Aetna Accelerates Net Insurance Trend

In an announcement Thursday that is sure to further unsettle agents and brokers who fear that their profession may soon be obsolete, Aetna, Inc., a $1 billion (US$) life insurance company that covers 10 million Americans, unveiled plans to sell group life insurance online.

The news came just one day after ING Group, the largest Dutch financial services company, announced plans to create a new business unit in the United States that will also sell life insurance on the Web.

Aetna, the largest insurance carrier in the United States, sells life, disability and long-term care insurance products. With its announcement Thursday, the company unveiled i.Choose Life, the first in a series of Web-based offerings under development.

The new product offers employees a number of online insurance options, such as adding more coverage or making beneficiary changes. The program also allows employees to evaluate whether their company-paid benefits are appropriate for their needs.

Aetna says i.Choose Life will be accessible to employees on company intranets.

Insurance Wars

Although consumers may ultimately benefit from direct online insurance sales, the ING Group’s sales force of 4,000 insurance brokers could lose a substantial number of customers.

“Maybe it’s more competition for the agents, but they’ll get that from others anyway,” said Fred Hubbell, ING Group management board member. “If we keep it in house, we’ll have more money to spend on marketing and to reinvest to support the sales channel in other ways.”

Unlike some other financial services, insurance has moved online slowly and cautiously, possibly because the industry is regulated state-by-state and the rules vary widely. The biggest roadblock appears to be that a number of states require a traditional signature to formalize an insurance contract.

Additionally, industry leaders have expressed serious resistance to moving insurance sales online. Earlier this year, Joe Annotti, assistant vice president of public affairs for the Association of Independent Insurers said, “This is not like buying books from It’s a much more complicated process.”

Gathering Momentum

Nevertheless, some insurance companies have already made the move online. In March, Fidelity Investments launched, which serves as a research tool and quote service for consumers.

The site will ultimately operate as an online insurance agency enabling shoppers to buy life, auto, health and other coverage for the same fees that agents now get from insurance companies when they sell policies.

Earlier this year, Forrester Research issued a report saying that brick-and-mortar insurance giant Allstate’s plans to sell insurance online would “spark an all-out Internet war.” The report cautioned that the shift in power from agents, product managers and underwriters to consumer marketers and customer service experts would fuel the dispute.

Forrester added that as online competition intensifies, a series of substantial changes would sweep the industry, pressuring agents to “adapt to business on the Internet or face a substantial loss of income.”

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