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Quotesmith.com Responds to Illinois Subpoena Relative to Insurance Industry Sales Practices; Reiterates Pro-Consumer Business Model

Quotesmith.com, Inc. (ticker: QUOT, exchange: NASDAQ) News Release - 11/23/2004


Quotesmith.com Responds to Illinois Subpoena Relative to Insurance Industry Sales Practices; Reiterates Pro-Consumer Business Model

DARIEN, IL(November 23, 2004) -- Quotesmith.com, Inc., (Nasdaq SmallCap: QUOT), ), the only place on earth where you can get instant insurance quotes from over 200 leading companies and have the freedom to buy from the company of your choice, today announced that it has responded to a subpoena from the State of Illinois Department of Financial and Professional Regulation, Division of Insurance, requesting documents and information. The Company previously announced that it received the subpoena on November 11, 2004.

"The Illinois Division of Insurance made a straightforward information request that did not contain any allegations of wrongdoing and we answered that request yesterday without expectation of receiving any future allegations of wrongdoing," remarked Robert Bland, chairman and CEO. "As more state regulators participate in what has now become a nationwide probe of insurance sales practices involving perhaps hundreds of insurance brokerage firms, we again wish to advise our shareholders and employees that we do expect to receive additional subpoenas and information requests of this nature. We will not issue specific press releases regarding the receipt of any more such subject-related subpoenas unless such requests contain allegations of wrongdoing or other onerous information demands which could have a material effect on our business, neither of which we are expecting."

Reiteration of Pro-Consumer Business Model

Elements of the Quotesmith.com pro-consumer business model that set us apart from other insurance brokers are as follows:

  • Quotesmith.com has pioneered and brought to market a radical pro-consumer insurance business model that is predicated on providing as many auto, life, health and home insurance quotes as possible on a pre-purchase basis and of allowing the customer to buy from the company of their choice without regard to the compensation that we might earn on a given sale.
  • We currently provide instant quotes from over 200 insurance companies. Our unique $500 lowest price guarantee and $500 accuracy guarantee have both been in place for more than 7 years. The details of both guarantees are available online at www.insure.com.
  • We have never engaged in the brokerage of any commercial property and casualty insurance, or of large group life and health insurance, two broad areas which appear to be the focus of the burgeoning investigations.
  • Our direct response advertising and Web-based methods of delivering information gives all of our customers fair and full access to all of our databases and pricing information on a pre-purchase basis.
  • We have a longstanding and very public history of providing quotes for insurance companies that pay us no compensation as a free public information service.
  • All of our quotes are derived from published insurance company rate manuals and we have never manufactured "fake" insurance quotes as some large brokerages have been accused of doing.
  • We have approximately 200,000 customers nationwide and have no current customer complaints on hand.
  • We have never asked any employee to steer business to one company or another based upon the compensation that we might receive on a given sale.
  • We generate revenues from the receipt of industry-standard commission agreements, some of which pay retroactive volume-based commissions and some of which pay no such commissions. These are the same kinds of commission agreements that have been in wide use throughout the insurance brokerage industry for decades.
  • Insurance pricing in the individual life and health insurance markets represent our areas of highest expertise and experience. Our internal research has revealed no discernable difference or pattern of higher pricing by those insurance companies that pay retroactive volume-based bonus commissions to agents as compared to those that do not pay such commissions. In fact, it's not uncommon to see that the lowest-priced policies being offered to consumers are from insurance companies that pay the highest broker commissions.
  • Unlike the commercial property & casualty insurance markets, in which the payment of a negotiated up-front service fee to the broker is a common occurrence, Quotesmith.com has never charged such fees to its customers and relies entirely on industry-standard commissions, including retroactive volume-based bonus commissions, to generate revenues.

About Quotesmith.com

Originally founded in 1984 as Quotesmith Corporation, Quotesmith.com owns and operates a comprehensive online consumer insurance information service at www.insure.com. Visitors to the Company's Web sites are able to obtain free, instant quotes from more than 200 leading insurers, achieve maximum savings and have the freedom to buy from any company shown. Insure.com also plays home to over 3,000 originally authored articles on various insurance topics and also provides consumer insurance decision-making tools that are not available from any other single source. Quotesmith.com generates commission and fee revenues that are paid by participating insurance companies. We also receive bonus commissions from some insurance companies that are based on the volume of business produced by the Company. Shares of Quotesmith.com trade on the Nasdaq SmallCap Market under the symbol "QUOT."

Cautions about Forward-Looking Statements

This announcement may contain forward-looking statements that involve risks, assumptions and uncertainties pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. This announcement also contains forward-looking statements about events and circumstances that have not yet occurred and may not occur. These forward-looking statements are inherently difficult to predict. Expressions of future goals and similar expressions including, without limitation, "intend," "may," "plans," "will," "believe," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential" and "forecast," reflecting something other than historical fact, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Investors should be aware that actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance. Reported Web site activity and/or quotes are not necessarily indicative of any present or future revenue. The Company will not necessarily update the information in this press release if any forward-looking statement later turns out to be inaccurate. Potential risks and uncertainties include, among others, concentration of common stock holdings, integration and management of the Life Quotes operation, declines in the life insurance industry, unpredictability of future revenues, potential fluctuations in quarterly operating results, competition, the evolving nature of its business model, risks associated with capacity constraints and the management of growth as well as the risks associated with the results of investigations of insurance company practices and potential terrorism threats. More information about potential factors that could affect the Company's financial results are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003 which is on file with the United States Securities and Exchange Commission. Quotesmith.com and insure.com are service marks of Quotesmith.com, Inc. All other names are trademarks of their respective owners. Copyright 2004. All rights reserved. Quotesmith.com, Inc.

SOURCE Quotesmith.com, Inc.

 

CONTACT: Phillip A. Perillo, CFO, (630)515-0170, ext. 295,phil@insure.com

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