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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q/A

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2000
or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 0-26083

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INSWEB CORPORATION(Exact name of Registrant as specified in its charter)

Delaware

94-3220749(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification Number)


901 Marshall Street
Redwood City, California 94063(Address of principal executive offices)

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(650) 298-9100(Registrant's telephone number, including area code)

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Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

The
number of outstanding shares of the Registrant's Common Stock, par value $0.001 per share, on October 31, 2000 was 35,270,020 shares.

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Explanatory Note

The Company has restated its unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2000, to adjust
certain employee separation costs and asset impairments originally expensed as part of its restructuring charge in the quarter ended September 30, 2000. Unrelated to this restatement, effective
January 1, 2000, InsWeb has adopted guidance set forth in SEC Staff Accounting Bulletin No. 101:Revenue Recognition(SAB 101). InsWeb has
restated its unaudited Condensed Consolidated Financial Statements for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000, as a result of this change in
accounting principle. A description of the adjustments that comprise the restatement of the restructuring charge and the impact of the change in accounting principle are disclosed in Note 2 of
the unaudited Condensed Consolidated Financial Statements filed with this Form 10-Q/A.

2

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FORM 10-Q
INSWEB CORPORATION
INDEX

|                                                                                                 |  |                                                                                                                                          |  | Page
Number
|------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|PART I    FINANCIAL INFORMATION                                                                  |  |                                                                                                                                         
|ITEM 1:    Financial Statements                                                                  |  |                                                                                                                                         
|                                                                                                 |  | Condensed Consolidated Balance Sheets as of September 30, 2000 (unaudited and restated) and December 31, 1999                            |  | 4          
|                                                                                                 |  | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2000 and 1999 (unaudited and restated) |  | 5          
|                                                                                                 |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and 1999 (unaudited and restated)           |  | 6          
|                                                                                                 |  | Notes to Condensed Consolidated Financial Statements                                                                                     |  | 7          
|ITEM 2:    Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 14                                                                                                                                      
|ITEM 3:    Quantitative and Qualitative Disclosures About Market Risk                            |  | 34                                                                                                                                      
|PART II    OTHER INFORMATION                                                                     |  |                                                                                                                                         
|ITEM 6:    Exhibits and Reports on Form 8-K                                                      |  | 35                                                                                                                                      
|                                                                                                 |  | Signature                                                                                                                                |  | 36         
|                                                                                                 |  | Exhibits                                                                                                                                 |  | 37         

3

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PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INSWEB CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                  |                                                                                                            | September 30,
2000 |              | December 31,
1999 |  
|----------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------ | ------------ | ----------------- | -
|
|Assets                                                            |                                                                                                            |                    |              |                   |  
|Current assets:                                                   |                                                                                                            |                    |              |                   |  
|Cash and cash equivalents                                         |                                                                                                            | $                  | 15,221,119   |                   | $
|Short-term investments                                            |                                                                                                            |                    | 40,117,751   |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total cash, cash equivalents and short-term investments           |                                                                                                            |                    | 55,338,870   |                   |  
|Accounts receivable, net of allowance of $167,484 and $141,780 at |                                                                                                            |                    |              |                   |  
|September 30, 2000 and December 31, 1999, respectively            |                                                                                                            |                    | 3,236,507    |                   |  
|Prepaid expenses and other current assets                         |                                                                                                            |                    | 5,991,330    |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total current assets                                              |                                                                                                            |                    | 64,566,707   |                   |  
|Property and equipment, net                                       |                                                                                                            |                    | 9,522,794    |                   |  
|Investment in joint venture                                       |                                                                                                            |                    | 2,059,409    |                   |  
|Intangible assets, net                                            |                                                                                                            |                    | 39,999       |                   |  
|Long-term investments                                             |                                                                                                            |                    | 1,996,882    |                   |  
|Deposits and other assets                                         |                                                                                                            |                    | 2,810,335    |                   |  
|Capitalized website development costs                             |                                                                                                            |                    | 664,289      |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total assets                                                      |                                                                                                            | $                  | 81,660,415   |                   | $
|                                                                  |                                                                                                            |                    |              |                   |  
|Liabilities and stockholders' equity                              |                                                                                                            |                    |              |                   |  
|Current liabilities:                                              |                                                                                                            |                    |              |                   |  
|Accounts payable                                                  |                                                                                                            | $                  | 519,688      |                   | $
|Accrued expenses                                                  |                                                                                                            |                    | 5,194,754    |                   |  
|Deferred revenue                                                  |                                                                                                            |                    | 3,035,680    |                   |  
|Restructuring accrual                                             |                                                                                                            |                    | 494,994      |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total current liabilities                                         |                                                                                                            |                    | 9,245,116    |                   |  
|Note payable to strategic partner                                 |                                                                                                            |                    | 1,390,176    |                   |  
|Deferred rent                                                     |                                                                                                            |                    | 480,847      |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total liabilities                                                 |                                                                                                            |                    | 11,116,139   |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Stockholders' equity:                                             |                                                                                                            |                    |              |                   |  
|Convertible preferred stock, $0.001 par value.                    |                                                                                                            |                    |              |                   |  
|                                                                  | Authorized: 5,000,000 shares, No shares issued or outstanding                                              |                    |              |                  |  
|Common stock, $0.001 par value. Authorized: 150,000,000           |                                                                                                            |                    |              |                   |  
|                                                                  | Issued and outstanding: 35,266,628 shares at September 30, 2000 and 34,742,760 shares at December 31, 1999 |                    |              | 35,267            |  
|Paid-in capital                                                   |                                                                                                            |                    | 189,778,518  |                   |  
|Accumulated other comprehensive income                            |                                                                                                            |                    | 61,572       |                   |  
|Common stock warrants                                             |                                                                                                            |                    | 113,071      |                   |  
|Deferred stock compensation                                       |                                                                                                            |                    | (861,472     | )                 |  
|Accumulated deficit                                               |                                                                                                            |                    | (118,582,680 | )                 |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total stockholders' equity                                        |                                                                                                            |                    | 70,544,276   |                   |  
|                                                                  |                                                                                                            |                    |              |                   |  
|Total liabilities and stockholders' equity                        |                                                                                                            | $                  | 81,660,415   |                   | $
|                                                                  |                                                                                                            |                    |              |                   |  

The
accompanying notes are an integral part of these condensed consolidated financial statements

4

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INSWEB CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                         |                                              | For the Three Months
Ended September 30,                          |            | For the Nine Months
Ended September 30, |            
|---------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------------------------------- | ---------- | --------------------------------------- | -----------
|
|
|
|Revenues:                                                                                |                                              |                                                                   |            |                                         |            
|                                                                                         | Transaction fees                             |                                                                   | $          | 3,768,104                               |            
|                                                                                         | Development and maintenance fees             |                                                                   |            | 453,082                                 |            
|                                                                                         | Other revenues                               |                                                                   |            | 9,166                                   |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              | Total revenues                                                    |            |                                         | 4,230,352  
|                                                                                         |                                              |                                                                   |            |                                         |            
|Operating expenses:                                                                      |                                              |                                                                   |            |                                         |            
|                                                                                         | Product development                          |                                                                   |            | 2,048,719                               |            
|                                                                                         | Sales and marketing                          |                                                                   |            | 7,384,811                               |            
|                                                                                         | General and administrative                   |                                                                   |            | 5,908,510                               |            
|                                                                                         | Amortization of intangible assets            |                                                                   |            | 40,001                                  |            
|                                                                                         | Amortization of stock-based compensation     |                                                                   |            | 185,696                                 |            
|                                                                                         | Impairment of goodwill and other intangibles |                                                                   |            |                                        |            
|                                                                                         | Restructuring charge                         |                                                                   |            | 638,727                                 |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              | Total operating expenses                                          |            |                                         | 16,206,464 
|                                                                                         |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              | Loss from operations                                              |            |                                         | (11,976,112
|Other income (expense), net                                                              |                                              |                                                                   | 132,217    |                                         |            
|Interest income, net                                                                     |                                              |                                                                   | 1,028,297  |                                         |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              | Loss before cumulative effect of a change in accounting principle |            |                                         | (10,815,598
|Cumulative effect of a change in accounting principle                                    |                                              |                                                                   |           |                                         |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              |                                                                   | Net loss   |                                         | $          
|                                                                                         |                                              |                                                                   |            |                                         |            
|Net loss per sharebasic and diluted:                                                    |                                              |                                                                   |            |                                         |            
|Loss before cumulative effect of a change in accounting principle                        |                                              | $                                                                 | (0.31      | )                                       | $          
|Cumulative effect of a change in accounting principle                                    |                                              |                                                                   |           |                                         |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|Net loss per sharebasic and diluted                                                     |                                              | $                                                                 | (0.31      | )                                       | $          
|                                                                                         |                                              |                                                                   |            |                                         |            
|Weighted average shares used in computing net loss per sharebasic and diluted           |                                              |                                                                   | 35,238,431 |                                         |            
|                                                                                         |                                              |                                                                   |            |                                         |            
|Pro forma net loss per sharebasic and diluted                                           |                                              |                                                                   |            |                                         | $          
|                                                                                         |                                              |                                                                   |            |                                         |            
|Weighted average shares used in computing pro forma net loss per sharebasic and diluted |                                              |                                                                   |            |                                         |            
|                                                                                         |                                              |                                                                   |            |                                         |            

The
accompanying notes are an integral part of these condensed consolidated financial statements.

5

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INSWEB CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                        |                                                                                                           | For the Nine Months Ended September 30,
(unaudited) |                                                    
|------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------
|
|
|Cash flows from operating activities:                   |                                                                                                           |                                                     |                                                    
|                                                        | Net loss                                                                                                  |                                                     | $                                                  
|                                                        | Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization |                                                     |                                                    
|                                                        | Amortization of stock-based compensation                                                                  |                                                     |                                                    
|                                                        | Write-down of fixed assets included in restructuring charge                                               |                                                     |                                                    
|                                                        | Gain on sale of equipment                                                                                 |                                                     |                                                    
|                                                        | Foreign currency translation (gain) loss on note payable                                                  |                                                     |                                                    
|                                                        | Amortization of intangible assets                                                                         |                                                     |                                                    
|                                                        | Equity loss from joint venture                                                                            |                                                     |                                                    
|                                                        | Impairment of goodwill                                                                                    |                                                     |                                                    
|                                                        | Cumulative effect of a change in accounting principle                                                     |                                                     |                                                    
|                                                        | Changes in assets and liabilities:                                                                        |                                                     |                                                    
|                                                        |                                                                                                           | Accounts receivable                                 |                                                    
|                                                        |                                                                                                           | Prepaid expenses and other current assets           |                                                    
|                                                        |                                                                                                           | Deposits and other assets                           |                                                    
|                                                        |                                                                                                           | Accounts payable                                    |                                                    
|                                                        |                                                                                                           | Accrued expenses                                    |                                                    
|                                                        |                                                                                                           | Restructuring accrual                               |                                                    
|                                                        |                                                                                                           | Deferred revenue                                    |                                                    
|                                                        |                                                                                                           | Deferred rent                                       |                                                    
|                                                        |                                                                                                           |                                                     |                                                    
|                                                        |                                                                                                           |                                                     | Net cash used in operating activities              
|                                                        |                                                                                                           |                                                     |                                                    
|Cash flows from investing activities:                   |                                                                                                           |                                                     |                                                    
|                                                        | Purchases (redemptions) of investmentsnet                                                                |                                                     |                                                    
|                                                        | Purchases of property and equipment                                                                       |                                                     |                                                    
|                                                        | Investment in joint venture                                                                               |                                                     |                                                    
|                                                        | Capitalized website development costs                                                                     |                                                     |                                                    
|                                                        |                                                                                                           |                                                     |                                                    
|                                                        |                                                                                                           |                                                     | Net cash provided by (used in) investing activities
|                                                        |                                                                                                           |                                                     |                                                    
|Cash flows from financing activities:                   |                                                                                                           |                                                     |                                                    
|                                                        | Proceeds from issuance preferred stocknet                                                                |                                                     |                                                    
|                                                        | Proceeds from issuance of common stock                                                                    |                                                     |                                                    
|                                                        | Proceeds from exercise of stock options                                                                   |                                                     |                                                    
|                                                        | Proceeds from stock issued from Employee Stock Purchase Plan                                              |                                                     |                                                    
|                                                        | Payment to Series B stockholder                                                                           |                                                     |                                                    
|                                                        | Payment of note payable to officer                                                                        |                                                     |                                                    
|                                                        | Payments on line of credit from affiliate                                                                 |                                                     |                                                    
|                                                        |                                                                                                           |                                                     |                                                    
|                                                        |                                                                                                           |                                                     | Net cash provided by financing activities          
|                                                        |                                                                                                           |                                                     |                                                    
|Net (decrease) increase in cash and cash equivalents    |                                                                                                           |                                                     | (10,467,641                                        
|Cash and cash equivalents, beginning of period          |                                                                                                           |                                                     | 25,688,760                                         
|                                                        |                                                                                                           |                                                     |                                                    
|Cash and cash equivalents, end of period                |                                                                                                           | $                                                   | 15,221,119                                         
|                                                        |                                                                                                           |                                                     |                                                    
|Supplemental disclosure of cash flow information:       |                                                                                                           |                                                     |                                                    
|                                                        | Cash paid during the period for interest                                                                  |                                                     | $                                                  
|                                                        |                                                                                                           |                                                     |                                                    
|Supplemental schedule of non-cash financing activities: |                                                                                                           |                                                     |                                                    
|                                                        | Deferred stock compensation from issuance of options                                                      |                                                     | $                                                  
|                                                        |                                                                                                           |                                                     |                                                    
|                                                        | Proceeds from sale of a portion of InsWeb Japan K.K. used to reduce note payable to the strategic partner |                                                     | $                                                  
|                                                        |                                                                                                           |                                                     |                                                    
|                                                        | Conversion of preferred stock to common stock                                                             |                                                     | $                                                  
|                                                        |                                                                                                           |                                                     |                                                    

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

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INSWEB CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Significant Accounting Policies



The consolidated financial statements include the accounts of InsWeb Corporation and its wholly-owned subsidiaries, InsWeb Insurance Services, Inc.
(formerly Avatar Insurance Services, Inc.) and Benelytics, Inc. (the "Company"). All significant inter-company accounts and transactions have been eliminated in the consolidated
financial statements. Investments in 20 to 50 percent owned affiliates are accounted for on the equity method. All common share and per share amounts reflect a 10-for-1
split approved by the Board of Directors in 1997 and a 3-for-2 split authorized in June 1999.

The
accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not contain all of the information
and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 2000
and results of operations for the three and nine months ended September 30, 2000 and 1999, respectively, and cash flows for the nine months ended September 30, 2000 and 1999,
respectively. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the three and
nine months ended September 30, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000.

These
condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on
Form 10-K as filed with the Securities and Exchange Commission on March 30, 2000 and other information filed with the Commission.



For the three months ended September 30, 2000, three customers accounted for 13%, 12% and 12%, respectively, of total revenues. For the nine months
ended September 30, 2000, three customers accounted for 18%, 11% and 10%, respectively, of total revenues. For the three months ended September 30, 1999, three customers accounted for
31%, 12% and 12%, respectively, of total revenues. For the nine months ended September 30, 1999, three customers accounted for 31%, 12% and 11%, respectively, of total revenues.



Basic earnings per share is computed using the weighted average number of shares of common stock outstanding. Diluted earnings per share reflects the potential
dilution that would occur if preferred stock had been converted and stock options and warrants had been exercised. Common equivalent shares from preferred stock, stock options and warrants have been
excluded from the computation of net loss per sharediluted as their effect is antidilutive.

Pro
forma net loss per sharebasic and diluted, as presented on the face of the condensed consolidated financial statements, represents what the net loss per
sharebasic and diluted would have been assuming the conversion of the outstanding preferred stock as of the beginning of such periods.

7

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Certain amounts in the 1999 financial statements have been reclassified to conform with the 2000 classifications.

2. Restatement of financial results

In conjunction with InsWeb's annual audit of its financial statements, InsWeb announced on January 31, 2001, that it was restating its unaudited results
of operations for the second and third quarters of 2000 to adjust certain employee separation costs and asset impairments originally expensed as part of its restructuring charge in the quarter ended
June 30, 2000. Unrelated to this restatement, effective January 1, 2000, InsWeb changed its revenue recognition policy for set-up fees, which are included in development and
maintenance fees, and for transaction fee revenues derived from certain online linking agreements to comply with SEC Staff Accounting Bulletin No. 101:Revenue
Recognition(SAB 101).



In the quarter ended June 30, 2000, InsWeb originally recorded certain payments to be made to terminating employees as part of its restructuring charge.
Upon reevaluation of this accounting, InsWeb determined that these payments were effectively "stay bonuses" which should be recognized over the contractual service period of the related employee, and
excluded from the restructuring charge. This adjustment resulted in an increase to the Company's original restructuring charge by $23,000 for the three months ended September 30, 2000, and a
decrease of $1,859,000, which is net of $345,000 of severance related charges incurred and paid in April 2000, that were originally recorded as operating expenses other than restructuring
charges, for the nine months ended September 30, 2000. Compensation expense included in operating expenses has also been adjusted (increased) by $1,270,000 and $1,675,000, to record the amount
of stay bonuses earned during the three and nine months ended September 30, 2000, respectively.

The
second adjustment reduces the asset impairment portion of the restructuring charge recorded in the quarter ended June 30, 2000, related to InsWeb's termination of the San
Carlos facility lease. In May 2000, InsWeb assigned its 12-year lease to an affiliate of the landlord in exchange for, among other things, a termination fee of $1.0 million
to be received when the property is re-leased by the landlord. At the time that the lease was assigned, InsWeb wrote-off the $1.1 million of the related tenant
improvements as part of the original restructuring charge. However, as releasing of this property and the resulting collection of this termination fee was probable, this adjustment is being made to
accrue the $1.0 million fee as a reduction of the restructuring charge recorded in the quarter ended June 30, 2000. The corresponding receivable has been recorded as part of deposits and
other assets at September 30, 2000. The $1.0 million receivable was collected in full in October 2000.



Effective January 1, 2000, InsWeb changed its revenue recognition policy for set-up fees, which are included in development and maintenance
fees, and revenue derived from certain online linking agreements to comply with SEC Staff Accounting Bulletin No. 101:Revenue Recognition. Prior
to this accounting change, InsWeb recognized revenue from set-up fees received from a participating insurance carrier when the development work was completed and the insurance company's
integration with the Company's site became operational ("Live Date"). As a result of SAB 101, InsWeb continues to defer set-up revenue until the Live Date, but has changed its revenue
recognition policy from full recognition at the Live Date to recognizing the revenue ratably over the estimated life of the carrier relationship. Additionally, InsWeb has changed its revenue
recognition policy for transaction fees from linking agreements that are contingent on the delivery of certain minimum click-throughs. No linking

8

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agreements with such a contigency clause were entered into prior to fiscal 2000. Prior to this change, InsWeb recognized revenue based on the number of click-throughs delivered. As a result of the
adoption of SAB 101, InsWeb will defer revenue on contracts with certain minimum click-through requirements until all contingencies have been met. This accounting change results in a cumulative
effect of a change in accounting principle, for years prior to 2000, of $1,635,000 reflected in the nine months ended September 30, 2000, and a decrease in revenue of ($1,091,000) and
($940,000) for the three and nine months ended September 30, 2000, respectively. The adjustment for this change in accounting principle is unrelated to the other restatement adjustments
described above, and results solely from the adoption of SAB 101.

The
effects of the restatement of the restructuring charge and the change in accounting principle on the Company's condensed consolidated financial statements for the three and nine
months ended September 30, 2000 are as follows:

|                                                                  |  | Three Months Ended
September 30, 2000 |         | Nine Months Ended
September 30, 2000 |  
|----------------------------------------------------------------- |  | ------------------------------------- | ------- | ------------------------------------ | -
|
|
|Total revenues                                                    |  | $                                     | 5,322   |                                      | $
|Total operating expenses                                          |  | $                                     | (14,915 | )                                    | $
|Other income                                                      |  | $                                     | 1,161   |                                      | $
|Loss before cumulative effect of a change in accounting principle |  | $                                     | (8,432  | )                                    | $
|Cumulative effect of a change in accounting principle             |  |                                       |        |                                      |  
|Net loss                                                          |  | $                                     | (8,432  | )                                    | $
|Net loss per sharebasic and diluted                              |  | $                                     | (0.24   | )                                    | $

The
restatement of the restructuring charge had the effect of (increasing) decreasing basic and diluted net loss per share by ($0.04) and $0.04 for the three and nine months ended
September 30, 2000, respectively, and the change in accounting principle had the effect of increasing basic and diluted net loss per share by ($0.03) and ($0.07) for the three and nine months
ended September 30, 2000, respectively.

September 30, 2000As Originally
Reported

As restatedBalance Sheet Data:Other assets

$
1,810

$
2,810Total assets

$
80,660

$
81,660Deferred revenue

$
460

$
3,036Restructuring accrual

$
1,960

$
495Total liabilities

$
9,071

$
11,116Stockholders' equity

$
71,589

$
70,544


9

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The
pro forma 1999 amounts below are provided to show what InsWeb would have reported if the new accounting policy had been in effect for the fiscal 1999 periods presented below.

|                                     |  | For the Three Months
Ended September 30, |         | For the Nine Months
Ended September 30, |  
|------------------------------------ |  | ---------------------------------------- | ------- | --------------------------------------- | -
|
|
|Total revenues                       |  | $                                        | 4,230   |                                         | $
|Loss before cumulative effect of     |  |                                          |         |                                         |  
|a change in accounting principle     |  | $                                        | (10,816 | )                                       | $
|Cumulative effect of a change in     |  |                                          |         |                                         |  
|accounting principle                 |  |                                          |        |                                         |  
|Net loss                             |  | $                                        | (10,816 | )                                       | $
|Net loss per sharebasic and diluted |  | $                                        | (0.31   | )                                       | $
|Shares                               |  |                                          | 35,238  |                                         |  

3. Comprehensive loss

Total comprehensive loss for the three and nine months ended September 30, 2000 and 1999 were as follows:

|                                   |                                          | Three Months Ended
September 30, |             | Nine Months Ended
September 30, |  
|---------------------------------- | ---------------------------------------- | -------------------------------- | ----------- | ------------------------------- | -
|
|
|Net loss                           |                                          | $                                | (10,815,598 | )                               | $
|Other comprehensive income (loss): |                                          |                                  |             |                                 |  
|                                   | Foreign currency translation adjustments |                                  |             | (34,341                         | )
|                                   | Unrealized (loss) gain on investments    |                                  |             | (1,772                          | )
|                                   |                                          |                                  |             |                                 |  
|Total comprehensive loss           |                                          | $                                | (10,851,711 | )                               | $
|                                   |                                          |                                  |             |                                 |  

4. Related Party Transactions



A stockholder, who is also a customer, accounted for $600,940 and $814,625 of the Company's revenues for the nine months ended September 30, 2000 and
1999, respectively. For the three months ended September 30, 2000 and 1999, the customer accounted for $239,385 and $383,780 of the Company's revenues, respectively. This customer accounted for
$8,800 and $0 of the Company's accounts receivable at September 30, 2000 and December 31, 1999, respectively.



An affiliate, who owns a majority interest in a stockholder, is also a customer and accounted for $205,065 and $248,697 of the Company's revenues for the nine
months ended September 30, 2000 and 1999, respectively. For the three months ended September 30, 2000 and 1999, the customer accounted for $66,135 and $115,500, respectively. This
customer accounted for $9,345 and $15,495 of the Company's accounts receivable at September 30, 2000 and December 31, 1999, respectively.

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During the three and nine months ended September 30, 2000, the Company recognized $1,260,000 and $3,783,782, respectively, in marketing expense under a
marketing agreement with an Internet company compared to $1,244,822 and $3,235,461 for the comparable periods in 1999. A beneficial owner of a significant number of shares of the outstanding stock of
the Internet company is a principal stockholder of the Company.

5. InsWeb Japan

In 1998, the Company entered into a Joint Venture Agreement with a strategic partner and significant stockholder to develop, implement and market an online
insurance marketplace in Japan and the Republic of Korea. The joint venture is carried out exclusively through InsWeb Japan K.K., a Japanese corporation, in which the Company owns a 25%
interest. In conjunction with this agreement, the Company also entered into an agreement in August 1999 to provide consulting and hosting services to
assist InsWeb Japan K.K. in developing its Internet strategy. For the three and nine months ended September 30, 2000, $0 and $1,413,608 was billed to InsWeb Japan K.K.,
respectively, under this contract and is included in development and maintenance fees. At September 30, 2000, no accounts receivable was due from InsWeb Japan, K.K. Though this agreement
has not been terminated, the Company does not expect to provide future consulting and hosting services to InsWeb Japan K.K.

The
Company's initial interest in InsWeb Japan K.K. was purchased in exchange for a promissory note due to the Company's strategic partner. Interest expense related to this
note for the three and nine months ended September 30, 2000 was $17,547 and $53,087 compared to $17,666 and $62,651 for the comparable periods last year. As of September 30, 2000,
$1,390,176 was outstanding under the note. In August 2000, the Company invested an additional $707,550 as part of an additional sale of capital stock by InsWeb Japan K.K. As a result of this
additional investment, the Company maintained its 25% interest in InsWeb Japan K.K.

6. Recent Accounting Pronouncements

In March 2000, the FASB issued Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of APB Opinion No. 25." FIN No. 44 is effective July 1, 2000. This interpretation provides guidance for applying APB Opinion No. 25, "Accounting for Stock
Issued to Employees." The Company has adopted FIN No. 44, which had no material impact on the Company's financial position, results of operations and cash flows as of September 30, 2000.

In
March 2000, the Emerging Issues Task Force ("EITF") of the FASB reached a consensus on Issue No. 00-2, "Accounting for Web Site Development Costs," which
provides guidance on accounting for costs incurred to develop, enhance, and upgrade a website. The consensus is effective for website development costs incurred in quarters beginning after
June 30, 2000. The Company implemented this guidance on July 1, 2000, and for the three and nine months ended September 30, 2000, the Company capitalized $664,289 of costs
relating to the upgrade and enhancement of the Company's website. All other development costs, not qualifying for capitalization under EITF Issue No. 00-02, are expensed during the
period, which is consistent with prior quarters. Amounts capitalized under this standard will be amortized over the estimated useful life of the related upgrade and enhancement, considered to be three
years.

7. Restructuring

In May 2000, the Board of Directors approved a decision to restructure the Company's operations in order to enhance operating efficiencies and to
further develop its agency operations. The restructuring plan includes the closure of the Company's facilities in Redwood City, San Carlos and

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Westlake Village, California and Bel Air, Maryland, the relocation of the Company's operations to the Sacramento California area, and the discontinuance of certain strategic initiatives. The
restructuring plan contemplates a total of approximately 190 individuals leaving the Company across all functions. As a result of reductions in the workforce, the Company's headcount was 158 at
September 30, 2000 compared to 207 at June 30, 2000 and 293 at March 31, 2000. It is expected that the restructuring plan will be completed in the first quarter of 2001.

In
the second quarter of 2000, the Company recorded a related restructuring charge of $1.5 million. The charge consisted of employee separation costs of $0.9 million,
asset impairments of $1.1 million, other exit costs of $0.5 million, offset by a lease termination fee of $1.0 million to be received as a result of the Company's termination of
its lease on their San Carlos facility. In the third quarter of 2000, the Company recorded additional restructuring charges of $0.6 million. The charge consisted of additional employee
separation costs of $0.1 million, asset impairments of $0.2 million, and other exit costs of $0.3 million. Other exit costs recorded in the third quarter of 2000 primarily
represent future rent payments for facilities being exited, and were incurred due to revisions in our restructuring plan.

The
asset impairments of $1.1 million in the second quarter consisted solely of the write-off of tenant improvements associated with the Company's facility in San
Carlos, California. As the approved restructuring plan calls for the relocation of the Company's corporate headquarters to the Sacramento California area, the Company assigned its 12-year
lease to an affiliate of the landlord of the property in exchange for a portion of the future profits, if any, associated with the releasing of this property through September 2003 and the
release of the Company's letter of credit and security deposit. As a result, the Company wrote off the tenant improvements. Additionally, the landlord agreed to pay to the Company a termination fee of
$1.0 million, if and when, the landlord formally terminates the lease with the Company and a portion of future profits, if any, upon the landlord's releasing of the facility. As releasing of
this property and the resulting collection of the $1.0 million termination fee is probable, the $1.0 million fee was accrued to reduce the restructuring charge, in the second quarter of
2000, and is included in deposits and other assets at September 30, 2000.

Details
of the restructuring charge are as follows (in thousands):

|                                                 |  | Employee
Termination
Benefits |        | Write-down of
Property, Plant
and Equipment |   | Other  |   | Total |      
|------------------------------------------------ |  | ----------------------------- | ------ | ------------------------------------------- | - | ------ | - | ----- | -----
|2000 restructuring charge                        |  |                               |        |                                             |   |        |   |       |      
|Second quarter                                   |  | $                             | 926    |                                             | $ | 1,066  |   | $     | (464 
|Third quarter change in estimate                 |  |                               | 77     |                                             |   | 203    |   |       | 359  
|                                                 |  |                               |        |                                             |   |        |   |       |      
|Total restructuring charge                       |  | $                             | 1,003  |                                             | $ | 1,269  |   | $     | (105 
|                                                 |  |                               |        |                                             |   |        |   |       |      
|Write-down of assets to net realizable value     |  |                               |        |                                             |   | (1,066 | ) |       |      
|Lease termination receivable                     |  |                               |        |                                             |   |        |   |       | 1,000
|Cash payments                                    |  |                               | (1,003 | )                                           |   |       |   |       | (603 
|                                                 |  |                               |        |                                             |   |        |   |       |      
|Restructuring liability as of September 30, 2000 |  | $                             |       |                                             | $ | 203    |   | $     | 292  
|                                                 |  |                               |        |                                             |   |        |   |       |      

---

In
addition to severance costs which are included in the restructuring charge, the Company also accrued retention bonuses of $2,430,000 and $3,713,000 for the three and nine months
ended September 30, 2000, respectively. For the three months ended September 30, 2000, $653,000, $833,000 and $944,000 of retention bonuses were included in Sales and Marketing, Product
Development and

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General and Administrative expenses, respectively. For the nine months ended September 30, 2000, $1,015,000, $1,257,000 and $1,441,000 of retention bonuses were included in Sales and Marketing,
Product Development and General and Administrative expenses, respectively. These bonuses were offered to certain employees for their commitment to stay with the Company for periods of six months to
one year beginning May 2000. At September 30, 2000, InsWeb had future retention commitments of $2,224,000, which are expected to be accrued periodically ending in the first half of
fiscal 2001.

8. Impairment of Goodwill and Other Intangibles

In April 2000, the Company entered into a linking agreement with eHealthinsurance.com under which InsWeb customers access eHealthInsurance's individual
health, small group health, and Medicare supplement insurance product offerings. As a result, the Company evaluated the cost to develop and market its health care product offerings and decided to
discontinue the development of its health care initiatives, which were primarily being carried out through the business and assets acquired as a result of the Company's acquisition of
Benelytics, Inc. in 1998. The Company then evaluated the recoverability of the goodwill and other intangibles recognized in connection with this acquisition, and determined that the
circumstances indicated an inability to recover the carrying amount of the assets. During the second quarter of 2000, the Company recorded a one-time non-cash write down of
$4,418,412 of goodwill and other intangible assets, including the assembled workforce and contractual relationships associated with the Benelytics, Inc. acquisition. At September 30,
2000, the balance of intangible assets was $39,999, which represents the covenants not to compete entered into with former Benelytics employees. This balance is being amortized on a
straight-line basis over the remaining life of three months.

9. Commitments and Contingencies

The Company leases its current office facilities under noncancelable operating leases which expire at various dates through January 2011. Future minimum
lease payments under noncancelable operating leases for the years ending December 31, are as follows:

2001

$
3,312,3022002


3,553,4172003


3,667,4132004


3,638,3322005


3,546,193Thereafter


14,608,582$
32,608,582


In
September 2000, InsWeb signed a 10-year lease agreement through 2010 for additional office space in the Sacramento area to house its corporate headquarters and
agency operations. The Company expects to incur additional costs for leasehold improvements and furniture and equipment associated with this lease over the next 6 months. The Company plans to
sublease its current operating facilities upon completion of the relocation to the Sacramento area, and expects any sublease revenue to offset its ongoing lease obligations.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

InsWeb has included in this filing certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning
InsWeb's business, operations and financial condition. The words or phrases "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions are generally
intended to identify forward-looking statements. Such forward-looking statements are subject to various known and unknown risks and uncertainties, and InsWeb cautions you that any forward-looking
information provided by, or on behalf of, InsWeb is not a guarantee of future performance. Actual results could differ materially from those anticipated in such forward-looking statements due to a
number of factors, some of which are beyond InsWeb's control, including, but not limited to, InsWeb's limited operating history, anticipated losses, the unpredictability of its future revenues,
reliance on key customers, competition, risks associated with system development and operation risks, management of potential growth and risks of new business areas, business combinations, and
strategic alliances. All forward-looking statements are based on information available to InsWeb on the date hereof, and InsWeb assumes no obligation to update such statements.

Overview

InsWeb operates an online insurance marketplace that enables consumers to shop online for a variety of insurance products, including automobile, term life,
homeowners, renters and individual health insurance, and obtain insurance company-sponsored quotes for actual coverage. In order to create this marketplace, InsWeb has established business
relationships with more than 40 insurance companies throughout the United States as of September 30, 2000.

InsWeb's
principal source of revenues is transaction fees. While quotes obtained through InsWeb's online insurance marketplace are provided to consumers free of charge, InsWeb's
participating insurance companies pay transaction fees to InsWeb generally based on qualified leads delivered to them electronically. Qualified leads are produced in two ways: for insurance companies
offering consumers instant online quotes, a qualified lead is produced when a consumer requests insurance coverage based on a specific quote; for insurance companies providing e-mail or
other offline quotes, a qualified lead is produced when the consumer clicks to request the quote itself. In either case, transaction fees are generally payable whether or not the consumer actually
purchases an insurance policy from the insurance company, and revenue from transaction fees is recognized at the time the qualified lead is delivered to the insurance company. Effective
January 1, 2000, InsWeb changed its revenue recognition policy for transaction fees from linking agreements that are contingent on the
delivery of certain minimum click-throughs. No linking agreements with such a contingency clause were entered into prior to fiscal 2000. Prior to this change, InsWeb recognized revenue based on the
number of click-throughs delivered. As a result of the adoption of SAB 101, InsWeb will defer revenue on contracts with certain minimum click-through requirements until all contingencies have been
met.

In
October 1999, InsWeb began generating commission revenue as an insurance agent based on activities it performs related to the sale of certain automobile insurance policies
in California. During the first six months of fiscal 2000, InsWeb began expansion of its agency activities to include the sale of automobile insurance policies in Washington and Arizona. However, in
the third quarter, InsWeb decided to temporarily restrict its agency operations to California as a result of its relocation to the Sacramento area. InsWeb's subsidiary, InsWeb Insurance
Services, Inc., has been appointed as an authorized automobile insurance agent by eight participating insurance companies in California, and by one carrier in both Arizona and Washington.
InsWeb receives a commission based on a percentage of the insurance policy premium related to each insurance policy sale where InsWeb has acted as the insurance agent. InsWeb recognizes the revenue
from these activities on the later of the billing date or effective date of the policy. InsWeb also recognizes revenue when an applicable policy is renewed. As

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part of its announced restructuring plan, InsWeb intends to expand its online insurance agency operations.

InsWeb
also generates development and maintenance fees from its participating insurance companies. InsWeb charges a fee to design and develop customized interfaces between an
insurance company's information system and the InsWeb site. Effective January 1, 2000, InsWeb changed its revenue recognition policy for set-up fees, which are included in
development and maintenance fees, to comply with SEC Staff Accounting Bulletin No. 101:Revenue Recognition. Prior to this accounting change,
InsWeb recognized revenue from set-up fees received from a participating insurance carrier when the development work was completed and the insurance company's integration with the
Company's site became operational ("Live Date"). As a result of SAB 101, InsWeb continues to defer set-up revenue until the Live Date, but has changed its revenue recognition policy from
full recognition at the Live Date to recognizing the revenue ratably over the estimated life of the carrier relationship. Additional development fees are charged as insurance companies add new
products, increase their geographic coverage and convert to instant quoting capability on InsWeb's online insurance marketplace, as well as for periodic upgrades and changes to insurance companies'
information resident on the InsWeb site. InsWeb charges maintenance fees for maintaining and servicing the programs of the individual insurance companies and for maintaining any hardware at InsWeb's
facility that is dedicated to specific insurance companies. These maintenance fees are typically payable monthly and are recognized as revenue ratably over the term of the maintenance agreement.
Prepaid development and maintenance fees are recorded as deferred revenue until earned. Development and maintenance fees are expected to account for a declining percentage of total revenues as
transaction fees and fees related to InsWeb's activities as an agent increase.

Product
development expenses consist primarily of payroll and related expenses for development and technology personnel. As discussed in the notes to the financial statements,
management implemented EITF Issue 00-02, "Accounting for Website Development Costs," during the third quarter of 2000. This resulted in the capitalization of website development costs
directly related to the enhancement and upgrade of the InsWeb site. Such costs had previously been expensed as period costs. Consistent with the guidance of EITF Issue 00-02 and other
applicable accounting guidance, all other software development costs have been expensed as incurred. InsWeb expects that its product development costs will continue to increase for the foreseeable
future.

Sales
and marketing expenses consist primarily of payroll and related expenses for InsWeb's sales and marketing personnel as well as consumer marketing expenditures for advertising,
public relations, promotions and fees paid to online companies with which InsWeb has contractual relationships. Through the first quarter of fiscal 2000, InsWeb increased its sales and marketing
expenses in order to establish and maintain relationships with insurance companies, attract increased consumer traffic to the InsWeb site, and develop the InsWeb brand. In the second quarter of 2000,
InsWeb began concentrating its consumer marketing program on maintaining key online relationships and on selective cost effective marketing campaigns designed to maintain consumer awareness of InsWeb
and its online insurance marketplace. As a result, InsWeb reduced consumer marketing expenses in the second and third quarters of 2000 from amounts reported in the first quarter of 2000. Consumer
marketing expenses may increase in future quarters as the Company expands its online relationships.

General
and administrative expenses consist primarily of payroll and related expenses for InsWeb's management, administrative and accounting personnel, expenses relating to site
operations, occupancy expenses, professional fees and other general corporate expenses. Although general and administrative expenses have increased in support of the Company's continued business and
its operations as a public company, InsWeb expects that general and administrative expenses will decrease over the next two quarters due to reduced headcount and cost containment measures being
undertaken as a result of the announced restructuring plans.

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Revenues

Transaction Fees.Transaction fees accounted for $3.8 million, or 89.1%, and $14.7 million, or 82.8%, of
total revenues, for the three and nine months ended September 30, 2000, respectively, compared to $6.3 million, or 88.9% and $13.6 million, or 88.1% of total revenues, for the
comparable periods in 1999. The decrease for the three months ended September 30, 2000 was primarily attributable to the loss of
State Farm as a participating carrier effective May 1, 2000. State Farm represented none of the Company's revenues for the three months ended September 30, 2000 versus 31% in the
comparable prior year period. The increase for the nine months ended September 30, 2000 was primarily the result of the increased number of leads generated by the substantial increase in the
number of completed shopping sessions, partially offset by a decline in revenue generated per shopping session and the loss of State Farm. The increase in shopping sessions resulted from increased
consumer traffic due to InsWeb's consumer marketing activities, and the addition of a substantial number of online relationships.

During
the first nine months of 2000, more than 1.7 million shopping sessions were completed at InsWeb, a 21% increase over the 1.4 million shopping sessions completed
in the first nine months of 1999. InsWeb recorded more than 2.9 million unique user sessions during the first nine months of 2000, an increase of 21% over the approximately 2.4 million
unique user sessions recorded in the comparable period in 1999.

Development and Maintenance Fees.Development and maintenance fees accounted for $0.5 million or 10.7% and
$3.0 million or 17.0% of total revenues, for the three and nine months ended September 30, 2000, respectively, compared to $0.8 million or 10.9% and $1.8 million or 11.7%
of total revenues, for the comparable periods in 1999. The decrease for the three months ended September 30, 2000 was primarily attributable to a decrease in the number of new insurance
companies electing to participate with InsWeb during the period. The increase for the nine months ended September 30, 2000 primarily resulted from revenue associated with a development
agreement with InsWeb Japan K.K., as well as adoption of Staff Accounting Bulletin 101. To a lesser degree, the increase was attributable to an overall increase in the number of InsWeb's participating
insurance companies.

Operating Expenses

Product Development.Product development expenses decreased to $2.0 million and increased to $7.6 million
for the three and nine months ended September 30, 2000, respectively, from $2.8 million and $6.6 million for the comparable periods in 1999. The decrease for the three months
ended September 30, 2000 was primarily attributable to the capitalization of website development costs as required by a recent accounting pronouncement, combined with reduced headcount in the
period resulting from restructuring efforts. The increase for the nine months ended September 30, 2000 was primarily attributable to a higher average headcount needed to support the
requirements of InsWeb's growing network of participating insurance companies and online relationships and to design, test and deploy InsWeb's product offerings and retention bonuses associated with
the restructuring. Ins Web expects product development expenses to decrease slightly over the next two quarters, compared to amounts recorded in the third quarter of 2000, as a result of reduced
headcount.

Sales and Marketing.Sales and marketing expenses decreased to $7.4 million and increased to
$31.3 million for the three and nine months ended September 30, 2000, respectively, from $10.3 and $22.4 million for the comparable periods in 1999. The decrease for the three
months ended September 30, 2000 was primarily attributed to significant reductions in offline advertising relationships combined with a reduction in headcount resulting from restructuring
efforts. The increase for the nine months ended September 30, 2000 was due to substantial increases in consumer marketing expenses, including increased costs and fees associated with new and
existing online relationships, costs incurred

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in the first half of the year related to national radio and television campaigns, an increase in the average number of sales and marketing personnel, operating costs associated with InsWeb's customer
care center and associated insurance agency activities and retention bonuses associated with the restructuring. Although InsWeb reduced its sales and marketing expenses in the third quarter of 2000
below amounts reported for the three months ended June 30 and March 31, 2000, sales and marketing expenses may nevertheless increase in future periods as the Company expands online
partnership programs.

General and Administrative.General and administrative expenses increased to $5.9 and $16.4 million for the
three and nine months ended September 30, 2000, respectively, from $4.2 and $9.9 million for the comparable periods in 1999. This increase was primarily due to increased personnel and
related costs, increased office and occupancy costs associated with additional leased office facilities, increased depreciation related to capital expenditures and retention bonuses associated with
the restructuring. InsWeb expects that general and administrative expenses in all categories will decrease over the next two quarters due to reduced headcount and cost containment measures being
undertaken as a result of the announced restructuring plans. Nevertheless, general and administrative expenses may increase compared to prior periods if the restructuring and other cost containment
measures are not successful.

Other Operating Expenses

Amortization of Stock-based Compensation.Amortization of stock-based compensation for the three and nine months ended
September 30, 2000 was $186,000 and $796,000, respectively, compared to $340,000 and $921,000 for the comparable periods in 1999. This decrease is attributable to the reduction in employees in
conjunction with the Company's restructuring plans.

Amortization of Intangible Assets.Amortization of intangible assets during the three and nine months ended
September 30, 2000 was $40,000 and $1.1 million, respectively, compared to amortization of $0.8 million and $2.3 million for the comparable periods in 1999. The decrease in
expense is attributable to the write-down of the Benelytics, Inc. intangible asset resulting from the Company's partnership with eHealthInsurance.

Restructuring Charge.In May 2000, the Board of Directors approved a decision to restructure InsWeb's operations
in order to enhance operating efficiencies and to further develop its agency operations. The restructuring plan includes the closure of the Company's facilities in Redwood City, San Carlos and
Westlake Village, California and Bel Air, Maryland, the relocation of the Company's entire operations to the Sacramento, California area, and the discontinuance of certain strategic initiatives. The
restructuring plan is targeted for completion in the first quarter of 2001. As a result of the Company's restructuring plan, in the second quarter of 2000, the Company recorded a restructuring charge
of $1.5 million. The charge consisted of employee separation costs of $0.9 million, asset impairments related to its San Carlos facility of $1.1 million, and other exit costs of
$0.5 million, offset by the lease termination receivable of $1.0 million. In the third quarter of 2000, the Company recorded additional restructuring charges of $0.6 million. The
charge consisted of additional employee separation costs of $0.1 million, asset impairments of $0.2 million, and other exit costs of $0.3 million. Other exit costs recorded in the
third quarter of 2000, primarily represent future rent payments for closed facilities. As the Company completes its restructuring plan, additional expenses may be incurred due to changes in the
estimates in realizable value of assets to be disposed and other costs.

Separately,
the Company recorded charges in the third quarter of 2000 of approximately $2.4 million for retention agreements with key employees, relocation expenses, and other
restructuring costs. These charges were recorded in product development, sales and marketing, and general and administrative expenses. The Company anticipates additional charges of approximately
$4.0 million representing additional retention payments to key employees, individual and corporate relocation

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expenses, and recruiting. Retention costs will be expensed over the period that services are rendered. Other costs will be expensed as incurred through the completion of the restructuring period in
the first quarter of 2001. Though InsWeb's operating expenditures are expected to decline as a result of this restructuring plan through reduced headcount, a reduction of depreciation from assets
disposed of and reduced occupancy expenses, operating expenses nevertheless may increase if our planned construction of our new facility is delayed further or costs exceed the original estimates and
if our restructuring plan is not ultimately successful.

Impairment of Goodwill and Other Intangibles.The Company evaluated the recoverability of the goodwill and other
intangibles recognized in connection with its acquisition of Benelytics, Inc. and determined, as a result of its announced new partnership with eHealthInsurance, that the circumstances
indicated an inability to recover the carrying amount. During the second quarter of 2000, the Company recorded a
one-time non-cash write-down of $4.4 million of goodwill and other intangible assets, including the assembled workforce and contractual relationships,
associated with the Benelytics, Inc. acquisition.

Interest Income, Net

Interest income, net, includes income earned on InsWeb's invested cash and investments, and expense related to its outstanding debt obligations. Net interest
income for the three and nine months ended September 30, 2000 was $1.0 and $3.5 million, respectively, compared to net interest income of $1.1 and $0.9 for the comparable periods in
1999. The increase in net interest income was primarily a result of the repayment of the line of credit in fiscal 1999 with the proceeds of the Company's initial public offering of common stock in
July 1999 and increased interest income on cash and short-term investments in fiscal 2000.

Liquidity And Capital Resources

At September 30, 2000, InsWeb's principal source of liquidity was $55.3 million in cash, cash equivalents and short-term investments.

In
each period, the use of cash primarily consisted of InsWeb's operating loss before non-cash items. For the nine months ended September 30, 2000, net cash used in
operating activities was $32.8 million compared to $23.8 million in the comparable period in 1999. For the nine months ended September 30, 2000, non-cash items
included amortization and write-off of intangibles of $5.5 million, depreciation of fixed assets of $2.6 million, write-down of fixed assets as a result of the
restructuring of $1.3 million and amortization of deferred stock compensation of $0.8 million. Increases in prepaid assets associated with the prepayment of online partnership
agreements, partially offset by a decrease in accounts receivable and an increase in the restructuring accrual, also contributed to the cash used in operations for the nine months ended
September 30, 2000.

For
the nine months ended September 30, 2000, net cash provided by investing activities was $19.5 million, which primarily consisted of the sale of
short-term investments offset by purchases of equipment and furniture, website development costs, and the investment in a joint venture. At September 30, 2000, InsWeb had no
material commitments for capital expenditures, but expects such expenditures to total approximately $6.3 million in 2000, primarily consisting of equipment, software, furniture and leasehold
improvements.

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In September 2000, InsWeb signed a 10-year lease agreement through 2010 for additional office space in the Sacramento area to house its corporate headquarters and
agency operations. The Company expects to incur additional costs for leasehold improvements and furniture and equipment associated with this lease over the next six months. The Company plans to
sublease its current operating facilities upon completion of the relocation to the Sacramento area, and expects any sublease revenue to offset its ongoing lease obligations. Future minimum lease
payments under the Sacramento lease are $10.6 million for the term of the lease.

In
addition, under various marketing agreements with its online partners, InsWeb is obligated to make minimum payments totaling $16.8 million through October 2001.

We
believe that our current level of cash, cash equivalents and short-term investments will be sufficient to meet our anticipated liquidity needs for working capital and
capital expenditures through 2001. Although we do not anticipate the need for additional financing, we nevertheless may need additional funds to meet all of our anticipated operating needs or to
expand business internally or through acquisition. Our forecast of the period of time through which our financial resources will be adequate to support our operations, involves significant risks and
uncertainties, and actual results could vary materially as a result of the factors described above. If we require additional capital resources, we cannot assure you that any financing arrangements
will be available in amounts or on terms acceptable to the Company and any such available financing arrangements could result in dilution to our stockholders.

Factors That May Affect Our Future Performance

Our future business, operating results and financial condition are subject to various risks and uncertainties, including those
described below.

Our business is difficult to evaluate because we did not begin to generate significant revenues from our core business until 1998

We were incorporated in February 1995, but we did not begin to generate significant transaction fees from our online marketplace until 1998. Our limited
operating history makes an evaluation of our
future prospects very difficult. An investor in our common stock must consider the uncertainties frequently encountered by early stage companies in new and rapidly evolving markets. These
uncertainties include:



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To
address these uncertainties, we must, among other things:



Our
business strategy may not be successful and we may not be able to successfully address these uncertainties. Moreover, our ability to take the foregoing steps may be hampered by
our limited financial resources should we fail to rapidly increase revenues or should increased revenues be more than offset by increased operating expenses.

We have a history of losses, we expect future losses, and we may not achieve or maintain profitability

Given planned investment levels, our ability to achieve profitability will depend upon our ability to generate and sustain substantially increased revenues. As
a result, we believe that we will incur substantial operating losses for the foreseeable future. We incurred operating losses of $21.9 million for the year ended December 31, 1998,
$38.4 million for the year ended December 31, 1999, and $46.0 million for the nine months ended September 30, 2000. As of September 30, 2000, our accumulated deficit
was $118.6 million. Although we experienced significant revenue growth in earlier periods, this growth rate is not sustainable and revenues may decrease from comparable prior year periods. Our
operating results for future periods are subject to numerous uncertainties, and we may not achieve sufficient revenues to
become profitable. Even if we achieve profitability, we may not sustain or increase profitability on a quarterly or annual basis in the future. If we are unable to achieve profitability, or if our
profitability is delayed we may need to seek additional financing to continue our business operations. Such financing could be on terms that are dilutive to our existing stockholders or could involve
the issuance of securities that have rights and preferences that are senior to those associated with our common stock. Moreover, if such financing were not available or were available only upon terms
that were unacceptable to us, we could be required to significantly curtail our operations.

Our future revenues are unpredictable, our operating results are likely to fluctuate from quarter to quarter, and if we fail to meet the expectations of securities analysts or
investors, our stock price could decline significantly

Due to our limited operating history, the emerging nature of the market in which we compete and the high proportion of our revenues that are derived from
consumer traffic on our website, our future revenues are inherently difficult to forecast. We believe that period-to-period comparisons of our operating results may not be
meaningful, and you should not rely upon them as an indication of our future performance. Moreover, our expense levels are based largely on our investment plans and estimates of future revenues. We
may be unable to adjust our spending to compensate for an unexpected shortfall in revenues. Accordingly, any significant shortfall in revenues relative to our planned expenditures would harm our
results of operations and could cause our stock price to fall

20

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sharply, particularly following quarters in which our operating results fail to meet the expectations of securities analysts or investors.

Factors
that may cause fluctuations in our operating results include the following, many of which are outside our control:



Seasonality affecting insurance shopping and Internet usage may cause fluctuations in our operating results

We have experienced seasonality in our business associated with general slowness in the insurance industry during the year-end holiday period. We
expect to continue to experience seasonality as our business matures. Because of this seasonality, investors may not be able to predict our annual operating results based on a
quarter-to-quarter comparison of our operating results. We believe seasonality will have an ongoing impact on our business.

Because substantially all of our revenue is attributable to automobile insurance shopping on our online marketplace, we are especially vulnerable to risks related to the online
market for automobile insurance or the automobile insurance industry generally

Automobile
insurance accounted for approximately 78% of our total revenues in the year ended December 31, 1999 and approximately 75% in the nine months ended
September 30, 2000. We anticipate that automobile insurance will continue to account for a substantial portion of our revenues for the foreseeable future. As a result, if we fail to attract a
broad base of consumers to shop for automobile insurance on our site, or if changes in the automobile insurance industry make electronic commerce a less attractive means to shop for this type of
insurance, our ability to generate revenue will be reduced and our business will be harmed. In addition, our business is likely to be affected by any events or changes that affect the automobile
insurance industry as a whole.

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If we are unable to promote our brand and expand our brand recognition, our ability to draw consumers to our website will be limited

A growing number of websites offer services that are similar to and competitive with the services offered on our online insurance marketplace. Therefore,
establishing and maintaining our brand is critical to attracting additional consumers to our website, strengthening our relationships with participating insurance companies and attracting new
insurance companies. If our brand does not achieve positive recognition in the market, our ability to draw consumers to our website will be limited. In order to attract and retain consumers and
insurance companies and to promote and maintain our brand, through the first quarter of fiscal 2000, we increased our financial commitment to creating and maintaining prominent brand awareness.
Beginning in the second quarter of fiscal 2000, our consumer marketing program has been reduced and currently consists of the maintenance of certain network online relationships, and other selective
cost, effective marketing campaigns, designed to maintain consumer awareness of InsWeb and our online insurance marketplace. If our marketing efforts do not generate a corresponding increase in
revenues or we otherwise fail to successfully promote our brand, or if these efforts require excessive expenditures, our business will be harmed. Moreover, if visitors to our website do not perceive
our existing services or the products and services of our participating insurance companies to be of high quality, or if we alter or modify our brand image, introduce new services or enter into new
business ventures that are not favorably received, the value of our brand could be harmed.

Our plans to offer additional services could result in significant expenditures, and we may not generate sufficient revenue to offset these expenditures

We intend to offer additional services including, among other things:



We
may not be able to offer these additional services in a cost-effective or timely manner, or these efforts may not increase the overall market acceptance of our products
and services. Expansion of our operations in this manner could also require significant additional expenditures and strain our management, financial and operational resources. The lack of market
acceptance of these efforts, regulatory issues, or our inability to generate enough revenue from these expanded services or products to offset their cost could harm our business.

Competition in the market for online distribution of insurance is intense, and if we are unable to compete effectively with current competitors or new competitors that enter
the market, the fees paid to us by participating insurance companies may fall, the fees charged by online companies with which we have strategic relationships may rise, and our market share may suffer

The online insurance distribution market is a new industry and, like the broader electronic commerce market, is both rapidly evolving and highly competitive.
Increased competition, particularly by companies offering online insurance distribution, could reduce the fees we are able to charge our participating insurance companies or increase the fees we are
required to pay to online companies with

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which we have strategic relationships, resulting in reduced margins or loss of market share, any of which could harm our business.

Some
of our current competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources
than we do. In addition, we believe we will face increasing competition as the online financial services industry develops and evolves. Our current and future competitors may be able to:



Accordingly,
we may not be able to maintain or grow consumer traffic to our website and our base of participating insurance companies, our competitors may grow faster than we do, or
companies with whom we have strategic relationships may discontinue their relationships with us, any of which would harm our business.

If our participating insurance companies do not continue to provide high quality products and service to consumers, our brand will be harmed and our ability to attract
consumers to our website will be limited

Our ability to provide a high quality shopping experience to consumers depends in part on the quality of the products and services consumers receive from our
participating insurance companies, including timely response to requests for quotes or coverage. If our participating insurance companies do not provide consumers with high-quality
products and services, the value of our brand may be harmed and the number of consumers using our services may decline. We have from time to time received complaints from consumers who have not
received a timely response to a request for an insurance quote. Although we have taken steps and proposed methods to encourage our participating insurance companies to be responsive to consumer
requests, these steps and/or proposed methods may not be successful. In addition, if any of our major participating insurance companies were to discontinue their business, be downgraded by insurance
company rating services or be financially harmed by trends in the insurance industry, our brand may be harmed.

Our plan to expand our online insurance agency operations will require significant resources and we may not be able to generate sufficient revenues to recover our expenses

Since October 1999, InsWeb has been operating an online insurance agency business in California. Our online agency receives a commission on the sale and
renewal of the automobile insurance polices sold though its offices.

During
the nine months ended September 30, 2000, our online agency sold 3,654 new automobile insurance policies for nine carriers in four western states. Due to the company's
restructuring activities and its relocation to Sacramento, however, the number of policies sold is expected to decline in the fourth quarter. The number of policies sold is expected to increase in
future quarters after the agency operations are expanded.

Our
plan to expand the online agency operations requires that we attract and retain highly skilled sales agents and customer care personnel. We will face competition from other
agencies and insurance companies for these agents. In addition, we will need additional carriers to appoint us as an agent and pay us commissions. Although the agency infrastructure is already in
place, integration of additional carriers into our online agency operations may take more time and be more expensive than we project.

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If we are unable to implement our expansion in a timely and cost-effective manner, we may not be able to recover our costs and our business will be harmed.

Because several of the insurance companies with which we have relationships are major stockholders or are associated with members of our board of directors, we may find it
difficult to terminate or suspend the participation of one of these insurance companies based upon the quality of its service. This could, in turn, cause the quality of our services to decrease and
harm our brand image with consumers

Several insurance companies participating in our online marketplace own significant portions of our outstanding stock, are affiliated with members of our board
of directors or have close business relationships with members of our board. One insurance company, Nationwide, holds approximately 9% of our outstanding common stock, and Richard D. Headley,
President and Managing Director of Nationwide Global Holdings, is a member of our board. Another insurance company, CNA, holds approximately 6% of our outstanding common stock. Most of our other
outside directors are affiliated
with companies, such as insurance brokerage firms, that may have substantial business dealings with many of the insurance companies with which we have relationships. As a result of such affiliations
or relationships, we may find it difficult to terminate or suspend the participation of one of these insurance companies based upon the quality of its service. This could, in turn, cause the quality
of our services to decrease and harm our brand image with consumers.

Because a limited number of insurance companies account for a majority of our revenues, the loss of a single insurance company relationship could result in a substantial drop
in our revenues

Revenues from State Farm, AIG and American Family accounted for approximately 31%, 11% and 11%, respectively, of our revenues for the year ended
December 31, 1999, and revenues from State Farm, AIG, and GE Financial Assurance accounted for approximately 18%, 11% and 10%, respectively, of our revenues for the nine months ended
September 30, 2000. Effective May 1, 2000, State Farm is no longer participating in InsWeb's marketplaces for auto, term life, homeowners, condominium and renters insurance. As a result
of State Farm's withdrawal, revenues for the second quarter of 2000 from State Farm declined to approximately 15% of total revenues, and no revenue from State Farm was recognized for the third quarter
of 2000. Until additional agreements with new carriers can be negotiated and these carriers are integrated into InsWeb's marketplaces, revenues may decline in the near term. In addition, one
participating company was removed from our marketplace in July 2000, by mutual agreement because of a serious decline in its financial rating. Should one or more of our other key insurance
company partners cease to participate in our online marketplace, change its underwriting criteria or geographic coverage in a way that reduces the proportion of consumers that are offered quotes from
that insurance company, or suffer a significant decline in its ratings, our operating results could be materially harmed. Because of the broad market presence of some of our participating insurance
companies, we expect to continue to generate a substantial portion of our revenues from a limited number of insurance companies for the foreseeable future. In addition, although new carriers may be
signed up to participate in our online marketplace, these new carriers may not replace revenues lost as a result of State Farm's non-renewal. Moreover, there can be no assurance we will be
able to add any new carriers.

In most jurisdictions, we rely on the participation of a limited number of insurance companies on our online marketplace, and the loss of any of these insurance companies could
make our online marketplace less attractive to consumers

Consumer demand for the services offered on our website in any jurisdiction is substantially dependent upon the participation of competing
brand-name insurance companies offering competitive quotes for a given insurance product in that jurisdiction. Accordingly, the success of our business

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depends on our ability to attract and retain well-known insurance companies to participate in our marketplace. Although we currently have relationships with more than 40 insurance
companies overall, in individual jurisdictions where competing quotes for comparable products are available on our online marketplace, the number of companies offering quotes ranges from one to 15. If
we are unable to increase the number of insurance companies that participate in our online marketplace, particularly in the jurisdictions where we currently offer comparable insurance products from
only three or fewer insurance companies, we may not be able to attract additional consumers or may lose our existing consumers to other online competitors offering a wider variety of insurance
companies. At the end of the third quarter, 2000, there were 26 jurisdictions in which three or fewer insurance companies were offering automobile insurance quotes on our online marketplace. Of those,
AIG is a participant in 14 jurisdictions. No automobile insurance quotes are available in New Jersey, and as of September 30, 2000, there were eight jurisdictions in which only one insurance
company is offering automobile quotes on our online marketplace. If any other insurance company participating in a number of jurisdictions discontinued or significantly reduced its participation in
our online marketplace, the attractiveness of the marketplace to consumers in these jurisdictions would be greatly diminished.

In
addition, we believe that there is a general trend toward consolidation in the insurance industry. For example, in the first quarter of 2000, Kemper Direct acquired the personal
lines business of Reliance Direct, one of our participating insurance companies. In the jurisdictions where we currently offer comparable insurance products from three or fewer insurance companies,
the loss of one or more of these companies, whether due to industry consolidation or otherwise, could materially reduce the selection of insurance companies available to consumers on our website,
thereby substantially reducing the attraction of our online marketplace to consumers.

We may have difficulty integrating new insurance companies into our online marketplace or agency operations, which could harm our ability to offer improved comparison shopping
opportunities and thus limit the attractiveness of our service to consumers

Integration of an insurance company into our online marketplace requires a significant commitment of time and resources on our part and on the part of the
insurance company, and is a technologically difficult process. This integration process typically takes from three to six months to complete and typically requires us to expend between 160 and 2,000
man-hours. To develop company-sponsored quotes for consumers, the integration requires either the development of a customized interface with the carrier's own rating system, accessing a
third party rating engine of the carrier's choice, or adding the carrier's rating information into InsWeb's proprietary rating engines. Though integration into our agency operations may require fewer
resources to implement than integration of an insurance company into our online marketplace, potential participating insurance companies may not be willing to invest the time and resources necessary
to achieve this integration, or we may not be able to overcome the technological difficulties associated with, or devote the time and resources necessary to, successfully integrate the insurance
company into our online marketplace or our agency operations.

We do not have exclusive relationships or long-term contracts with insurance companies, which may limit our ability to retain these insurance companies as
participants in our marketplace and maintain the attractiveness of our services to consumers

We do not have an exclusive relationship with any of the insurance companies whose insurance products are offered on our online marketplace, and thus,
consumers may obtain quotes and coverage from these insurance companies without using our website. Our participating insurance companies offer their products directly to consumers through insurance
agents, mass marketing campaigns or through other traditional methods of insurance distribution. These insurance companies can also offer their products and services over the Internet, either directly
to consumers or through one or more of our online competitors, or both. In addition, most of our agreements with our participating insurance

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companies are cancelable at the option of either party upon 90 days' notice or less. As discussed above, effective May 1, 2000, State Farm Insurance is no longer a participant on
InsWeb's online insurance marketplace.

Traffic on our website is heavily dependent on our online relationships. These relationships may not generate sufficient revenues to justify the fees we pay to online
companies. Further, our consumer traffic may decline in the event an online relationship is unsuccessful

We rely on relationships with a variety of Internet portals, financial institutions, and other online companies to attract consumers to our website. As of
September 30, 2000, we have 214 online relationships, over 70 of which were added during the first nine months of this year. In a typical arrangement, the online company includes a "link" on
its website on which a user can click to jump to our website or to a site that we operate under the online company's name; as part of the arrangement, we typically pay the online company a portion of
the resulting transaction fees and in some cases a fixed fee. These relationships may not continue to generate a substantial amount of new traffic on our website, or the revenues generated by these
relationships may be insufficient to justify our payment obligations. Furthermore, the value of these relationships is based on the continued positive market presence, reputation and growth of these
online companies' websites and services. Any decline in the market presence, business or reputation of these online companies' websites and services will reduce the value of these relationships to us
and could harm our business.

We
have entered into exclusive arrangements with Yahoo! Inc. and MSN under which our website is the exclusive insurance site included in their website, and a significant
marketing agreement with AOL. For the year ended December 31, 1999 and nine months ended September 30, 2000, we received approximately 10.1% and 27.7% of our website traffic from these
online relationships, respectively, and approximately 33.7% and 67.7% of our traffic from all of our online relationships combined,
respectively. Our ability to increase our revenues will depend, in part, on increased traffic to our website that we expect to generate through these very significant online relationships.

Our
relationships with online companies typically have a 12-month term and do not provide us with automatic renewal rights upon termination. In addition, these agreements
are typically terminable by either party on 30 to 90 days' notice. There can be no assurance we will be able to negotiate or renew marketing agreements with online companies on terms that are
acceptable to us. The termination, non-renewal or renewal on unfavorable terms of a relationship from which we generate significant traffic to our website would harm our business.
Additionally, an online company's failure to maintain efficient and uninterrupted operation of its computer and communications hardware systems would likely reduce the amount of traffic we receive at
our site, harming our business.

Laws and regulations that govern the insurance industry could expose us, or our participating insurance companies, our officers, or agents with whom we contract, to legal
penalties if we fail to comply, and could require changes to our business

We perform functions for licensed insurance companies and are, therefore, required to comply with a complex set of rules and regulations that often vary from
state to state. If we fail to comply with these rules and regulations, we, an insurance company doing business with us, our officers, or agents with whom we contract, could be subject to various
sanctions, including censure, fines, a cease-and-desist order or other penalties. This risk, as well as changes in the regulatory climate or the enforcement or interpretation
of existing law, could expose us to additional costs, including indemnification of participating insurance companies for their costs, and could require changes to our business or otherwise harm our
business. Furthermore, because the application of online commerce to the consumer insurance market is relatively new, the impact of current or future regulations on InsWeb's business is difficult to
anticipate.

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The recently enacted Gramm-Leach-Bliley Act may alter the traditional structure of insurance regulation and impose new or additional legal requirements on our business

The November 1999 passage of the Gramm-Leach-Bliley Act (S.900) increased the potential for significant changes in the structure and regulation of the
insurance industry. Traditionally, regulation of insurance has been almost exclusively the province of the states, including regulation of sales practices, underwriting requirements and claims
payments. Moreover, with limited exceptions, securities firms and banking institutions historically were prohibited from engaging in the business of insurance, and were regulated by federal agencies.
The Gramm-Leach-Bliley Act eliminated these legislative barriers
between segments of the financial services industry. Although insurance will still be regulated primarily by the states, insurance entities that become part of a financial services institution may be
indirectly affected by the federal regulatory requirements pertaining to banks or securities firms.

Our intended expansion of our business, including, in particular, our agency activities, will subject us to additional regulations which may delay or prevent our expansion and
harm our business

Over time, we intend to expand our operations to include new products and services and to offer existing and new products in new jurisdictions, which may
require us to comply with additional laws and regulations. If we fail to adequately comply with these laws and regulations, our ability to offer some of our products or services in a particular
jurisdiction could be delayed or prevented and our business could be harmed. Compliance with these laws and regulations and those of other jurisdictions into which we expand may require us to obtain
appropriate business licenses, make necessary filings and obtain necessary bonds, appoint foreign agents and make periodic business reports.

If we are unable to safeguard the security and privacy of consumers' and participating insurance companies' confidential data, consumers and insurance companies may not use our
services and our business may be harmed

A significant barrier to electronic commerce and communications is the secure transmission of personally identifiable information of Internet users as well as
other confidential information over public networks. If any compromise or breach of security were to occur, it could harm our reputation and expose us to possible liability. A party who is able to
circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to make significant expenditures to protect against security
breaches or to alleviate problems caused by any breaches. To date, we have experienced no breaches in our network security. We rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as names, addresses, Social Security and credit card numbers, user names
and passwords and insurance company rate information. Advances in computer capabilities, new discoveries in the field of cryptography, or other events or developments could result in a compromise or
breach of the algorithms we use to protect consumers' and insurance companies' confidential information.

Uncertainty in the marketplace regarding the use of Internet users' personal information, or proposed legislation limiting such use, could reduce demand for our services and
result in increased expenses

Concern among consumers and legislators regarding the use of personal information gathered from Internet users could create uncertainty in the marketplace.
This could reduce demand for our services, increase the cost of doing business as a result of litigation costs or increased service delivery costs, or otherwise harm our business. Legislation has been
proposed at both the federal and state levels that would limit the uses of personally identifiable information of Internet users gathered online or require online services to establish privacy
policies. In addition, the Federal Trade Commission has adopted regulations affecting the information gathering practices of online companies, and it has brought suit against several high profile
companies for failing to adhere to the privacy policies posted on their

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websites. Many state insurance codes limit the collection and use of personal information by insurance companies, agents, or insurance service organizations. Failure to adhere to the growing body of
privacy regulations could result in administrative actions or private litigation and harm our business.

System failures could reduce or limit traffic on our website and harm our ability to generate revenue

Since launching our online marketplace, we have experienced occasional minor system failures or outages which have resulted in the online marketplace being out
of service for a period ranging from several minutes to three hours while our technicians brought backup systems online. We may experience further system failures or outages in the future that could
disrupt the operation of our website and could harm our business. Our revenues depend in large part on the volume of traffic on our website and, more particularly, on the number of insurance quotes
generated by our website in response to consumer inquiries. Accordingly, the performance, reliability and availability of our website, quote-generating systems and network infrastructure are critical
to our reputation and our ability to attract a high volume of traffic to our website and to attract and retain participating insurance companies. Moreover, we believe that consumers who have a
negative experience with an electronic commerce website may be reluctant to return to that site. Thus, a significant failure or outage affecting our systems could result in severe
long-term damage to our business.

If we do not successfully enhance or expand our technology infrastructure to accommodate increases in the volume of traffic on our website, our website may not perform at
levels that are satisfactory to consumers

We are continually enhancing and expanding our technology, quote generating systems, network infrastructure and other technologies to accommodate the volume of
traffic on our website. We may be unsuccessful in these efforts or we may be unable to accurately project the rate or timing of increases in the volume of traffic on our website. In addition, we
cannot predict whether additional network capacity will be available from third party suppliers as we need it. Also, our network or our suppliers' networks might be unable to timely achieve or
maintain a sufficiently high capacity of data transmission to timely process orders or effectively download data, especially if our website traffic increases. Our failure to achieve or maintain high
capacity data transmission could significantly reduce consumer demand for our services.

Our facilities and systems are vulnerable to natural disasters and other unexpected losses, and we may not have adequate insurance to cover such losses

Our computer hardware operations are located in leased facilities in Redwood City. A full backup system is located in Irvine, California. Each of these areas
is susceptible to earthquakes. If both of these locations experienced a system failure, the performance of our website would be harmed. These systems are also vulnerable to damage from fire, floods,
power loss, telecommunications failures, break-ins and similar events. If we seek to replicate our systems at other locations, we will face a number of technical challenges, particularly
with respect to database replications, which we may not be able to address successfully. Although we carry property and business interruption insurance, our coverage may not be adequate to compensate
us for all losses that may occur. Our servers may also be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions.

We may experience technological problems or service interruptions with individual insurance companies, which could harm the quality of service on our website

Several of our participating insurance companies have chosen a technical solution that requires that our Web servers communicate with these insurance
companies' computer systems in order to perform the filtering and risk analysis and rating functions required to generate quotes. Thus, the availability of quotes from a given insurance company may
depend in large part upon the reliability of

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that insurance company's own computer systems, over which we have no control. A malfunction in an insurance company's computer system or in the Internet connection between our Web servers and the
insurance company's system, or an excess of data traffic on that system, could result in a delay in the delivery of e-mail quotes or could cause an insurance company that provides instant
quotes to go offline until the problem can be remedied. Moreover, the malfunction could cause the carrier to dispute the number of leads it received from InsWeb. Further, a computer malfunction could
cause an insurance company to quote erroneous rates, in which case the insurance company would be required to take itself offline until the malfunction can be corrected. Any technological problems
with or interruption of communications with an insurance company's computer systems could materially reduce the number of competing insurance companies available to provide quotes, and therefore the
level of service perceived by consumers, on our online marketplace.

Our recent growth and subsequent reduction in force has placed a significant strain on our management, systems and resources, and we may experience difficulties in managing our
operations in the future

Through the quarter ended March 31, 2000, we experienced growth and expansion which placed a strain on our administrative, operational and financial
resources and increased demands on our systems and controls. As a result of our restructuring plans, our workforce has declined by approximately 45%. This reduction has occurred through a combination
of InsWeb initiated terminations and voluntary resignations. If our management is unable to manage our resources effectively, our business will be harmed. This prior growth and subsequent reduction in
force has resulted in a continuing increase in the level of responsibility for our management personnel. We anticipate that our continued operations will require us to retain our current personnel and
to recruit, hire, train and retain new managerial, technical, sales and marketing personnel based on the attrition of our current employee base. Our ability to manage our operations successfully will
also require us to improve our operational, management and financial systems and controls on a timely basis.

We rely on the services of our executive officers and other key personnel, whose knowledge of our business and the insurance industry and technical expertise would be extremely
difficult to replace

Our future success is substantially dependent on the continued services and continuing contributions of our senior management and other key personnel,
particularly Hussein A. Enan, our Chairman and Chief Executive Officer; and Mark P. Guthrie, President, Chief Operating Officer and Chief Financial Officer (acting). The loss of the services of any of
our executive officers or other key employees could harm our business. For example, in March 2000, Stephen Robertson, our Chief Financial Officer, resigned to pursue other professional
interests. This resignation has put additional pressure on our executive management team to fulfill his functional responsibilities. As of the date of this report, we have not recruited a new Chief
Financial Officer.

We
have no long-term employment agreements with any of our key personnel other than Mr. Enan, whose employment agreement expires in July 2002. We maintain a
$2 million life insurance policy on Mr. Enan that names us as the beneficiary, but maintain no similar insurance on any of our other key employees. Additionally, we have granted
additional cash and stock option incentives in order to retain certain of our executive officers, including Mr. Guthrie, and certain other key personnel. Payment of these incentives is subject
to these individuals completing service terms from six months to one year from April 2000. As the value of these incentives are highly dependent on an increase in the market price of our common
stock, there can be no assurance we will be able to retain such key employees through or after their retention period nor retain or recruit other officers and key employees in the future.

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Because of intense competition for technical personnel, we may not be able to recruit or retain necessary personnel, which could slow the process of adding new insurance
companies to our website or otherwise harm our business

Our future success depends on our continuing ability to attract, retain and motivate highly skilled employees, particularly with respect to technology
development and implementation, including integration of insurance companies into our online marketplace. If we are not able to attract and retain new personnel, particularly to expand our technology
development and implementation team, our business will be harmed. The implementation of new insurance companies on our site is a technologically complex and labor-intensive process. Accordingly, any
difficulty we face in attracting and retaining talented development and implementation personnel could slow the process of adding new insurance companies to our online marketplace and therefore limit
our ability to increase the attractiveness of our services to consumers. Competition for personnel in our industry is intense and we have had a high turnover rate of employees over the last two
quarters. We may be unable to retain our key employees or attract, assimilate or retain other highly qualified employees in the future. We have from time to time experienced, and we expect to continue
to experience in the future, difficulty in hiring and retaining employees with appropriate qualifications.

Our success depends on continued growth of electronic commerce, which may not achieve broad acceptance by consumers

Our future revenues and profits are substantially dependent upon the widespread acceptance and use of the Internet by consumers as an effective medium for
commerce. Rapid growth in the use of the Internet is a recent phenomenon, and it may not continue, or the Internet may not be adopted as a medium of commerce by a broad base of consumers. If a broad
base of consumers do not adopt the Internet as a medium of commerce, our business may be materially adversely affected.

Our success depends on the willingness of consumers to shop for and purchase insurance on the Internet instead of by more traditional means; consumers may not be willing to do
this

Shopping for and purchasing insurance on the Internet is a relatively untested concept, and if it does not gain widespread acceptance, our business may fail.
Demand and market acceptance for recently introduced services and products on the Internet are subject to a high level of uncertainty, and there are few proven services and products. Our success will
depend on our ability to engage consumers who have historically shopped for and purchased insurance through traditional distribution channels. In order for us to be successful, many of these consumers
must be willing to utilize new ways of conducting business and exchanging information. In addition, a substantial proportion of the consumers who use our website may be using our service because it is
new and different rather than because they believe that it offers a better way to shop for insurance. Such consumers may use our service only once or twice and then return to more familiar means of
shopping for and purchasing insurance.

If the Internet does not continue to develop and reliably support the demands placed on it by electronic commerce and other high volume applications, our business will suffer

The Internet may not become a viable medium for commerce or comparison insurance shopping for a number of reasons, including potentially inadequate development
of the necessary network infrastructure or delayed development of enabling technologies and performance improvements. If the Internet continues to experience significant growth in the number of users,
levels of traffic or networks' capacities for transmitting large amounts of data, the Internet's infrastructure may not be able to support the demands placed upon it. The Internet has experienced a
variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face additional outages and delays in the future. These outages and delays could reduce the
level of traffic and therefore the

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number of consumer insurance inquiries on our website. In addition, the Internet could lose its viability due to delays in the development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased governmental regulation. Changes in or insufficient availability of telecommunications services to support the Internet could also result in
slower response times and reduced use of the Internet.

Regulation of the Internet is unsettled, and future regulations could inhibit the growth of the Internet and otherwise harm our business

The laws governing the Internet remain largely unsettled, even in areas where there has been some legislative action. Furthermore, the growth and development
of the market for electronic commerce may prompt the enactment of more stringent consumer protection laws that may impose additional burdens on companies conducting business online. The adoption of
additional laws or regulations may inhibit the growth of the Internet as a medium for commerce and comparison insurance shopping, which could, in turn, decrease demand for our services, increase our
cost of doing business, or otherwise harm our business. In addition, applicability to the Internet of existing laws governing issues including property ownership, copyrights and other intellectual
property issues, taxation, libel and personal privacy is uncertain. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not
contemplate or address the unique issues of the Internet and related technologies.

Our international operations are subject to various risks

As of September 30, 2000, our international operations consist of activities with and through our joint venture partner, InsWeb Japan K.K. (of which we
currently own a 25% equity interest) to develop and maintain an online insurance marketplace in Japan. Though our foreign operations are limited they are subject to other inherent risks, including:



Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value and harm our operating results

We may acquire or make investments in complementary businesses, technologies, services or products if appropriate opportunities arise. For example, in
December 1998, we acquired Benelytics, Inc., a developer of employee health benefits selection and management software and reference data products. The process of integrating any
acquired business, technology, service or product into our business and operations may result in unforeseen operating difficulties and expenditures. Integration of an acquired company also may consume
much of our management's time and attention that would otherwise be available for ongoing development of our business. Moreover, the anticipated benefits of any acquisition may not be realized. We may
be unable to identify, negotiate or finance future acquisitions successfully, or to integrate successfully any acquisitions with our current

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business. Future acquisitions could result in potentially dilutive issuances of equity securities or the incurrence of debt, contingent liabilities or amortization expenses related to goodwill and
other intangible assets, any of which could harm our business. For example, in connection with the Benelytics acquisition, we recorded $7.3 million in goodwill, and $1.4 million to
software and other intangible assets. In the second quarter of 2000, we wrote off the remainder of the goodwill from the Benelytics acquisition.

We may be unable to protect our intellectual property rights

We regard our intellectual property as critical to our success. We rely on trademark, copyright and trade secret laws to protect our proprietary rights. We
have registered the INSWEB mark in the United States, Japan, France, Germany, South Korea and the United Kingdom and applications are pending in several other countries. Other United States and
worldwide trademark applications include, but are not limited to, eAgent, InsWeb.com, Powered by InsWeb, and Where You and Your Insurance Really Click. We have patent applications on file in the
United States. Our trademark registration and patent applications may not be approved or granted, or, if granted, may be successfully challenged by others or invalidated through administrative process
or litigation. Notwithstanding these laws, we may be
unsuccessful in protecting our intellectual property rights or in obtaining patents or registered trademarks for which we apply.

We may be subject to claims for infringement of intellectual property, with or without merit, which could be costly to defend or settle

We may from time to time be subject to claims of infringement of other parties' proprietary rights or claims that our own trademarks, patents or other
intellectual property rights are invalid. We have been subject to infringement claims in the ordinary course of business, including claims of alleged infringement of the patent and trademark rights of
third parties by us and companies with which we have business relationships. Any claims of this type, with or without merit, could be time-consuming to defend, result in costly litigation,
divert management attention and resources or require us to enter into royalty or license agreements. License agreements may not be available on reasonable terms, if at all, and the assertion or
prosecution of any infringement claims could significantly harm our business.

We incorporate third-party technologies and services into our online marketplace, and if the providers of these technologies and services fail in a timely manner to develop,
license or support technology necessary to our services, market acceptance of our online marketplace could be harmed

We have incorporated technology developed by third parties into our online marketplace, and we will continue to incorporate third-party technology in our
future products and services. We have limited control over whether or when these third-party technologies will be developed or enhanced. If a third-party fails to timely develop, license or support
technology necessary to our services, market acceptance of our online marketplace could be harmed.

Our stock price may fluctuate widely, and Internet stocks in general have been extremely volatile

The trading price of our common stock has been highly volatile and may be significantly affected by factors including actual or anticipated fluctuations in our
operating results, new products or new contracts by us or our competitors, loss of key customers, conditions and trends in the electronic commerce and insurance industries, changes in financial
estimates by securities analysts, general market conditions and other factors. The trading prices of many Internet stocks have experienced extreme price and volume fluctuations. These fluctuations
often have been unrelated or disproportionate to the operating performance of these companies. These fluctuations may continue and could harm our stock price. Any negative change in the public's
perception of the prospects of Internet or electronic commerce companies could also depress our stock price regardless of our results.

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Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if such a transaction would be beneficial to our
stockholders

Provisions of Delaware law and our certificate of incorporation and bylaws could make more difficult the acquisition of us by means of a tender offer, a proxy
contest, or otherwise, and the removal of incumbent officers and directors.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

InsWeb is exposed to financial market risks including changes in interest rates and, to a lesser degree, foreign currency exchange rates. The fair value of
InsWeb's investment portfolio or related income would not be significantly affected by either a 10% increase or decrease in interest rates due mainly to the short term nature of the major portion of
InsWeb's investment portfolio. InsWeb's interest income is sensitive to changes in the general level of U.S. interest rates, particularly since the majority of our funds are invested in instruments
with maturities less than one year, except for one U.S. agency security whose maturity is greater than one year. InsWeb's policy is to limit the risk of principal loss and ensure the safety of
invested funds by limiting market and credit risk. Funds in excess of current operating requirements are invested in obligations of the U.S. government and its agencies and investment grade
obligations of state and local governments and large corporations.

The
table below represents carrying amounts and related weighted-average interest rates by year of maturity of InsWeb's investment portfolio at September 30, 2000:

2000

2001

Total(In thousands, except interest rates)Cash and money market funds

$
5,181

$


$
5,181Average interest rate


6.1
%

0.0
%

6.1
%Investments

$
43,167

$
8,988

$
52,155Average interest rate


6.6
%

6.4
%

6.5
%Total

$
48,348

$
8,988

$
57,336Average interest rate


6.5
%

6.4
%

6.5
%


InsWeb's
revenue and capital spending is transacted in U.S. dollars. As discussed in the notes to the condensed consolidated financial statements, InsWeb investment in InsWeb
Japan K.K. and the note payable to strategic partner and shareholder is denominated in Japanese Yen. InsWeb has not engaged in hedging transactions to reduce its exposure to fluctuations that
may arise from changes in foreign exchange rates. Based on InsWeb's overall currency rate exposure at September 30, 2000 a near-term 10% appreciation or depreciation would have an
immaterial affect on InsWeb's operating results or financial condition.

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PART II: OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



10.23

Lease Between Registrant and Oates/Allegheny Venture I, LLC Dated September 29, 2000






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SIGNATURE

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|Dated: March 29, 2001 |  | INSWEB CORPORATION
(Registrant)                                                                          
|--------------------- |  | ---------------------------------------------------------------------------------------------------------
|                      |  | /s/MARK P. GUTHRIEMark P. Guthrie
President, Chief Operating
Officer and Chief Financial Officer (acting)

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EXHIBIT INDEX

|Exhibit |  |                                                                                     
|------- |  | ------------------------------------------------------------------------------------
|10.23   |  | Lease Between Registrant and Oates/Allegheny Venture I, LLC Dated September 29, 2000

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