insurance as well. Forrester Research in Cambridge, Mass., says it expects Internet insurance sales to approach $155 million this year and to soar to $4 billion within five years.
Two years ago, when insurance sales were just beginning on the Internet, about the only kind you could buy was term life, the least complicated form of life insurance. But now, several companies are offering auto insurance over the Internet listing various companies' offerings on a single Web site and some have added homeowners, health and disability policies, too.
Pricing of auto insurance, with its many variables, is hard to translate over the Internet. But because it is mandatory in almost every state, it holds the most potential. "Eighty million households have to buy or renew auto insurance each year," said Lin da Maurer, a spokeswoman for Insweb, an Internet company in Redwood City, Calif., that is betting heavily on auto insurance. "About four million people buy term life." For most people, shopping for insurance is not quite onerous as major surgery. But it is a long way down the pleasure list from planning a vacation in the tropics. Many customers say they just want to see what is available, know how much it will cost, make decisions and pay.
Where to Shop Some sites that offer multiple listings for insurance:
- QUICKQUOTE - https://www.quickquote.com
- INSUREMARKET - http://insuremarket.com
- QUOTESMITH - http://quotesmith.com
- INSWEB - http://inssweb.com/
- ITECHUSA - http://wwwitechusa.com
- ANSWER FINANCIAL - http://www.answercenter.com
In about an hour, Shirley Mathews, a retired commercial insurance administrator in Cincinnati, lined up full coverage for the three cars that she and her 28-year-old son drive. She got a price of $1,400 a year, $300 less than for her current policy.
Ms. Mathews is an experienced Web surfer. But it still took a while to find a distributor in her case, Insweb.com. Punch in the words "life insurance" or "auto insurance".
Another company that combines research on the computer with an agent's advice, Answer Financial Inc. in Los Angeles, sells exclusively through workplace groups. It offers life, auto and homeowners insurance from 55 companies.
Right now, the Internet can handle most of those desires for comparison-shopping. Closing the deals is another matter few can actually be completed on line. And most companies still refuse to lop off the commissions they would otherwise pay an agent.
Information on life insurance seems easiest to come by. Customers can see a wide range of offerings and choose coverage with the click of a mouse. But customers must sign and return an application, and the policies generally will not take effect without a visit from a paramedic who takes blood and urine samples and checks blood pressure.
For other insurance, Internet companies are not yet able to provide more than a handful of prices. Shoppers often have to wait for prices in a return E-mail or phone call from an agent. Even so, some people and hundreds of Internet sites will pop up, representing individual companies or agents, distributors with multiple listings and billboards. Without an Internet address from a news article or an advertisement there is little alternative to trial and error.
"That's one of the biggest problems with the Internet" said Dan Wager, an insurance agent who runs Quickquote in Incline Village, Nev., which provides prices for 28 companies. "But it's still a lot better than going through endless interviews with agents who typically represent only one or two companies."
Larry Laurence, the chairman of Itech Automated Lite Insurance Quotation Systems in Point Richmond, Calif., which sells policies from 60 companies through a combination of the Internet and agents, warns that shopping for life insurance by computer is not without pitfalls. People with medical conditions like high blood pressure, for example, are apt to apply for the lowest priced coverage. And then, when they are turned down, many will accept a more expensive policy.
To be sure agents can be helpful. But Jay Angoff, a former Missouri insurance commissioner, cautioned that agents will be agents, however well intentioned. "The legal duty of the agent to the customer is very, very minimal" he said. "The agent does not have a duty to inform the customer about other coverage that is available or that might be beneficial. The agent is the company's agent and not the customer's agent."
The Internet, of course, is hardly going to make agents disappear. Steven Aldrich, the president of Quicken Insure Market in Alexandria, Va., sees a combination of machines and agents well into the future. "About a third of the people are going to be very comfortable buying on line, without any human contact" said Mr. Aldrich, whose company is owned by Intuit Inc., the financial software maker. "Others are going to be happy to finish up with a telephone conversation. And another third are going to use the Internet to find an agent who will walk them through the entire process.";