Overstock.com Enters Insurance Market With Virtual Agency
May 5, 2014 by Michael Buck
SALT LAKE CITY – Online retailer Overstock.com has entered the insurance market with an online agency platform that offers personal and commercial policies through its heavily trafficked website — a first step in what might become a bigger business for the company.
“I think financial products may be a major part of our future,” Overstock Chief Executive Officer Patrick Byrne told Best’s News Service.
Overstock is offering private passenger automobile, residential covers and commercial policies through its website from about 12 carriers at the moment, Byrne said. Among the carriers participating on the platform are Progressive Corp. and Safeco Insurance, a subsidiary of Liberty Mutual Group.
The platform was launched in late April and initially saw steady traffic of around 50,000 to 60,000 visitors to the insurance tab on the retailer’s home page, Byrne said. The company is trying to leverage its current customer base in a bid to tap into the insurance market.
“This makes great sense for us,” Byrne said. “Seventy percent of our business is home, whether it’s furniture or appliances, it’s home. A lot of our customers are people who are buying a new home or a condo, or they’re renting, they’re moving into a new home or apartment. There’s a lot of that in our customer base.”
The company is able to offer insurance through a partnership with Insuritas, a provider of cloud-based, private-labeled insurance agencies. Insuritas says it allows businesses to own an insurance agency solution without the capital investment or operational risk of building or buying an agency. Byrne said it took less than $1 million to get the virtual agency live.
“Calling it a game changer for the industry and us is not overstating it,” said Insuritas President and CEO Jeffrey Chesky in a statement. “Our solution will provide Overstock with its own, private-labeled, full-service insurance aisle.”
There are a few other companies making a run as online independent insurance agencies, including TheZebra.com and CoverHound.com (Best’s News Service, Aug. 21, 2013). The services aren’t just rate-comparison websites, but bonafide insurance agencies that allow for customers to buy and bind coverage.
The Independent Insurance Agents & Brokers of America are also trying something similar with TrustedChoice.com, which brings price comparison technology to consumers, who then are steered toward a nearby independent agency to buy coverage.
Insurance is not a completely new concept on Overstock.com. The company in 2011 partnered with Answer Financial, now owned by Allstate Corp., for an insurance offering. The partnership, which was essentially a lead referral system, lasted two years and was not a “very robust business model” for Overstock, Byrne said.
“With this approach, it’s an exchange,” Byrne said. “You can rate shop, choose something — it’s all integrated into our shopping carts. You can buy your blankets, you bed and your home insurance all together.”
In addition to being potentially good for his company, Byrne said he has a personal connection to the insurance industry. His father, John J. “Jack” Byrne, was once the CEO of Geico, the auto insurer now owned by Warren Buffett’s Berkshire Hathaway, and is credited with saving the company from financial ruin. Jack Byrne died last year after a battle with cancer.
“I’ve always had insurance in my blood, I would say,” Byrne said.
(By Michael Buck, senior associate editor, BestWeek: Michael.Buck@ambest.com)
BN-NJ-5-5-2014 1547 ET #
