NU Online News Service, March 27, 9:31 a.m. – Digital Insurance Inc. has survived the consolidation in the Web health insurance brokerage market by working with brick-and-mortar brokers, not against them.
The Atlanta company has agreements to handle health insurance sales and administration for groups with 25 or fewer members for several large insurance brokers, including USI Insurance Services, San Francisco, the sixth largest broker in the country, and Hilb, Rogal and Hamilton Company, Glen Allen, Va., the seventh largest broker.
“We see technology as a wonderful tool,” says Adam Bruckman, a senior vice president at Digital. “But we look at it as if, at least in the near future, we’re not going to get to the point where all business can be done online. We look at the existing agent and broker community as our partner.”
Digital Insurance believes it can serve traditional brokers, rather than compete with them, because traditional brokers are having more trouble than ever making money from selling health coverage to very small groups.
Digital Insurance says its use of technology increases profits on small groups by lowering administrative costs.
If Digital Insurance succeeds at turning very small groups into gold, the potential gains could be impressive, because 85% of all U.S. businesses have 25 or fewer employees.
Compensation arrangements vary, but, in most cases, Digital Insurance shares a percentage of the commissions on any business sold, Bruckman says.
In addition to working with traditional brokers, Digital Insurance has been buying technology and Web sales expertise from other Web-based brokers.
The company recently acquired a large, Web-based health insurance brokerage operation from SimplyHealth Inc., Atlanta, after SimplyHealth decided to focus on the business of selling Web sales systems to insurers and insurance brokers.
Back in October 2000, the company acquired the consumer sales operations of HealthAxis Inc., East Norriton, Pa., a company that had struggled to establish a direct-to-consumer Web insurance sales site.
The company’s backers include traditional venture capital firms, such as Capital Z Partners, New York, and Inviva Inc., New York, a company known for developing an “instant term” sales system for selling term life insurance through the Web.