According to Mr. Ross, the Internet “is a viable means to distribute products,” though not as a unique business model.

“There is still an increase in volume with respect to [online] insurance sales, auto in particular, and we expect it to increase,” he said, adding that much of the increase will be the result of added services.

Last year, Meridien found that aggregators “were missing the close, or the ability to execute online in real time,” Mr. Ross noted. These capabilities now exist, “but the consumer still will not necessarily be the one to take advantage of that. It will be the agent or the advisor who will execute” the sale, he explained.

Lou Geremia, president of Insurance.com, headquartered in Newton, Mass., said his company was established in 1999 and is backed by Fidelity Investments.

Insurance.com, he said, “made some big plays early last year” to expand distribution, “which means relationships with big portals like AOL, MSN, Yahoo and Google.” Since the expansion, he said, “our business has more than doubled across the board.” He added that Insurance.com brings in more than a half-million visitors each month.

Auto remains the most popular online insurance to buy, Mr. Geremia said, “because people have to have it.” Another factor is rate discrepancies in auto insurance, “especially now that some carriers have increased rates.” Insurance.com, he noted, represents 10 core carriers for auto insurance in most states.

These include Travelers, The Hartford, Met Life and Liberty Mutual. Term life is another big seller and interest in health is also high, Mr. Geremia stated.

The challenge aggregators now face, Mr. Geremia said, is to bring in traffic “at a cost that enables you to make money from a fulfillment perspective.” Aggregators operate by selling insurance and earning a commission or a lead fee, “depending on your business model,” he explained. Marketing partners also must be paid for bringing potential customers to the site.

Business has steadily improved for some aggregators, he said, because of bigger marketing relationships that are being formed.

Mr. Geremia noted that closing techniques online have also improved over last year, because of increased telephone support. Insurance.com, for example, now has “buy online” capabilities with most carriersenabling a sale to be closed with a credit card, “much like Progressives Web site has been offering over the last few years,” he said.

Progressives Web site, he added, “provides a good benchmark in terms of the success” and possibilities of online business.

“Meridien said there will be winners and there will be losers,” Mr. Geremia said, referring to the aggregator survey. “I think over the past several years, the firms that haven't been successful took a lot of the carriers' time.” Now, he said, carriers are focusing on one or two of the largest aggregators.

Mark P. Guthrie, president and chief operating officer of Sacramento, Calif.-based InsWeb, said that aggregators are “here to stay.” Relationships with carriers have matured to the point that, “we feel like we are part of their growth and the days of experimenting with aggregators, from a carrier perspective, are gone.”

InsWebs model, he explained, is “consumers and insurance companies with us as facilitators in-between.”

Through the first two quarters of this year, InsWeb has experienced “record” growth, Mr. Guthrie said. “From our perspective, it's probably around 20 percent. It's a lot of growth.”

That number translates to “tens of thousands and sometimes hundreds of thousands more consumers coming to InsWeb.” But those numbers are “still small if you think about 130 million households out there,” he said.

About 80 percent of consumers visiting InsWeb are interested in personal lines auto insurance, 5-to-10 percent are interested in term life and 2-to-3 percent are interested in the “other products category,” which includes homeowners, renters, condo and health insurance, Mr. Guthrie explained.

Hits to the site are up “because of a combination of things,” he noted. More people are familiar with the Internet and are “comfortable with self-directed household management,” he explained. Also, higher rates from some carriers are another factor, “and I think it is becoming easier to find the players online than in the past, in that there are fewer [aggregators] out there.”

InsWeb's marketing techniques haven't changed much, said Mr. Guthrie. InsWeb markets through online messaging to consumers and in the past has used other techniques, such as static banner ads. Now the organization uses marketing technology available from Yahoo, Lycos and other search engines, he noted.

In general, he said, “we have been consistent with our belief of having InsWeb be there close to the life event that is making somebody think about insurance.”

The main improvements to closing techniques are actually off the Web, Mr. Guthrie said. Though the expectation was that customers would want to close a sale online, “I think we have all seen the realities of that.”

Because of the complexity of insurance, he explained, call centers have become more important. “There has been a lot of improvement in call center technology and techniques,” so there is no longer “a giant gap between a Web experience and a telephone experience.”

InsWeb, he added, represents more than 40 carriers and offers a variety of insurance products.

And what does Meridien see in the future for aggregators? “I don't see [aggregators] being such a viable model in the long-run,” Mr. Ross said.

“Why? Because you have the agent, which is still the most sought-after channel provider, and you have the carriers, which will start taking advantage of aggregation capabilities themselves.”

Similar to the dot.com bust of the late 1990s, he said, “I see that trend happening to some insurance aggregators, if they rely on simply the Internet as their sole means to attract revenues.”

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 1, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.