Allstate to Sell Insurance Online

NEW YORK (06/28/2000) - Allstate Insurance Co. next month plans to begin a national rollout of a program for selling insurance directly to consumers via the Internet after doing a "soft launch" in Oregon in May. And the new strategy is leading to sweeping internal changes at the insurer.

Edward Liddy, Allstate's president and CEO, told a gathering of financial services industry executives here yesterday that the Northbrook, Illinois, company has revised its long-term strategy to include two new channels for its insurance products: the Internet and telephone call centers.

As part of this strategy, Liddy said, Allstate already has eliminated its 6,000 agent employees, who were given a choice of becoming independent contractors or leaving the company. "The days of one single distribution channel are past," he said.

Liddy added that Allstate doesn't plan to make any deals with online aggregators that use the Internet to sell insurance policies from multiple companies. "We have what all the aggregators want," he said. "We have the brand." And the addition of the Internet and call center capabilities gives Allstate a "much more powerful way of selling" its insurance products than relying on aggregators would, he said.

Allstate's go-it-alone approach differs from one being taken by New York-based American International Group Inc. (AIG), which recently struck deals to sell its auto-insurance policies through links to Web sites run by ETrade Group, Inc. in Menlo Park, California, OnMoney.com in White Plains, New York, and Worldly Information Network Inc.'s Wordlyinvestor.com in New York.

AIG also offers quotes on auto insurance through aggregator InsWeb Corp. in Redwood City, California, and the company has a Web site of its own called AIGdirect.com that consumers can also use to get quotes. "We play both sides of the coin," said Scott Alexander, AIG's chief e-business officer.

Another online auto insurance provider is GEICO, a fully owned subsidiary of Berkshire Hathaway. GEICO also offers quotes on policies via the Internet, but for now it won't let customers buy insurance coverage online -- the same approach that AIG is taking.

So far, only automobile insurance is available on the Allstate Web site and through its call centers. But Liddy said Allstate plans to add homeowners' insurance in September. "That's something that an Internet-only company wouldn't be able to do," he said. "You have to have a physical presence to be able to go out and inspect the homes."

It took several months for Allstate to develop its Internet strategy and ensure commitment from all levels of management, Liddy said. "I suppose when I look back on what we're trying to get done, moving even faster would have been a smart thing to do," he added. "The price for inactivity can be very high."

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