1. Update on E-Commerce and its Use by Insurers CAS 2000 Spring Meeting Las Vegas Tony Alfieri, eCoverage

2. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Introduction l Insurance industry has survived the onslaught of new technology practically unchanged…until now l First it was online trading and other financial services. Now online insurance is expected to take off as well l Who will be the winners and losers? –Consumers will reap big rewards –New pressures on industry already enduring unprecedented price competition

3. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers What do the experts say? "Online offerings are increasingly important to financial services institutions, with consumers conducting a significant and growing percentage of all financial transactions online. There is a substantial opportunity for the player who can put the right ingredients together to create a truly powerful Internet insurance offering.'' Booz Allen & Hamilton 3 rd Annual Internet Insurance Survey

4. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers What are the opportunities? l Recent study by Booz Allen & Hamilton estimates that the internet and technology could cut expense for insurance companies up to 60%, particularly in areas of distribution and customer service l Estimates for online sales vary; recent Forrester report estimates $14B online market by 2004 l No dominant online brand today

5. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers “Online insurance is wide open.” - Ben Black, Harris Interactive Is there a dominant brand? Among online users, percent who could name a web site by product category Source: Harris Interactive

6. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers What is happening today? l Brick and Mortar companies discover the web (finally) l Insurance Marketplaces l New Challengers

7. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Brick and Mortar Companies l Informational Only l Lead Generator –Application is forwarded to agent for quote l Online Quotes –Referral to agent for binding of coverage l Online Quotes, Binding of Coverage, and Claims –Progressive as an early leader –Allstate

8. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Brick and Mortar Companies l General consensus among analysts is that most large personal auto carriers will be offering online quoting within the next 12 to 18 month l Unclear as to how many will be offering coverage binding online during that timeframe l In general, most carriers business plans only consider the web as simply an additional distribution channel

9. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Insurance Marketplaces l Quote aggregators and lead generators l Often more than just personal auto –Homeowners –Renters –Life –Annuities l Examples: –InsWeb –Quicken Insurance –Insurance.com –Quotesmith

10. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers New Challengers l Internet Only Carriers –View the internet as more than just a distribution channel –See opportunity to build more efficient ways to sell and service insurance products –Changing the paradigm of control in the insurance purchasing process l Examples: –eCoverage –ePolicy –Esurance

11. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers A Challenger’s Perspective: eCoverage l Formed about 1 year ago l Based in San Francisco l Began selling personal auto online in California in September, 1999 l Currently offering auto product in about 8 states l Plans to offer product to approximately 25-30 states by end of Q2 l Blue Chip Investors and Board of Directors

12. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers l SOFTBANK Venture Capital l E*TRADE Group l RRE Ventures, co-founded by Jim Robinson III (American Express) l David Coulter, (Bank of America) l Ken Langone, (EDS, Home Depot) l Chris Larsen, (E-LOAN) l Accel Partners Investors & Board

13. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Business Model Issuing Carrier Brand Name Reinsurer MGA Captive

15. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers What is eCoverage doing? l Complete overhaul of traditional insurance company processes l Building company around the technology and business practices of the internet l Staffing with innovators from within and outside of the industry, willing and motivated to break the mold Key Point: Innovation can only happen if you provide the proper platform to support it.

16. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Three Key Areas: It is critical that a company have ownership of 3 key areas of the business: 1.Technology 2.Customer Experience 3.Product

17. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Technology l Core technology developed entirely in-house l Seven patents filed on technology allow for unprecedented flexibility in product and business development l Superior data quality and accessibility l APL not spoken here

18. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Customer Experience l eCoverage takes responsibility for the customer experience, from quote to claim l Licensed, non-commissioned professionals online or by phone 24x7 l eCoverage branded claims process

19. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Product l Unique sales environment brings new challenges l Current industry products assume agents touch l Proprietary personal auto product designed exclusively for sales over the internet l Superior understanding of data facilitates continuous updating of risk management operations in order to minimize risk and maximize profitability

20. CAS 2000 Spring Meeting, Las Vegas Update on E-Commerce and its Use by Insurers Conclusion: Who will win? l Consumers, for certain (better customer service, lower prices) l Companies who can : 1.Differentiate themselves via Superior Customer Service and real value-added product innovation 2.Leverage new technologies to create more efficient and cost effective processes throughout entire organization 3.Keep up the pace in a continuously evolving environment