State Farm waves bye-bye to InsWeb
Beginning May 1, 2000, State Farm Mutual Automobile Insurance Co. will pull up its stakes at InsWeb and depart. State Farm has clearly made a commitment to the Internet with its online bank. So why would the nation's biggest home and auto insurance company defect from the nation's most popular (according to Media Metrix traffic numbers) insurance quote aggregator?
InsWeb says in a statement, "In speaking with State Farm representatives, we believe their reasons for not renewing their contract with InsWeb were specific to their own distribution model." InsWeb spokesperson Greg Jones would not provide further details.
But State Farm spokesperson Dick Luedke says that State Farm is "not changing its direction with regard to the Internet as a tool to meet customers' needs."
Luedke would not comment on any of State Farm's future Internet business plans, except to say that his company will continue to provide consumers with agent contact information through other online insurance marketplaces — QuickenInsurance and NetQuote — as well as its own Web site.
State Farm not "standing pat" with Internet
|"I'm sure [State Farm] isn't standing pat with regard to the Internet."|
In light of recent studies done by Forrester Research, a Cambridge, Mass.-based company, that show insurance and the Internet really starting to click, as well as Allstate Insurance Co.'s Internet play, it's unlikely that State Farm is pulling away from the Web.
One knowledgeable source who wishes to remain anonymous tells Insure.com that State Farm plans to use the Internet "soon" for its policyholders to make claims and input changes to their policies. There's no word on the exact roll-out date.
Tony Diodato, a senior financial analyst at A.M. Best Co., says, "I'm sure [State Farm] isn't standing pat with regard to the Internet."
State Farm Bank embraces Internet
Diodato speculates that the insurer's exit from InsWeb could signal a more streamlined approach to the Internet for State Farm. The company's bank is already Internet-accessible nationwide, and insurance agents in Missouri and Illinois play a key role in moving the the bank's products, providing loans, offering home mortgages, and supplying bank account support. State Farm agents in other states will soon play that same key role. (For more, see State Farm Bank clicks with the Internet.)
Luedke of State Farm flatly says that his company's exit from InsWeb is not related to competitive strategies for State Farm Bank. "We spend our money in our policyholders' best interest, and we have chosen not to spend money [at InsWeb] now," explains Luedke. State Farm accounted for approximately 30 percent of InsWeb's revenues in the first quarter of 2000 — around $2.6 million. The company had signed an agreement with InsWeb in September 1997 and began providing agent contact information in 1998 for consumers who requested condo, home, renters term life and auto insurance quotes.