In May 2001, eWausau.com, the Web property serving small-business customers developed by Wausau, Wis.-based Wausau Insurance, was shut down after executives at the company realized that small-business owners were reluctant to use the Web to research and shop for insurance.The company shut down on the heels of consummating a strategic alliance with Atlanta-based InsureZone, a partnership that would expose eWausau to even greater distribution opportunities than it could muster alone. But eWausau is now gone, and InsureZone-a startup provider at the time-carries on the legacy.

This development served as a precursor to a third-party distribution shakeout that occurred in the small-business insurance space.

With the field whittled down, the distribution outlets that remain have pumped capital into their operating models and appear to have settled in for the long haul. The fact that they've been able to attract top-name, small-business insurers has helped their cause immensely.

Three of the core players entrenched in this space include: AgentSecure, a property of InsureZone Inc.; Chicago-based InsuranceNoodle, which serves the market along with its recently-acquired InsureVianet property; and Carpentersville, Ill.-based Financial Kiosk.

To increase it scale and leverage position, InsuranceNoodle this spring created a new holding company, InsuranceVianet. The holding company was formed to provide overall guidance and governance for its two subsidiary operations, InsuranceNoodle and Bloomfield, Conn.-based InsureVianet. InsuranceNoodle and InsureVianet (which was acquired by InsuranceNoodle in January) are strategically positioned for future growth, says Don Urbanicz, CEO of InsuranceVianet.

"InsuranceVianet is now poised to review and integrate additional business opportunities, such as new joint ventures and acquisitions, that will enhance and expand the online products and services InsuranceNoodle and InsureVianet offer to small businesses and commercial insurance agencies across the U.S.," says Urbanicz.

InsuranceNoodle was laying its foundation about the same time in 2000 that Access CoverageCorp, Charlotte, N.C., was establishing its own. CoverageCorp was designed as a provider of Internet-based business insurance technology, providing solutions for carriers, brokers, and managing general agents. The company's leveraging tool was its patent-pending application, Intelligent Interchange, which was built on a single-entry multi-carrier platform designed to help users streamline quoting, underwriting, and other critical functions.

But these days, CoverageCorp-seeing the handwriting on the wall-opted to shift its efforts to licensing its Intelligent Interchange technology to insurers and other users, rather than distribute products and services. Another provider that launched in 2000, New York City-based CoverageConnect, raised two rounds of capital in mid-2000 and eventually succumbed to the mounting competition.

As the new order of providers for small-business insurance settle in, the programs have identified agents as the center of their distribution universe. It reinforces the notion that small-business owners would eschew going to the Web to search for insurance. But a word to the wise, industry participants say, is that it's still essential to enable an owner to use these services to accommodate the small percentage that find it meaningful.

"We provide the business owner an opportunity to go on our site and seek their coverage needs," says Kathryn Emmerson, CEO of InsuranceNoodle. "However, we found that this is not a priority for them. Most of them will call or e-mail their agent. The consensus seems to be that they want to go through their trusted advisor for these needs. Most of them don't have the time to become experts in business insurance."

The Hartford Financial Services, one of the leading providers of small-business insurance via its Spectrum package, concludes that while most small-businesses don't want to get into the heavy-lifting of acquiring business insurance, they still want to perform the preliminary legwork.

In response, the Hartford, Conn.-based company offers an Internet site located at www.sb.thehartford.com, which enables owners to conduct a preliminary needs analysis prior to contacting an agent. "The site is geared toward entrepreneurs," says Sue Honeyman, a spokesperson for The Hartford. "It's very helpful because it translates insurance jargon into plain English. If a small-business owner can conduct this research, this eases the work for the agent, who can then proceed to return a quote much quicker," she says.

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