The dot-com meltdown that has rocked retailers, investors and Wall Street is spreading to the insurance industry. In the past few months, InsWeb Corp. acquired QuickenInsurance.com from Intuit Inc., Esurance Inc. was acquired by Folksamerica Holding Co. Inc., while two online companies that provide insurance-related services-Ebix.com and Quotesmith.com Inc.-are in danger of being delisted from the Nasdaq.These events may be disturbing to proponents of online insurance, but they're neither surprising nor devastating. The Web has become cluttered with thousands of dot-coms selling toys, pet supplies or insurance, and consolidation was inevitable. The old adage, "it takes money to make money" is relevant to dot-coms as well, despite what some people may believe. Although it may be true that e-commerce companies have lower overhead expenses and are more nimble than traditional companies, they still need a predictable revenue stream to stay afloat and attract additional capital, and their failure to do so has sunk many of them.

Although venture capital financing has dried up, that doesn't necessarily mean it's time to write the obituary for online insurance firms. Last fall, Esurance aligned itself with a much larger insurance company that possesses the deep pockets that are necessary to fund online ventures. Now comes word that another online insurer, San Francisco-based ECoverage Inc., is searching for a white knight (see page 8).

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