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Why Overstock.com Opened an Insurance Agency

Overstock created a new company that holds an online insurance agency, which is accessible from a tab on its main site.

E-commerce site Overstock.com announced yesterday that it is now selling insurance. CEO Patrick Byrne explains in an interview with Insurance & Technology that given the site's biggest merchandise sellers — home appliances and furnishings — finding a way to offer the insurance that covers all those purchases was a logical next step for the company.

"A lot of our buyers are new home buyers," he says. "It's a natural constituency for insurance."

Overstock created a new company that holds an online insurance agency, which is accessible from a tab on its main site. Buyers can complete the buying process for auto, home, and renters insurance and then check out through their regular Overstock shopping cart.

The company currently offers policies from about a dozen companies, with plans to grow to about 20, Byrne says.

"We only want to be in businesses where we can save people money, and how do you save people money on insurance? You get the insurance companies to bid against each other on an exchange," he explains.

Why is Overstock so sure it can offer competitive prices through its agency? The company's data-driven DNA — common among online retailers — shows through in Byrne's assertion that "insurers have realized that people who come through online are better risks that they can offer special rates to."

[MetLife's Manish Bhatt explains the company's Walmart initiative]

Like any new entrant, Byrne says the company is learning how to navigate the rules around insurance sales. Most notably, it is figuring out just how much data it can auto-fill from its customer files. Even though the company has a wealth of data on its customers, it still has to collect some more for insurance purposes — and might have to re-collect some data.

"We are going to be using our data files as much as we can to make the experience of buying easier," he adds. "For us, it's both the cost savings and making it easier."

Overstock's announcement came on the same day that Walmart announced a marketing agreement with the online broker AutoInsurance.com. Clearly, retail giants see an opportunity to insert themselves in the insurance value chain. How should the industry react?

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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Kelly22
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Kelly22,
User Rank: Author
5/15/2014 | 4:09:41 PM
re: Why Overstock.com Opened an Insurance Agency
Both have the potential for success. The option to purchase at the dealership does make sense, and I can see the kiosk option being popular. That said, I also think it's really important for insurers to focus on mobile strategy to better appeal to current and prospective customers.
Nathan Golia
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Nathan Golia,
User Rank: Author
5/14/2014 | 7:08:17 PM
re: Why Overstock.com Opened an Insurance Agency
That's right, Carine, and forward thinking insurers have to make bets on the best way to reach people with a high propensity to buy. Is that through having a presence at the dealership in some way, like a kiosk? Or is it a robust mobile presence so you that you can apply from the waiting room?
Nathan Golia
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Nathan Golia,
User Rank: Author
5/14/2014 | 7:07:24 PM
re: Why Overstock.com Opened an Insurance Agency
It's true, Stephen. Speaking as a person in an equally disrupted industry Gă÷ media Gă÷ the only thing you can do is hope that enough people around you will understand that tech disruption only works in one direction and are ready to change their models appropriately.
Nathan Golia
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Nathan Golia,
User Rank: Author
5/14/2014 | 7:05:06 PM
re: Why Overstock.com Opened an Insurance Agency
Thanks Terry. I know that overseas the specter of Google is more obviously looming. I think there is definitely a danger of that happening stateside as well.
Kelly22
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Kelly22,
User Rank: Author
5/1/2014 | 9:15:59 PM
re: Why Overstock.com Opened an Insurance Agency
Interesting that Overstock.com and Walmart are venturing into the insurance space around the same time. I agree with the previous comments - these announcements reflect the big impact that retail is having on insurance distribution. Insurers will have to follow the customers here; after all, we're in a customer-centric world.
carine01
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carine01,
User Rank: Apprentice
5/1/2014 | 9:02:40 PM
re: Why Overstock.com Opened an Insurance Agency
Absolutely, lots to learn in the US from other countries which are ahead in innovative distribution channels. E.g. in some countries, auto insurance can be purchased at the dealership, which makes lots of sense.
sapplebaum606
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sapplebaum606,
User Rank: Apprentice
5/1/2014 | 6:31:35 PM
re: Why Overstock.com Opened an Insurance Agency
I agree with Terry. The industry - which includes both carriers and agents - should recognize and accept that the train has left the station - meaning that traditional insurance distribution models have been fundamentally and permanently altered and that the best they can do to preserve or grow their share is to make their products available as, how, when and where buyers wish to evaluate and consume them.
tgolesworthy
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tgolesworthy,
User Rank: Apprentice
5/1/2014 | 5:51:35 PM
re: Why Overstock.com Opened an Insurance Agency
Good story Nathan - further evidence of the retail disruptive effect and this is unlikely to stop. Insurance is a great product that has, for too long, been constrained by rigid sales models. Have you been following insurance activities of Google in UK and France? Even with "insurance" as most expensive adword, Google option will always be top search result!
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