Although the handful of commercial property/casualty carriers using online policy processing recognize the technology's limitations, they remain confident that offering online services will improve their competitive position."Last year we quoted about $600 million worth of business online, and we sold $146 million online," says Mark Benson, executive vice president, CyberComp, a Lawrenceville, N.J.-based subsidiary of Reliance Group Holdings. The annual premium for most of those workers compensation policies averaged $10,000.

Because the cost to process that business-particularly the underwriting component-is so much lower, CyberComp is adding real money to its bottom line. "There is clearly a savings," Benson says. "In 1998, we quoted $300 million in business using two underwriters; last year we quoted $600 million with the same two underwriters and this year it will probably be $800 million or $900 million with two underwriters."

But to play in this arena, carriers have to change the way they think, he stresses. "CyberComp outsources lots of stuff. We have 55 employees and 32 of them are marketing people. Show me another insurance company that has that small amount of overhead."

Executives at e-Wausau are silencing the critics by pointing out that the underwriting guidelines contained in the carrier's online system are as rigorous and accurate as those applied to policies underwritten by humans. "We are in a position where we are actually getting better quality business coming through online because each and every application is thoroughly analyzed, including past losses and the potential to incur losses going forward," says Ed Hanlon, managing executive, underwriting and operations, e-Wausau. "The underwriter is always on-it's never a bad Monday or a bad Friday."

Atlantic Mutual executives also express confidence. "One of the greatest fallacies about online insurance is that the business is somehow better, worse or different than that which exists in the offline world," says Jeffrey Behm, an e-commerce manager for New York-based Atlantic Mutual. "There is nothing magic about the Web that removes the need to partner with the right business partners and use careful selection and underwriting criteria.

"If an agent or insurer sets themselves up for a fall by implementing an online solution that does not include good risk selection, they deserve what they get."

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