The auto insurance business has gone to war online. Insurance companies such as esurance have emerged from nowhere to capture a significant portion of the auto insurance market, wholly through online marketing and sales. Theirs is a completely electronic empire. The company is underwritten by an established insurance firm and provides all of its customer service through a half dozen regional call centers scattered around the country.

Auto insurance is perhaps the most egregious example of insurance/internet collision. Every major insurance company offers "quotes" online for health insurance, life insurance, property and casualty and a host of lesser policies such as motorcycle and watercraft coverage. Long term health insurance is the new online product that many insurance companies are featuring, even those that don't carry a full line of health insurance products. The internet has become a showcase for "bargain" policies and for new products.

Limits to Online Insurance Sales

Fortunately for the independent agent, in the insurance business the "devil is in the details." Health and life policies can be complicated agreements; people who are buying them need to understand the importance of every clause in the policy. While they can read a policy that has been purchased online, they may well have difficulty finding someone who can explain it to them if it hasn't come through a local insurance agent.

Accordingly, the big firms like Metlife, Aetna, Farmers and Allstate will provide quotes online but then will usually direct online inquiries to local agents. There are a number of large firms that take pride in their network of local agents and use the national websites to support their independent agents.

The Value of a Local Agency Online

There are also quite a few independent insurance agencies that have developed websites trumpeting their independence and claiming it as a virtue. While local agencies don't carry competing products, they will carry different types of policies from an assortment of firms. The more aggressive independent agencies use 800 telephone numbers and online quote inquiries to make themselves appear larger than they perhaps are. Agents must be licensed to operate by the state where they are doing business; there aren't many locally based agencies that are licensed in more than one state.

That doesn't mean that an agency in Eugene Oregon, for example, can't service the entire state of Oregon. With a well designed website a local firm can blow itself up into a regional enterprise. 800 numbers contribute to this image as do expanded business hours and online claim forms. Those claim forms may simply generate a phone call from the office to the customer, but to the policy holder it seems like a large business entity providing full service and attentive support.

An independent agent can promise something that no online insurance sales operation can deliver: a face-to-face conversation and a step-by-step, page-by-page explanation of an insurance policy. Agents can use the websites operated by the underwriters they represent: many of the national websites have excellent FAQs on their policies and explanations of policy options. It's a good place for a consumer to start, and the independent agent can link his agency's site to those informative pages - and then reel the customer back in. Like politics, in the end all insurance is local. A website can expand what local means for an independent agent, both by online presence and through the use of search engine optimization.