Wal-Mart enters auto insurance market

It is a day that many brokers saw coming - Wal-Mart has entered the insurance business.

Wal-Mart enters auto insurance market



It won’t be selling insurance per se, but Wal-Mart customers can click through a link on the website to get competing quotes from several car insurance providers, the ubiquitous chain store announced yesterday.

By clicking through a link on Walmart.com, or by going to autoinsurance.com directly, clients to get competing quotes from several car insurance providers such as Progressive, Esurance, Travelers and Safeco to choose the policy and price that best fit their needs – just one more player to enter the highly competitive online insurance market.

“We are always looking for ways to reduce complexity,” Daniel Eckert, Wal-Mart’s senior vice-president of services told CNN, “increase transparency, and give everyday low prices to Wal-Mart shoppers.

“Insurance is one of our consumers’ biggest monthly expenses and many feel they are overpaying for the insurance they have and don’t know if they are getting the best coverage and the coverage they need. We thought we could bring something to life in both of these arenas.”

Wal-Mart will also promote the service via displays in its stores.

The online service is already available in eight states: Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas, with plans for a nationwide rollout in the coming months.

Wal-Mart points to the savings to be had, citing a pilot program survey it conducted last year in Pennsylvania, where customers who purchased policies from autoinsurance.com on average said they saved $1,168 a year.

Wal-Mart said the service originated from talks with Tranzutary Insurance Solutions, a New Jersey-based insurance broker that runs AutoInsurance.com.

The superstore is not the only retailer to get into the insurance business. Earlier this week, online discount service Overstock.com said it will begin selling insurance on its website through the insurance service Insuritas.

A February report from management consulting group Accenture reveals this mode of insurance distribution could be the wave of the future.

According to a new report from management consulting group Accenture, more than two-thirds of policyholders would consider purchasing insurance products from organizations like Amazon, Verizon or Google, including 23% who would buy from online service providers, 20% from home service providers, 14% from retailers and 12% from car dealers.

“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks, but also from Internet giants,” said Accenture Managing Director Michael Lyman. “Overall, there is a significant switching risk.”

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