If you like what we do here, please click on our sponsor's banner and check out our store. Thanks!

It was Art Villa's lucky day. While at the VentureNet '97 conference, this owner of a small computer consulting firm was greeted with photographers. He received a beautiful plack, with a congratulatory letter from the CEO of an insurance company. He received free passes to an exclusive lunch gathering, attended by high-tech heavies. He even got a new briefcase.

You see, Art was the first customer of a new Web site called InsurePoint. He needed to buy insurance for his new business--which is what InsurePoint is all about.

Origins of InsurePoint began with a speech in Chicago, by Robert Davidson, the Executive Vice President of Bolton, a southern California insurance agency. It was at the end of 1995 and his speech was on the subject of marketing insurance on the Net. "At that time," says Davidson, "the industry was struggling with the implications of the online world."

There are two types of property/casualty insurance companies. On the one hand, there are the direct writers. These include such brand names as State Farm and AllState. These companies have their own sales forces, which can only sell their own insurance products. That is, a State Farm agent cannot sell an AllState product.

At the other end of the spectrum are the agency companies. Like State Farm and AllState, an agency company will develop its own insurance products. However, the agency companies will not have a sales force; rather, they will use other companies to distribute the product. One such company is Bolton.

Companies like Bolton faced a classic situation of disintermediation: What if the agency companies decided to bypass them and sold their products directly on the Internet? Bolton knew it had to team up with an agency company and develop an Internet joint venture.

Well, at the end of Davidson's speech, an agency company, Atlantic Mutual, was intrigued about pursuing a Web strategy. By the middle of 1996, both companies entered a joint venture and began the development of InsurePoint. In this venture, Bolton agreed to use its expertise in marketing insurance products. After all, Bolton has a strong local brand in Southern California. It would be difficult for a company, such as Atlantic Mutual, with no experience in marketing policies, to suddenly enter the California market. Moreover, Bolton was far ahead of the learning curve regarding the Internet. It was the third insurance company to have a Web site in north America.

As for Atlantic Mutual, it would continue to innovate and maintain the quality of its products. "It was a synergistic match," says Davidson. The InsurePoint development team consisted of 12 employees from Atlantic Mutual and one from Bolton. These people were located in three separate states and communicated via Lotus Notes.

InsurePoint uses template underwriting. That is, the user will fill-in a form on the InsurePoint site, which is targeted to a narrow group of companies: electronic components manufacturers, hardware/software consulting firms, Internet services companies, software developers and systems integrators. The form has four sections:

1. Business: Here, you will disclose what types of services and products you provide (and how much they represent as a percentage of revenues). You need to give a brief description of each product and service, as well as disclose your major customers.
2. Locations: InsurePoint allows for a maximum of two locations. You will indicate the address, square footage, business personal property value, age, type of construction (frame, masonry, etc.), and whether you have an alarm and smoke detection system. The form even asks if the fire department is paid, volunteer or part-paid.
3. Equipment: Here, you will indicate the market value of your computer equipment (eg, servers, mini's, mainframes, personal computers, etc.) and software. The form also asks how much you back-up your systems on an off-site location.
4. E & O (Errors & Omissions): Apparently, E&O insurance is in the greatest demand for high-tech firms. The reason is that this insurance covers potential mistakes that computer consultants may commit on sensitive corporate systems and networks. In most cases, general liability policies do not cover such losses (these policies tend to cover product and service failures that result in property damage or bodily injury)

A great feature of the online application is that if you are unable to complete it in one sitting, you can save the information and return at a later date. This is very important, given the fact that the application is long. The application process is secured using SSL and digital certificates from VeriSign. Bolton and Atlantic Mutual will process the application and provide a quote within two business days. This process is automated as much as possible, thus saving hours and money for the customer.

Besides processing an application, the user can also file a claim. Again, InsurePoint uses a template method, which results in cost savings. Currently, you cannot make payments for the policy using the Web. A major reason is the complexity of integrating the Web site into the legacy systems of Atlantic Mutual and Bolton. But InsurePoint should have a payment system shortly.

InsurePoint also plans on providing online access to historical account information. In terms of marketing, InsurePoint is attempting to establish reciprocal links with high- tech trade associations. In fact, Bolton is an active member of various high-tech trade associations, such as the Software Council, and was a sponsor of the VentureNet '97 conference.

So far, InsurePoint is available only in California. The reasons are: the high number of computer users and the tremendous growth of ISPs in the state. And, of course, there is a high concentration of high-tech companies. As InsurePoint grows, there are plans to expand into other states. Although, setting up shot in another state is not a simple task. Each state has its own insurance regulations. For example, to establish the California version, the regulatory authorities took six months.

Since its launch on June 10th, InsurePoint has sold two policies and four are in the hopper. The first policy was for $2,000 and the second for $3,500. "Our goal was to have about $1,500 per policy," says Davidson.

It's not often that you see an insurance company push the technology envelope. Then again, Bolton is much like its high-tech clients--a small company, which is growing quickly and is willing to try something new. It should not be surprising that the Insurance Journal named Bolton the "Agency of the Year" for 1996, because of "superior customer service, outstanding levels of automation, and innovative customer solutions."

"In a way, InsurePoint is a learning tool," says Davidson. Perhaps, the industry has something to learn from Bolton.

Tom Taulli