At a time when U.S. companies are cutting back on health care benefits and the number of uninsured Americans continues to grow, Web-based companies are stepping up their efforts to attract individuals and small-business owners.It's estimated that 43 million Americans do not have health insurance. In targeting this untapped market, Web-based insurance companies continue to expand their products and service offerings, and are actively pursuing more partnerships with both online and offline insurance providers, financial groups, civic organizations and other businesses.

For example, Atlanta-based SimplyHealth recently joined with Synovus Financial Corp. to develop a private-label Web site and call center operation to be used along with the Synovus Insurance Web site. The private-label service markets health insurance to Synovus' individual and small business customers at its 38 affiliated banks with more than 240 branches in four states.

"We currently have more than 20 partnerships and that number is growing rapidly," says SimplyHealth's CEO Eric Grossman. "Most are co-branded partnerships while others like Synovus are private label."

Another company making waves is Atlanta-based Digital Insurance Inc., which recently expanded its offerings by signing agreements with six additional carriers, including UNICARE and Golden Rule. In business only 15 months, Digital currently provides individual health insurance access in 47 states.

Back in the game

The fact that InsWeb Corp. and eHealthInsurance Inc. have jumped back into the Web-based health insurance arena demonstrates that companies believe the Internet is an excellent forum for people to find and purchase affordable health insurance.

Recently, InsWeb entered into a two-year online distribution agreement with QuickQuote to market individual health insurance.

The new program will expose QuickQuote to InsWeb consumers, while Gold River, Calif.-based InsWeb will get a share of QuickQuote agency commissions from first-time policy sales and subsequent renewals.

The deal marks InsWeb's return to the health insurance market after its partnership with eHealthInsurance ended when eHealthInsurance filed a lawsuit in February against InsWeb.

Vip Patel, chairman of Sunnyvale, Calif.-based eHealthInsurance, claims that sales are growing 15% to 20% each month. He declined to provide sales numbers, but added that 40% of the individual customers who have applied for health insurance through the company's Web site were previously uninsured.

"The key to our success in the individual market has been our services including online applications processing for 7,000 different plans, along with our partnerships with companies such as General Electric, Visa and Bank One," Patel says.

The price barrier

Some industry experts remain skeptical that providers of online health insurance services can reduce the cost of coverage, which is still the biggest hurdle for individuals seeking insurance.

The Kaiser Family Foundation sponsored a recent study in which seven hypothetical consumers "applied" for coverage with 19 insurance companies and HMOs in eight markets.

The applicants were assigned various pre-existing health conditions ranging from asthma to HIV. The study found most of the coverage offered to the applicants had limited benefits and higher costs compared to typical coverages. Geographic location also influenced benefits and price, according to the study's results.

"The insurance e-marketplace certainly improves consumer accessibility, convenience and-to a certain extent-price competition," says Brad Holmes, senior analyst with Forrester Research in Cambridge, Mass. "But public policy and underwriting issues do overshadow the benefits of this improved access to products and services," he adds.

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