Issues in Marketing Online Insurance Products: An Exploratory Look at Agents’ Use, Attitudes, and Views of the Impact of the Internet

ABSTRACT This article uses a survey of insurance agents in Florida to examine the manner in which insurance agents use and view the Internet as a method of marketing insurance products. The results of the survey suggest that the agents' use of the Web and their attitudes toward the Web do not vary by demographic characteristics (including age, education level, gender, and income). In addition, the agents' perception of the Internet as a threat (rather than an opportunity) does not vary by age or education level and is not correlated with their attitudes toward the use of the Web. However, while Internet marketing and other means of direct selling are viewed by the agents as equal threats to their sales, the agents believe that such marketing by other companies is a greater threat than that done by the companies they represent. INTRODUCTION The use of the Internet to buy and sell products has increased dramatically over the past five years, with more than 28 million households having made online purchases in 2000. However, the insurance industry has been slow to focus on the online businessto-consumer market, and Internet purchases of insurance have been relatively small. In 2000, only about 700,000 households (or 1 percent of the insurance market) purchased insurance online. On the other hand, it is estimated that about 9 percent of the market (typically young, price-sensitive, brand-loyal consumers) did use the Internet to research the purchase of relatively simple insurance coverages (Rogers, 2001). One reason often cited for the slow growth of online insurance sales is resistance from insurance agents, who fear that they will be eliminated from the process. Increased use of the Internet by insurers could not only result in lower prices for consumers, but also lower commissions for agents and a reduction in the number of agents (Trembly, 2000b). However, others argue that the complicated nature of insurance products makes it unlikely that the Internet will ever replace traditional sales agents. Instead, it may be used both to improve interaction between agents and insurers and to enhance the ability of agents to provide customer service at reduced costs (Rogers, 2001). For example, given the large percentage of phone calls to an agency that are billing-related, allowing consumers to access their billing histories online could free up agency staff for more productive work, such as consultative selling, improving claims service, etc. (Morgan, 2001). In this view, the Internet represents an opportunity for agents, rather than a threat. These diverse views regarding the impact of the Internet on insurance agents provide the motivation for this research. The purpose of this article is to provide an exploratory look at (1) the ways in which insurance agents use the Web (if at all) to enhance sales or to provide services to their clients; (2) their attitudes toward online marketing of insurance; and (3) whether agents view the Internet primarily as a threat to their business or as an opportunity. Another focus is whether the agents' use of the Web and their attitudes and views about the Web vary by age, education level, or other demographic characteristics. The article begins with a brief look at the literature regarding the online marketing of insurance products. The next section discusses the research hypotheses and methodology. The results with respect to each of the hypotheses are then described. LITERATURE REVIEW The academic and trade literature has addressed a variety of topics related to the marketing of insurance products over the Internet. These topics include (1) the regulation of online selling; (2) methods of marketing insurance products over the Web; and (3) barriers to Internet marketing. In general, insurers want minimal government and regulatory involvement with their Internet sales activities (Greenberg, 2000). Regulators are concerned, however, about issues such as protecting consumers and ensuring the legality of contracts sold over the Internet (Meyer and Krohm, 1999). …