Online Sales of Asset Acuumulation and Wealth Protection Products Reach Up to 19 Percent by 2005, Financial Services Executives Say

Accenture / Loma Research Suggests Winning Strategies in the eEconomy

NEW YORK, March 21, 2000 - Financial services companies around the world, from large insurance carriers to Internet start-ups, expect the impact of the Internet on the asset accumulation and wealth protection market to accelerate dramatically in the next five years, according to new research released today by Accenture and LOMA (Life Office Management Association, Inc.).

The research, based on a survey of more than 200 financial services executives worldwide, indicates that the Internet will influence every aspect of the insurance industry, including distribution channels, customer servicing and pricing.

"The question is no longer whether the Internet will change the insurance marketplace," said Barry L. Rupert, the Accenture Financial Services partner who led the research project. "Rather, the focus is on how quickly the changes will occur, how the industry will be affected, and how financial services companies can best position themselves to take advantage of new eCommerce opportunities."

The findings are contained in a report entitled The Asset Accumulation and Wealth Protection Market Place: Winning in the eEconomy, which was prepared by Accenture in conjunction with LOMA.

Among the key findings of the research:

  • Executives expect that, within five years, online sales of protection products (term life, whole life, variable/universal life) will reach 17% of total sales; asset accumulation products (mutual funds) will reach 19%; retirement products (annuities, IRAs) will reach 17%; and health-related products (disability and long-term care insurance) will reach 16%.
  • Roughly one-half of companies expect to implement online quotes and application submissions within two years.
  • The vast majority of respondents believe that online distribution will improve the efficiency of traditional agent, broker and financial advisor channels, thereby reducing distribution costs over the next five years.
  • Three-quarters of companies expect that the Internet will be an effective tool to better reach and serve the mass market.
  • Two-thirds of executives expect products sold over the Internet to be less expensive than products sold through traditional channels.
  • "Industry efforts to sell and service protection products online have been sluggish to date, due to product complexity and infrequent customer interaction," noted LOMA’s president and CEO Thomas P. Donaldson, FLMI, CLU.

"But the survey results indicate that the Internet will grow in importance in the insurance arena as customers become more experienced with online banking and Internet sales of other financial and consumer products."

The research shows that companies that have some or all of the following characteristics have a head start in the eCommerce race:

  • Frequent customer contact
  • Minimal channel conflict
  • Early-mover advantages
  • The ability to leverage Internet experience in other financial services markets
  • A well-recognized brand name

"Providers need to quickly respond to the eCommerce challenge by adopting business models that meet the demands of the eEconomy ," said Rupert. Winning companies, he says, will have the following capabilities:

  • Straight through, one-touch self service through the Internet
  • Speed to market -- for both Internet capability and new products
  • Internet sales and service that is integrated with traditional channels, to allow for maximum customer choice
  • Customer insights that can be effectively leveraged into sales activities
  • Scalable operations to meet peak demand and rapidly growing traffic.

Note to Editors:
For the purpose of this report, we define asset accumulation and wealth protection products as follows:

Protection Products: term life, whole life, variable/universal life Asset
Accumulation Products: mutual funds
Retirement Products: annuities, IRAs
Health-Related Products: disability insurance, long-term-care insurance

Research Methodology:
This report was based on the worldwide survey responses of more than 200 financial services executives from insurance companies, Internet start-ups, banks, asset managers and securities brokerages. The executives are Accenture clients and/or LOMA members. The companies represent a cross-section of small to large industry participants. The survey was conducted between November 1999 and January 2000.

LOMA (Life Office Management Association, Inc.) is an international association of insurance and financial services companies which provides products and services to over 1,100 member companies around the world. Headquartered in Atlanta, LOMA helps insurers and the financial services industry improve management and operations through quality education, employee development, research, information sharing, and related products and services. Its home page address is