Within the last 18 months, the insurance industry has begun to take seriously online distribution of retail products. The result has been a proliferation of approaches to product distribution using the Web. These activities have generated a huge amount of interest among agents, carriers, and the press.
This Research Note categorizes current approaches to Web-based distribution and explains why this channel has generated such great interest. TowerGroup compares insurance products and the types of online retail products banks and brokerages offer. The distinctions we identify are used to predict the future of online insurance sales and the functionality insurance companies must emphasize in their online offerings.
Additional Information
Highlights
During the past 18 months many influential companies in the insurance industry have begun to take the Web seriously as an alternative channel of distribution for selected life and personal lines products. The result is a proliferation of insurance-related Web sites offering a wide variety of functionality to the retail consumer.
This functionality may be constrained by the idiosyncrasies of existing IT infrastructures, particularly at the traditional brick-and-mortar insurers. However, new business models are establishing themselves that have the potential to revolutionize insurance use and distribution.
The new channel is altering the traditional role of the insurance agent and affecting the economics of distribution of certain lines of insurance. However, in many other lines, the agent’s role will remain viable, and the Internet will ultimately prove to be a boon to efficiency of insurance distribution.
Even the most aggressive projections for growth of Web-based distribution of insurance products predict that the share of overall premiums likely to be generated by Web sales in the next five years will be relatively small, and only in selected lines. This TowerGroup Research Note examines four reasons such an ostensibly small change elicits such a great deal of attention in the industry and the press that covers it.
Regardless of the resounding success of the Web in the distribution of retail banking and brokerage products, the insurance policy is a fundamentally different product, and this new channel will be used differently in insurance than in the rest of the financial services industry.
(0 items)
