Tuesday, November 17th
8:15 a.m. - 9:15 a.m.

Building E-Commerce: On Time,
On Line and On Target

-- Richard Walker, KPMG Peat Marwick

Insurers need to have a presence on-line to remain competitive, said Richard Walker, senior manager of electronic commerce consulting with KPMG Consulting of Boston.

"It's like the Oklahoma land rush," Walker said. "Lots are being drawn and people are rushing in. Nimble companies are grabbing that space faster. With deregulation and competition, your market is being cannibalized."

Walker spoke Tuesday at Fulfilling the e-Promise, the A.M. Best Co.'s annual insurance information management conference in Boston.

By 2000, about 140 million people will be using the Internet. Per person spending on the Internet will grow by 600% over the next two years, Walker said. There are currently more than 8,000 insurance-related web sites, and the World Wide Web is doubling in size every 52 days, he said.

Walker highlighted some findings of a recent study by Limra International, a Windsor, Conn.-based marketing and research organization: 35% of insurance companies have web sites to promote education and provide information about their companies; 25% want to promote name recognition; 11% are interested in customer service; 8% are developing leads for producers and only 4% are doing direct sales.

Walker said companies shouldn't worry about being able to sell every conceivable insurance products on the web site immediately.

"Don't go for the big bang waterfall solution," Walker said.

He said once companies establish a Web presence, they can take baby steps to build their Web offerings. He noted not all insurance products, such as group universal health, are well-suited for the Web.

Auto insurance is posed for Internet growth in sales. About 7.5% of new policies are expected to be sold via the Internet by 2000 and premiums from the Internet are expected to increase from $21 million in 1997 to $850 million in 2001.

Homeowners insurance's growth is likely to be slower because of a slower churn, Walker said. It's estimated that homeowner premium generated from the Internet will grow from $1.1 million in 1997 to $152 million in 2001. Term life insurance premiums generated from the Internet are expected to grow 11%, Walker said.

However, Walker said the Internet is more than a gateway to new clients.

"The greatest impact of the Internet on the insurance industry until 2000 is not the method of selling as much as the method of delivering service to customers after the sale," Walker said.

He said producers would be happy to save time by dealing with carriers after the policy has been sold through electronic communication instead of by phone or paper.

"Post sales service (through the Internet) is good for agents who don't want to deal with that because they don't get paid," Walker said.