3 Giants’ Web Agency to Focus on Auto Coverage

When Mark Parsells, the president and chief executive officer of Fusura, joined the fledgling online insurance agency that was formed last year by three top insurance companies, he decided to delay the site’s start-up in favor of “getting it right.”

The former Citigroup executive, who joined Fusura last June, said he wanted to find better technology for selling insurance online and to refocus the company on one product — auto insurance. These things could not be done before the planned fourth-quarter opening, he said.

Now Wilmington, Del.-based Fusura is set to open its cyberspace doors sometime during the current quarter and to use the Web sites of banks and other financial institutions to sell auto insurance from its three founders, American International Group of New York; Kemper Insurance Cos. of Long Grove, Ill.; and Prudential Insurance Company of America in Newark, N.J. More insurance companies are expected to join in.

Mr. Parsells said that Fusura will have at least one major financial institution as a marketing partner when it goes live, but he declined to name it.

And though the online insurance agency intends to add marketing partners and insurers, Mr. Parsells stressed that it would “expand intelligently.”

“What I have observed — both when I was on the banking side and now as the provider — is that companies that are doing similar things to what we’re doing generally try to be all things to all people,” Mr. Parsells said. “They try to have 11 product lines, be in 50 states overnight, and the end result is, nobody is satisfied. The users are not satisfied, the marketing partners are not satisfied, and the investors in the company aren’t satisfied.”

“It’s important to understand what potential marketing partners like banks are really looking for,” Mr. Parsells said. High-quality products are expected, he said, but beyond that, banks want high close rates on sales.

Unfortunately, Mr. Parsells said, many companies that have formed alliances with banks have not been able to produce such good close rates.

To change that, he said, Fusura wants to be able to supply a variety of competitive quotes from big-name insurance companies for most customers of each bank it works with, as well as to offer high-quality service.

Fusura was founded in February 2001 as the brainchild of Maurice R. Greenberg, chairman and chief executive officer of AIG. The initial plan was that the online agency would sell auto, homeowners, and term life insurance from the three founding companies, as well as from other insurance partners, through banks, brokerages, and financial information portals.

Richard Bender, an AIG Life Insurance Co. executive, was president until Mr. Parsells was hired away from Citigroup where he had led Citibank Online.

Before joining Citigroup Inc., Mr. Parsells had been an executive in Internet distribution, insurance, credit cards, and business initiatives at Bank One Corp. and American Express Co. Under his leadership, Citibank Online achieved rankings as the No. 1 Internet bank from Gomez Advisors, Forbes magazine, and Forrester Research.

After analyzing the technology available for online insurance sales, Mr. Parsells said Fusura decided in November to buy a system from Channelpoint Inc. that it could use to develop the online agency in-house. The agency also hired three technical people from Channelpoint to customize the software to fit Fusura’s needs.

Mr. Parsells said he intends to build private-label or cobranded sites with Fusura’s marketing partners that capitalize on the strong relationships people have with their banks. Eventually, he said, the site will be able to supply four to six quotes per customer.

By the end of 2002, Mr. Parsells said, he hopes “we will have a handful of what I would consider marquee marketing partners and we’ll be in a limited number of states, with a limited number of carriers.”

That measured growth plan is due, in part, to Mr. Parsells’ belief that Fusura must focus tightly on serving its first few marketing partnerships and get the close rates high before expanding too aggressively.

The agency’s ownership by three big insurers has alleviated the concerns of some financial institutions that Fusura has approached about partnerships, he said.

“I think that many similar deals have been held up in the recent past because the financial stability of these players has not been where the marketing partner would like it,” Mr. Parsells said. “The companies that are behind Fusura help to make marketing partners feel more comfortable in doing business with us.”

Mr. Parsells said he foresees the agency eventually having eight or 10 auto insurance carriers to provide quotes. Over time, he said, it will look to add products, depending on its success with auto coverage.

Todd Eyler, a senior analyst at Forrester Research Inc. in Cambridge, Mass., said Fusura’s scaled-back plan is good for the company.

Focusing purely on auto insurance at first is “the smartest thing they can do,” Mr. Eyler said. “Auto is 80% of what’s happening online. The other ones are really sideshows that dilute resources and management attention.”

Taking the time to make sure it has “all the kinks ironed out” in its sales system before it expands aggressively will help Fusura avoid pitfalls that harmed predecessors, Mr. Eyler said.

In addition, he said, creating Fusura allows the insurance carriers to develop one technology that they want to use online instead of trying to work with multiple online insurance agencies with differing requirements.

“It’s just been too expensive for carriers to integrate with multiple platforms to then distribute to consumers,” Mr. Eyler said. Building their own platform “allows the carriers to just focus their investment dollars once.”