Update: eCommerce and Update: eCommerce and Its Use by InsurersIts Use by Insurers

CAS Spring Meeting

Las Vegas

May 9, 2000

Internet sales are projected toInternet sales are projected to grow over time grow over time

Projected Sales ($billions)

0

2

4

6

8

10

12

1998 1999 2000 2001 2002 2003

Influenced

Direct

Source: Forrester Research

Current activity suggests these Current activity suggests these estimates may be lightestimates may be light

Estimated Visitors - Top Five Insurance Sites (millions)

0

1

2

3

4

5

December 99 April 00

Top five sites received an estimated five million visitors in April

Hundreds of sites exist and draw traffic today, including

– Marketplaces

– Individual carrier sites

– Agencies

Source: topnine.com

But lower acquisition costs aren’t But lower acquisition costs aren’t guaranteedguaranteed

Attracting consumers can be difficult amidst the noise

– 3.6 million web sites exist, with 8.1 million registered domains

– Estimated 2 million new web pages created per day

The internet will be used by most players within each channel– Changes the way sales, service is provided– Should improve expense efficiency and service quality– Think “telephone”

The internet affects all facets of the The internet affects all facets of the insurance marketplaceinsurance marketplace

Acquisition is the most visible– Costs should come down over time– Consumers will expect such access, regardless of cost

impact

Other areas will see as dramatic (if less visible) change– Policy service of all types– Basic company operations

Service levels unheard of today will become the norm tomorrow

Winning companies will learn quickly to Winning companies will learn quickly to use the internet to advantageuse the internet to advantage

Improve efficiency from an expense perspective

Leverage the knowledge gains available

Adapt to greater market transparency

– Price– Practices