Can Life Insurance Survive Online?

Feb 16 1999

NEW YORK - John Hancock is continuing its aggressive online marketing strategy, inking a one-year deal to promote its life insurance business across Women.com's network of Web sites, beginning in March. The deal, valued at under $1 million, comes two months after the Boston-based insurance provider struck a two-year, $7 million marketing alliance with Microsoft Network.

Under the terms of the latest deal, John Hancock will run a slate of banner ads throughout the Women.com network, including MoneyMode, as well as Women's Wire , the Women.com Store , Beatrice's Web Guide , Stork Site , Prevention's Healthy Ideas and Crayola FamilyPlay . The companies also will develop a micro-site, which will be updated quarterly, to help educate consumers about life insurance and how to apply online. Jim Smith, executive director of electronic commerce at John Hancock, says the site will be more educational than promotional.

The number of firms underwriting auto and homeowners' insurance policies online has grown over the past year, as regional insurance companies and resellers such as Intuit and InsWeb have begun posting the entire sign-up process on the Web. By contrast, life insurance is a much trickier business to conduct on the Internet as it typically requires a physical check-up for the policy to be fully underwritten by an insurance firm.

John Hancock customers can conduct research, get a quote and request an application about life insurance policies, but that's about all, Smith says. In some cases, prospective applicants - especially ones with relatively ailing health - are required to pass along blood samples or other bodily fluids to insurance companies via a physician or paramedic in order to gain approval for life insurance.

The cumbersome sign-up process, and the fact that life insurance customers are typically older and less Internet-savvy, may be factors in the slim projections for the online life-insurance market. Forrester Research predicts the number of life insurance policies generated via the Internet will amount to only $601 million by 2003, or under 3 percent of the entire U.S. market. In contrast, home insurance will generate $335 million online, and auto insurance policies will amount to $3.2 billion during the same period, according to Forrester.

Still, John Hancock has been getting more aggressive in utilizing the Internet to attract new policy holders. "We want people to think about John Hancock when they're looking for life insurance online," says Smith. Eventually, Smith envisions the whole sign-up process being conducted online with applicants volunteering portions of their medical records to insurance companies.

Currently, John Hancock customers can submit their personal information online, "and at that point they'll get a phone call to set up where the paramedic visit will take place," Smith says, adding: "It cuts out at least one phone call and at least one week out of the [application] process."

Smith says the Internet currently represents more than a quarter of life insurance policies generated through its direct distribution channels, which also include direct mailings, TV and radio spots. The No. 1 recruitment channel remains John Hancock's sales reps.