Although the insurance market has proved to be a hard nut to crack for dot-com startups, that hasn't deterred new entrants from trying to gain a foothold on the Internet.One of the more recent entrants is NetInsurance, an online insurance agency that, claiming to be the first operation of its kind, offers customers the ability to comparison shop for and buy auto insurance in a single online session.

The emerging San Francisco-based firm, which is licensed as an agency in 44 states, has signed up 13 insurers, including Travelers, Progressive, The Hartford, Safeco and Kemper. Furthermore, NetInsurance has established online distribution channel partnerships with at least 11 firms, including BuyerZone.com and Business.com.

"Although some Internet-based firms offer varying degrees of electronic shopping capability, NetInsurance is the only company that has automated the entire transaction process," says Rob MacKethan, NetInsurance president. "Nobody else is doing this on a national scope in the personal lines space."

Quick and easy

Using NetInsurance, (www.netinsurance.com), a prospective customer can review an average of six premium quotes.

The NetInsurance Web site asks only for upfront information such as name, vehicle information, number of drivers to be included on the policy and driving record. More probing questions come later if the vehicle owner likes a particular quote and wants to apply for coverage.

If the terms are acceptable, the customer is prompted to supply a credit card number for a premium deposit and the transaction is concluded, typically in less than 20 minutes, MacKethan says.

NetInsurance employs a staff of licensed insurance agents, and the firm is paid regular agent commissions for sales and renewals. Insurers like that arrangement because they avoid the lead fees normally required of them by Web site aggregators on top of commissions, MacKethan says. "We are paid only for policies that are sold and wind up being issued."

Food for thought

Insurers, also aware of the public's continuing hunger for complete Web-based shopping, say MacKethan's firm will represents a step toward providing that capability. "Consumers want to make choices about purchasing their insurance and financial products," says Tom Mowry, vice president of marketing and agency personal lines for The Hartford Finanial Services Group Inc. "We want to be supportive of agents who want to develop business in different distribution channels."

Progressive Insurance Group also thinks NetInsurance will help it cultivate the increasing potential of Web-based sales. "We want to provide insurance when, where and how the consumer wants to buy it," says Michelle Balthazar, regional sales manager.

Some industry observers say NetInsurance has done a better job of carving out a market niche and building a solid distribution network than its predecessor insurance dot-coms and Web site aggregators. Using banks and auto sales Web sites is a "good idea," says Richard Roby, director of insurance for TowerGroup, a Needham, Mass.-based consulting firm specializing in financial services technology. "It's a natural fit to buy insurance at the same time you're buying a car and trying to get financing for it," he says.

Todd Eyler, senior analyst for Forrester Research, Cambridge, Mass., says he also likes the new firm's niche marketing concept but adds that he would have been more impressed with NetInsurance as a technology advancement had it hit the market a year or so sooner. "NetInsurance might be a credible player now, but I don't see this as a killer application," Eyler says.

John Maes is a freelance writer based in Elk Grove Village, Ill.

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