According to Nielson Online, 17 million consumers conducted insurance transactions online in the last six months (purchased a policy, filed a claim, or paid a bill). In addition, 16 million consumers shopped online for life, auto, health or home insurance but did not buy online. And, J.D. Power & Associates reports that as of 2008, sales transactions on the Web accounted for 21% of all new customer personal insurance sales.

Online marketing is a critical component of any insurer's consumer-focused customer acquisition strategy. For direct sellers, this means direct online sales. For agent writers, it means capturing those online shoppers and directing them to the agent channel. Insurers are actively investing in their own Web sites to capture these shoppers, but another important element in reaching online shoppers is through insurance aggregators. Aggregators draw consumer traffic by providing easy comparison shopping experiences, allowing consumers to compare quotes from multiple insurers without visiting each one individually.

From a consumer's point of view, aggregators offer convenience, speed and anonymity. However, it is at the shopping stage that the aggregators bring the most value to both insurers and consumers.

There are several different business models used by aggregators. Most use some combination of these models.

Some aggregators, such as Solon, Ohio-based, Darien, Ill.-based Inc. or Encino, Calif.-based Answer Financial Inc., are licensed insurance agents. They use an online sales platform and expend significant marketing dollars to drive potential customers to the Web site. They can quote, bind and issue the policy directly, and earn recurring commissions. Commissions and incentive compensation are negotiated individually with each carrier.

From the insurer's point of view, these "aggregators" are really just agencies. The fact that they happen to market and possibly transact online is immaterial to the carrier's operations. They receive completed apps from a licensed agent and process them through normal channels.


Some aggregators, such as Denver-based NetQuote Inc., Englewood, Colo.-based Insureme Inc. or Gold River, Calif.-based InsWeb Inc. obtain leads from their Web sites and then sell to agents, or to carriers that handle sales, closing and fulfillment. These aggregators are typically paid a lead fee based on the line of business and the quality of the lead. Non-standard auto, for example, or Florida homeowners, doesn't command as high a price as standard auto or homeowners in non-cat prone states. Leads may be sold in small quantities, or may be sold in a large block. For example, a captive agency carrier may purchase a large number of leads and distribute them among their agents to close. An individual agent or agency may purchase a few leads a day. Lead brokers sell the leads multiple times in order to maximize revenue.

Getting value out of working with a lead broker requires insurers that write through the agency channel to have a robust lead-tracking system to make sure leads are being acted upon.

Some aggregators generate revenue by driving volume to an insurer's own Web site, or even to another aggregator's Web site. They may act as an affiliate for an existing aggregator - bringing in traffic and selling it to the aggregator. Examples include Woodland Park, Colo.-based or El Dorado Hills, Calif.-based IntelliQuote Insurance Services. Or they may be existing aggregators that quickly segregate their traffic to identify those that meet their carrier's underwriting requirements. Those that don't meet the underwriting requirements are shown the logo of another potential provider. If the consumer clicks through, the aggregator is paid a small fee. Or they may show the logo of a carrier on another page of the Web site, again, being paid a small fee if the consumer clicks through.

Working with traffic brokers can be an effective way to drive volume to an insurer's own Web site.

Aggregators have a number of unique sales and marketing initiatives that supplement direct online marketing: Reach new customers who aren't interested in your brand. There is a group of prospects who truly are indifferent about who their carrier is. They are price-conscious and are looking for a good deal. That group searches out aggregators to comparison shop.

Leverage the marketing skills and budget of the aggregator. Internet marketing can require sophisticated skills. Often, insurance carriers have more knowledge of traditional marketing and are only beginning to develop internet marketing capabilities.

Control brand impressions. Because aggregators typically have the ability to screen out those customers that the carrier would normally decline, the consumer never sees the brand and is never turned down.

The online marketplace is large and skews to a slightly more affluent and educated group than the general population. Aggregators play a unique role in attracting those customers who prefer to comparison shop online. Their marketing savvy allows a carrier to gain access to a growing market segment they might otherwise miss. With multiple models available, carriers can find ways to use aggregators and preserve their current channels, keeping the agents in the financial and logistical loop.

Aggregators have a variety of resources available to help carriers, ranging from technical support for getting online to training programs for agents. Speedy response matters for this channel. Carriers providing leads to their agents will want to use lead-tracking tools to assure fulfillment processes meet customer expectations.

Consumers continue to improve their comfort using the Internet to find information, guidance and products. While some want to purchase online without personal guidance, others want to shop and have an agent help them afterward. Those carriers that can provide purchasing options will have a broader ability to access a wide spectrum of the marketplace. Conversely, carriers that don't provide a purchasing option for online buyers are missing out on more than 20% of the available marketplace.

Karlyn Carnahan is a principal in New York-based Novarica's insurance practice. She can be reached at kcarnahan

(c) 2009 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

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