Internet Insurance Model Gains Market Share, Frustrates Brokers

by Jamie Walden  on Monday, Oct. 12, 2009 12:00 am  

"If we write $2.5 million worth of premium with a particular carrier," Carter said, "and there's a gray area on a $100,000 claim and we pick up the phone and call and go, 'Hey, you really need to give them the benefit of the doubt.' And the carrier goes, '$100,000 worth of claim versus $2.5 million worth of premium - I think we pay the claim.'"

Though some online insurance firms have customer support centers, brokers said that wasn't enough.

"When my computer crashes or I have a computer problem, I can call an 800 number and talk to somebody who lives in a different country, who doesn't understand my unique situation or how my office is particularly networked," Berryhill said. "And if you've ever done that, that can be a very frustrating experience.

"Or I can call my local tech support guy that I know by his first name. And he knows where my office is and comes to my office and helps solve my problem. To me, it's worth that to have that personal understanding of my business."

One of the most important aspects of having a broker, Berryhill said, is engaging in conversations on the front end about what the coverage entails.

Berryhill said he leads clients through a checklist, discussing line by line what a policy does and does not cover.

"I think the big difference between having an agent and buying [insurance] online is you can have those conversations."

But some consumers have become jaded by the hard-sell, experts said, and prefer the comfortable anonymity of virtual shopping.

Jones of Legacy Capital said many consumers have encountered aggressive sales tactics, particularly from life insurance salesmen. "And people have experienced that and they don't like it," Carter said.

"They don't like to feel pressured," Stock, of QualChoice, said. "They like to make their own independent decisions and have the freedom to have the time to evaluate it on their own and compare and contrast."

'They're Relying on Us'

Though businesses with very few employees have gravitated toward cheaper insurance on the Internet, most businesses still use brokers.



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