Insurers Take the Direct Route to New Business

Numerous studies have produced differing results on the seemingly simple quantity of overall Internet users. Trying toestimate how many insurance policy purchases are a direct result of the Internet has proven difficult. The more complex tabulation of the number of wired consumers searching the Web for insurance or even the total number of insurance transactions on the Net, is even more elusive.

A recent study from Middletown, DE-based JCG Limited, an insurance marketing consultancy, has taken a different approach to trying to pinpoint how the Internet and direct marketing is impacting the insurance industry. The report, "Insurance Direct Marketing 2000: A Special Report on the Companies, the Practices, the Standards and the Benchmarks," is based on interviews with approximately 150 sources at insurance carriers and from data compiled from other industry and direct marketing studies, public insurance companies' 10k statements and reports from the Direct Marketing Association, says Donald Jackson, chairman, JCG Limited.

The most notable finding of the report, says Jackson, is the increase in in-force premium as a result of direct marketing efforts by insurance companies. "In 1990, we estimated there was $35.1 billion of direct marketing in-force premium," says Jackson. "We projected direct marketed in-force premium would break $100 billion in 2000 and it looks like the actual total will be almost $105 billion for last year."

Another finding, says Jackson, is the rapid increase in the number of insurance companies that are marketing directly. "In 1990, there were only a few companies that were extensively marketing directly to the consumer," says Jackson. Direct marketing includes mail, e-mail, telephone or Internet marketing. "Today there are more than 400 carriers marketing directly in one form or another," he says.

However, the most talked about direct marketing medium, the Internet, has seen little growth in actual sales, adds Jackson. "Only a handful of companies are using the Internet for actual sales," while most are using the Internet as lead generators, either for an agent or for referrals to call centers. "The conclusion of the report about the Internet is not very encouraging for insurance companies," as far as online sales go, notes Jackson. For instance, only three percent of Internet shoppers are converted into buyers, says Jackson, citing a study from Forrester Research (Cambridge, MA). And the numbers for insurance shoppers are even less encouraging. According the JCG's report, data compiled from an online insurance aggregator's 10k filings shows that only 1.09 percent of completed quotes are actually turned into applications. On the bright side, however, once the application is submitted, 84 percent turn into paid policies.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio