InsWeb: Too High a Premium?
Susan J. Marks
Online finance companies are setting themselves apart from the Internet pack, moving into steady profitability in fields like mortgages, tax planning, and even banking (see BW, 4/22/02, "Online Finance Hits Its Stride"). But one sector of this business that has stubbornly resisted black ink is insurance. And a look at InsWeb.com, a marketplace for competing quotes on all kinds of different insurance, illustrates why it's a field that, so far, hasn't worked.
InsWeb.com can save you money on insurance -- but at a price. Filling out applications for quotes online is cumbersome and sometimes confusing. The site also needs better tools to help consumers compare and understand the choices. By definition, what InsWeb is trying to do isn't easy. Finding the right insurance coverage at an affordable price -- whether for your health, life, auto, or home -- is a daunting task.
The site did turn up less expensive insurance coverage for my car, health, and even life than I have now. But it didn't do nearly enough to explain the policies to me, so I couldn't be sure that the cheaper quotes I received were truly for comparable coverage. It was especially hard when I tried to shop for health insurance.
NOT AN EASY E-FIT.
InsWeb is a marketplace for more than 40 insurance carriers. It makes a big chunk of its money as an agent for 11 auto-insurers and as a conduit for 25 more. The firms for which InsWeb is an agent pay it a commission. The others simply pass InsWeb a fee for the lead and attempt to close a deal with you directly, usually offline.
From the categories it offers, I found InsWeb most adequate for seeking car insurance. The site beat the price I pay now by hundreds of dollars. And it did an adequate job of giving broad advice. For example, it recommended a relatively large auto policy because I own a home and have substantial (at least to me) assets. But the application still was tedious and troublesome, especially since my information didn't always conform with the multiple-choice options offered as answers to some questions.
The real problem may be less InsWeb than the Internet itself. E-commerce analysts are quick to point out that not every industry is a good e-fit. It's easy to buy a book or CD online. And the Net may work for something simple like a homeowner's warranty, a straightforward basic renter's policy, or even a basic auto policy for one person. But my auto-insurance situation required live follow-up with a human being to make sure I knew what I was buying.
TOO MUCH WORK.
This problem could, perhaps, be solved with more sophisticated software -- but InsWeb's didn't answer my questions effectively. With health insurance, I couldn't effectively compare policies side by side. InsWeb has a tool for that job, but it didn't have space for enough information on each of the 24 policies it quoted prices for. To learn as much as I wanted to know, I literally had to click on each policy individually and read the details.
In fairness, after reading a few, they did seem to be pretty much the same. But it took too much work for me to feel comfortable or make me want to give up my insurance agent. Apparently, other consumers feel the same way: InsWeb lost $45 million last year.
One way to help consumers wade through all these choices would be an on-site expert who rates a particular policy's coverage or benefits, perhaps based on a system of one to four stars. Or the site could include short comments on the pros and cons of the different policies. That's a common way many e-commerce sites handle confusion when they offer a plethora of similar products. InsWeb should take a lesson from LetsTalk.com, the wireless-services marketplace, which handles similar complexity much better.
InsWeb does have a pretty good Learning Center, with articles on different kinds of insurance. The health-insurance section didn't help much, providing only general information that won't be enlightening to someone who already understands the basics.
However, its auto-insurance section intrigued me more. As a non-gearhead, I liked the tire-maintenance checklist from the Rubber Manufacturers Assn. I didn't know, for instance, how quick and easy it is to check if you need new tires. Place a penny in one of the tire's grooves, and if you can see Abe Lincoln's entire head, it's time to replace the tire. Even I get that. Under Life, topics ranged from basics such as choosing beneficiaries to the advantages of various trusts. The help wasn't extremely detailed, but offered solid information.
Though InsWeb delivered lower-cost policies, as promised, I still didn't like it. For my taste -- and my situation, which includes a family, homeownership, multiple drivers, and multiple vehicles -- its content needs to be handled in a more user-friendly way. For insurance, at least, it seems that no one has yet invented the software that can make you feel as comfortable as a human being can.
Marks covers personal finance and technology from Denver