| 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.
| "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."
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.
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