Small-business owners have become unusually popular in recent months,particularly with online insurance brokers looking for a new marketingniche.Web sites such as ePolicy.com, InsureZone.com and eWausau.com areoffering business owner policies, workers' compensation, contractors'liability and professional liability coverages to what some observersbelieve is a $50 billion market.

"Small business is an area that is very well adapted to Internet-basedcommerce," says Todd Eyler, a senior analyst with Forrester Research,Cambridge, Mass. "It's not a well-covered area by the insurance agent andbrokerage community, largely because it's inefficient to reach thecustomers."

Entrepreneurs are ideal targets for Web-based sales because they worklong hours, says Don Urbanciz, chief executive officer of Chicago-basedInsuranceNoodle.com, which began selling and binding policies over the Webin July.

The company launched its service in Illinois, Indiana, Iowa, Minnesotaand Wisconsin, and expects to roll out nationwide by the end of the year.

Name game

InsuranceNoodle-the name is meant to suggest "some intelligent use ofgray matter" in the subject of insurance-is the creation of Robert Rudy, aconsultant and former group vice president for corporate strategy atChicago-based CNA Insurance Cos., and Richard Madock, former president ofCNA's small-business division.

The company has secured agreements to offer policies from CNA Surety,The Hartford Financial Services Group, American International Group Inc.,St. Paul Fire and Marine Insurance Co. and Zurich U.S.

Visitors logging on to the company's site can enter individualinformation, such as lines of business, their ZIP code and e-mail address.Virtually all of the pages within the site are secure. Policies are boundonline on acceptance. Customers have the option of paying by credit cardonline, being billed directly or arranging for premium financing.

Although the company says its prices are competitive, Urbanciz saysthat cost ranked third in importance among the participants of a recentfocus group that took place in Illinois.

The focus group ranked advice and accessibility ahead of price, twoareas that give InsuranceNoodle an edge over traditional brokers, Urbancizbelieves.

"We've been getting most of our hits after 4 p.m. Central time. About40% in aggregate on the weekends, with Sunday night being predominant," hesays.

In addition to online applications, customers will have a customizedWeb page for managing their accounts as well as access to a call centerwith a toll-free number between 7 a.m. and 11 p.m. Central time, and anonline chat facility for asking questions about their coverages.

Affinity marketing

InsuranceNoodle plans to market its services through affinity group Websites and portals operated by industrial or trade organizations. "That's asmart strategy," says Eyler, who worries that the field may alreadybecoming crowded. "This category has great potential but this is about thethird one that has a similar strategy."

But other experts are not ready to concede the small-business market toonline brokers.

"I still wonder about the convenience factor," says Mike LaPorta ofDeloitte Consulting, Stamford, Conn. "Even if you're dealing with anindependent agent, almost everything is conducted by phone."

Jeffrey Myers, vice president of public affairs for the IndependentInsurance Agents of America, adds, "Business owners don't necessarilypurchase their insurance online. Our members are aware of the Internet, butnobody's ready to push the proverbial panic button."

-Richard Sherer

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