Hide Notes 

Slide 1: QuickenInsurance: The Race to Click and Close Team 2 Matthew Hanafin, Gaetan Lepinois, Nancy Reynolds, LaKesha Robertson, Adam Saulsbury, Greg Williamson
Slide 2: Company Overview How It All Started    The Internet was becoming an attractive alternative distribution channel for a variety of consumer products The insurance industry was slow to take advantage of the Internet. July of 1995, Steven Aldrich launched an online insurance “dot-com.”
Slide 3: FUNDAMENTAL ISSUES OF THE CASE In the case of OuickenInsurance: The Race to click and close, focuses were placed on: Market Place Business Models Aggregator Business Models Vertical Portal Models Horizontal Portal Models. After careful analysis of this case, it makes one ponder questions such as: •Which business model will dominate? •What kind of investments should be made? •What measures need to be taken to evolve the business?
Slide 4: Insurance Industry  1990s: large, inefficient, and highly fragmented insurance industry 1,100 property and casualty insurance providers  1,200 life and health insurance companies  Mid-1990s: expenses for agentbased carriers often exceeded premiums  1995: U.S. insurance industry = a mature $ 270 billion market 
Slide 5: Insurance Industry Cont’  1996: growths of life and auto insurance premiums slowed respectively to 2.9% and 4.3% per year • considerable consolidation   1999: commissions during the 1st year of a term life insurance policy ↑ to 40 to 70% of the revenues received Over the life of the policy, commissions averaged 5 to 10%
Slide 6: Insurance Industry Cont’ Significant market potential  Auto insurance represents the majority of the revenues  Estimations: with Internet distribution channel, 10 to 15% per policy per year would be saved  By early 2000: development of online sales channel (by established insurance carriers) 
Slide 7: Change in Property/Casualty Insurance Distribution Channels from 1998-2003 8% 6% 4% 2% 0% -2% -4% -6% -8% Percent Change Dedicated Agents Independent Agents Distribution Channel Direct Response Banks Internet Other
Slide 8: Change in Life/Health Insurance Distribution Channels from 1998-2003 6% Percent Change 4% 2% 0% -2% -4% -6% Dedicated Agents Independent Agents Direct Response Banks Internet Other Distribution Channel
Slide 9: Business Models Market Place Aggregator Vertical Portal Horizontal Portal
Slide 10: Marketplace – Business Model Basic Features Sell products and services  Do not take control of physical inventory  Sell products with a nonnegotiable price  Complete sales online 
Slide 11: Marketplace – Business Model Basic Features Sell products and services  Do not take control of physical inventory  Sell products with a nonnegotiable price  Complete sales online 
Slide 12: Marketplace – Business Model Revenue Model Based on commission or transaction fee on each sale  Costs are based mainly in IT and IT support  Procurement and inventory management costs often are lower than those of retailers. 
Slide 13: Aggregator – Business Model Basic Features  Provides information on products or services for sale by other channels.  Provides comparison of features and pricing  Does not enable buyers and sellers to complete final transaction.
Slide 14: Aggregator – Business Model Revenue Model  Referral fees – Where Available  Advertising  Supplemental Revenue Sources • Industry Supported • Supported by Parent Company
Slide 15: VERTICAL PORTALS (QUICKEN.COM) Basic Features  Vertical Portals are those that provide deep content  They are often comprised of a variety of business models, all of which generate separate revenue streams
Slide 16: VERTICAL PORTALS (QUICKEN.COM) Revenue Model  Within the Vertical Portal Model, Revenue & Cost Models were specific the type of service provided
Slide 17: HORIZONTAL PORTALS (AOL)    Basic Features Horizontal portals are those that provide gateway access to the Internet’s vast store of content and services. Horizontal portals often form strategic alliances with dial-up and broadband Internet service providers to enable revenue sharing on access fees AOL, known for being a proprietary online provider, operated as both a content portal and a network service provider before the Internet and maintained that model when it launched its Internet service in 1995
Slide 18: HORIZONTAL PORTALS (AOL) Revenue Model  Advertising fees  Also generate revenue with transaction fees & internet service providing fees.
Slide 21: Evolution of Quicken.com    Intuit Founded in 1983 as a software company World leader in personal and small business software by 1993 Products accounted 70% of the market • • • Quicken – Personal Finance Quickbooks – Small Business TurboTax – Federal & State Tax Preparation
Slide 22: Quicken.com and their Evolving Business Model  Launched in 1996 as an information aggregator. • Added value by gathering information and allowing customers to search financial topics they were interested in • Revenue came from advertising
Slide 23: Quicken.com cont.  By 1998 six focused divisions were introduced on the Quicken.com site changing the site to a vertical portal. • Two aggregators   QuickenInvestment QuickenRetirement QuickenInsurance QuickenLoan QuickenBanking • Three marketplaces    • QuickenTurboTax (an online extension of the Intuit software)
Slide 25: QuickenInsurance.com  Sold insurance policies online for insurance carriers • Charged carriers through referral fees, commission, installation and integration fees, and maintenance fees • Value to carriers came from Could reach larger base of customer  Educate customers and generate leads  Provide 30-70% cost savings  Increase knowledge base about customers 
Slide 26: QuickenInsurance.com cont.  Provided access to information, advice, quotes and price comparison online • Customers accessed this information and buying power free of charge. • Customers could conveniently make educated buying decisions 24 hours a day. • Customer could access a number of quotes in a fraction of the time.
Slide 27: QuickenInsurance.com cont.  Cost Drivers for the division • Hiring and retaining the technical support to develop and maintain the site • Marketing and sales cost are low do to the use of Quicken.com as an entry way and marketing force for the site
Slide 28: Build the QuickenInsurance Brand? Should Aldrich step up efforts to build the QuickenInsurance brand in lieu of other Quicken.com segments?  If not on QuickenInsurance, where should his focus be? 
Slide 29: Things to Consider  If Aldrich focuses to much on QuickenInsurance then it is likely that other brands in the business will suffer. • Quicken.com is a vertical portal. A wide range of services are provided. • The internet insurance market is one of the most crowded. Established carriers, big banks, and start-ups are crowding the market.  Remember that most of Intuit’s money comes from software.
Slide 30: Recommendations  Build the entire Quicken.com brand. • Invest in all the individual brands so that they will have the opportunity to grow. • Focus advertising dollars on Quicken.com From that point every service or product offered by Intuit can be used or purchased.  To much focus on individual brands would be costly. 
Slide 31: Online auto insurance Largest online insurance market segment  Penetration and growth of the auto insurance business (in 2000) was slower than expected.  Aldrich believes, future success with:  Greater choice of quoting carriers in each state  Online purchase or call center/fulfillment capabilities in more states 
Slide 32: Online auto insurance (Cont’) Analyst’s view: market should have grown faster than it did.  Incorrect prediction  • maybe an error in the analysis • additional analysis
Slide 33: Question  What do you believe Quicken.com and QuickenInsurance should do about the slow rate of progress in signing up auto insurance carriers?
Slide 34: Recommendations    Key factor: diverse and conflicting regulatory agencies overseeing the auto insurance business Traditional insurance carriers forced to develop highly specialized policies to satisfy the regulation Weakness of the marketplace business model: it must duplicate the highly diverse scheme of policies already existing in the insurance industry
Slide 35: Proposed strategies  To adopt an aggregator model for the auto insurance sector • Provide information on products & services for sale by others • Comparison of similar products provided, but cannot complete final transactions • Revenue model: referral fees & advertising  To employ 24-hour agents online to answer questions and quiet concerns for the customers
Slide 36: InsWeb Opportunity or Threat?
Slide 37: InsWeb – The Aggregator Basic Features  Provided quotes  Educated customers  Generated leads for its 36 insurance carrier partners  Did not sell policies online
Slide 38: InsWeb – The Aggregator Carrier Partners  Automobile  Term-life  Individual health  Homeowners  Renters insurance
Slide 39: InsWeb – The Aggregator Revenues  In 2000, 69% of annual revenues came from automobile insurance quotes  Also charged integration and maintenance fees
Slide 40: InsWeb Evolution  Launched online and Web-enabled call center insurance agency  InsWeb Insurance Services  Evolved its business model from an aggregator to a marketplace
Slide 41: InsWeb – The Marketplace Major Cost    Marketing and sales, including online and offline advertising and fees paid to other portals Product development and carrier system implementation and integration with the InsWeb service: Integration of an insurance carrier into the InsWeb marketplace typically took 3-6 months Building and operating call centers and data centers
Slide 42: InsWeb – The Marketplace Revenues were generated through  Referral fees • on every “qualified” lead to each insurance carrier • “click-through” to insurance carriers’ sites Advertising  Software integration and maintenance fees charged to each partner/carrier 
Slide 43: OPPORTUNITIES AND THREATS America Online  Should Aldrich respond to the action of AOL, concerning the decreased support for ‘My Profile’, by a partner that was also in a position to be a key competitor? How should Aldrich address the actions taken by AOL.com to restrict Quicken.com customers in the use of MyProfile? How should Aldrich respond to the actions of established players like Citigroup that were also available as a competing financial services vertical portal on AOL.com?  
Slide 44: Recommendations Approach AOL and attempt to reach an agreement that would benefit both parties.  If no agreement, then sever ties with AOL  Monitor competitor trends & evaluate and implement ways to continue competing in a competitive market. 
Slide 45: OPPORTUNITIES AND THREATS CITIGROUP & AMERICAN EXPRESS Could Quicken.com survive an attack from these two financial service providers? Yes or No, Explain
Slide 46: Survival Strengths Smaller and more focused on personal finance  Already control significant market share of tax and financial software  Wide variety of tastes prevents any one site from dominating 
Slide 47: Opportunities and Threats Wait or Attack? What dot-com’s are a threat? How much is a dot-com worth?
Slide 48: QuickenInsurance Today