Web-Enabling Small Business Insurance Policy Origination

July 2, 2001

Abstract

Boston, MA, USA July 3, 2001

Celent Communications offers the first in-depth look at the potential for selling small business insurance online and six of the new companies that are enabling this market

Web-enabling small business insurance has the potential to make it easier for carriers and agents to reach the what Celent terms the "Upper SOHO" market - the 5.7 million US small businesses with annual revenues between $50,000 and $500,000. 

With average annual insurance spending of $2,000 each, Upper SOHO businesses in the US represent a $11.4 billion market for carriers and agents. But a fundamental disconnect in the current distribution model keeps carriers from being able to reach them effectively.  

While it is profitable for carriers to offer coverage to these businesses, many of which are low-risk, it is currently unprofitable for agents to serve them, since commissions are not big enough to cover the expenses of prospecting and time spent on meetings and quote requests. 

The added efficiencies of the online channel have the potential to resolve this conflict. Celent predicts that 30% of the Upper SOHO market will buy business insurance through online channels by 2005, generating $3.8 billion in premiums.

"Unlike some of the early consumer web insurance plays, small business web initiatives are about making the agency model more efficient, not displacing it," says Celent analyst and author of the report Matthew Josefowicz. "The Online Agencies and Online Agency Enablers are working within the existing structure of the insurance industry, but offering significant efficiencies."

The report examines the market place for web-enabled small business insurance sales, traces the evolution of the marketplace, analyzes the strategic importance of this new channel to agencies, carriers, banks, and portals, and profiles six of the current players in the market place: InsureHiTech, ePolicy, Access CoverageCorp, InsureZone, Insurance Noodle, and Financial Keyosk. 

A Table of Contents is available online.

of Celent Communication's Life/Health Insurance and Property/Casualty Insurance research services can download the report electronically by clicking on the icon to the left.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA July 3, 2001

Return to report abstract  

EXECUTIVE SUMMARY 3
OVERVIEW OF SMALL BUSINESS INSURANCE 5
MARKET ANALYSIS 8
EFFECTS OF WEB-ENABLING 12
EVOLUTION OF WEB-ENABLING SMALL BUSINESS POLICY ORIGINATION 18
THE CARRIER PERSPECTIVE 22
PROFILES 24
  InsureHiTech 24
  ePolicy 25
  Access CoverageCorp 26
  InsureZone 27
  Insurance Noodle 29
  Financial Keyosk 30
THE CHALLENGES AHEAD 32
STRATEGIC IMPORTANCE TO ESTABLISHED PLAYERS 35
CONCLUDING KEY POINTS 37

 

        

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