Although a new study suggests that sales of auto policies via the Internet will continue to flourish, only a few Web site aggregators-those that bring a "supermarket-style" approach-will survive in the long haul.The study, by Newton Mass.-based Meridien Research Inc., concludes that the influx of Web-based aggregators selling auto insurance is making the field fiercely competitive, and will force some companies to fold or consolidate with other players.

The ability to enable consumers to purchase coverages online and to cross-sell other products such as life and health polices will be critical to the success of online aggregators, according to the Meridien report, "Auto Insurance Aggregators: On-Ramp to the Internet."

As competition continues to become more fierce, aggregators must be prepared to "play hard, increase brand recognition and customer loyalty, and attempt to carve out their niche," the report states.

"The jury is still out on the future of aggregation sites themselves," says Dave Potterton, Meridien's director of research. "The ones that survive will probably be sites that offer financial advice and financial services with insurance as part of the mix."

The report notes that less than 20% of auto insurers currently have the ability to sell policies online, despite the fact that Americans spent more than $79 billion on auto insurance in 1998.

"Auto insurance is typically a one-time purchase, with annual renewals throughout the life of the car," the study notes. "As a result, aggregators do not have many opportunities for repeat business."

Amid the cloak of caution cast over the field by Meridien, however, some aggregators are extremely heartened about their futures. One of them, Answer Financial Inc., has roared to prominence during its debut in current rankings of Internet-based electronic insurance marketplaces by Gomez Inc., Waltham, Mass.

Encino, Calif-based Answer Financial ranked second in overall Web site quality as a facility for buyers to get up-to-date rate information on auto, homeowners, life and health insurance. Its ranking was bested only by Sacramento, Calif.-based InsWeb Corp., the current stalwart among site aggregators.

Charles Schwab model

"Educational information is voluminous for all product types, and the site contains numerous tools for estimating an appropriate level of coverage," says Gomez in its explanation of the Answer Financial ranking. Gomez also lauds Answer's 24-by-7 customer service capabilities.

Answer Financial's strategy is to use a "Charles Schwab-type mold" that enables the consumer to get information about insurance, get their questions answered, assess their needs and purchase coverage online, says Steve Kroll, the company's senior vice president of marketing.

For example, many consumers don't know if they have the correct amount of coverage or they don't understand the advantages of higher deductibles and co-payments. That information void is what the Answer Financial site attempts to fill, Kroll explains. Answer Financial is a licensed insurance seller in all 50 states and it employs licensed insurance agents who perform many of the same functions as an independent agent-even binding auto coverages over the phone, Kroll says.

John Maes is a Chicago-area freelance writer.

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