Although the Internet is growing exponentially as a medium for insurance shopping and buying, the vast majority of consumers are still purchasing their policies offline. "When you look at the numbers for the industry, total insurance sold over the Internet is still less than 1%," says Chuck Johnston, vice president and director of Insurance Information Strategies at Stamford, Conn.-based Meta Group, a research and consulting firm.Even Progressive Insurance Corp., Mayfield Village, Ohio, which has seen its Internet sales grow from 6% of net premiums written in the first half of 1999 to 13% in the same period of 2000, still depends largely on its agents who sell nearly 80% of its personal lines business.

Therefore, while there may be fewer agents in the future, they will continue to be an important part of carriers' multichannel strategies-not only because more complex products require an agent's consultation, but because some customers won't use the Internet.

"If you look at the banking industry, one-third of Americans don't even have a bank account," says James Luscombe, a consultant for New York-based PricewaterhouseCoopers. "No matter how strong the Internet gets, there's probably a third of the population who will never be on the Internet," he says. And carriers need a distribution channel to handle those consumers-whether it's the telephone or an agent.

That's why State Farm Insurance Cos., Bloomington, Ill., is proceeding cautiously with its multichannel strategy. "We've tried to be very reassuring to our agents all along," says Robert Reiner, manager of enterprise Internet services at State Farm. "We've been able to work on this incrementally behind the scenes, to work on this slowly to bring everybody along at the proper speed."

Prudential is proceeding with similar deliberation, according to Robert McIsaac, first vice president, technology initiatives, The Prudential Insurance Co. of America, Newark, N. J. "Engaging with the field is very important to what we do," he says. "Although we created online account access for our customers, we gave it to the producer first, and we did it in such a way that it was very easy for them to get to the information. So right away, there was clear understanding of 'what's in it for me?'"

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