Healtheon/Web MD Joins Online Insurance Game

Online healthcare company Healtheon/WebMD has announced a strategic alliance with Internet insurance service company SimplyHealth.com to provide insurance services to its customers.

The two companies will co-develop a health insurance distribution service for WebMD.com’s online consumer portal. The new service will provide users access to a variety of health insurance products and information, as well as the ability to purchase insurance plans online.

As part of the agreement, SimplyHealth.com will pay Healtheon/WebMD $30 million (US$) over three years for the right to place their insurance distribution service on the WebMD site. In return, Healtheon/WebMD will make a minority equity investment in SimplyHealth.com and help promote and market the co-branded pages through online and offline advertising.

“Of the companies in the online health insurance space, we feel SimplyHealth.com is a very comprehensive offering,” said Reggie Bradford, chief marketing officer for Healtheon/WebMD. “They are consumer-centric and focus on quality products.”

Consumer Market Growing

The market for online insurance sales continues to grow, especially among individuals who are self-employed or employed by small businesses.

Additionally, despite President Clinton’s goal of extending health coverage to all small business employees, many of their employers have yet to adopt the proposal. As a result, some of these workers are turning to the Internet for researching and purchasing insurance services.

The online insurance industry also hopes to tap individuals who are not part of the workforce or who are Medicare recipients as prospective customers for their insurance services.

Point and Click Plans

SimplyHealth.com offers users the ability to find and apply for insurance plans that match their specific needs and budgets. For small business owners, the site offers assistance in setting up group plans and offers tips on explaining the information to their employees.

The site also provides updates on current insurance issues and benefit plans to help keep employers current about new trends in the industry.

Ready to Emerge?

The teaming of Healtheon/WebMD and Simply Health comes at a time when the online insurance industry appears ready to explode.

After brick-and-mortar insurance giant Allstate made its move into the online insurance business last November, a number of other high-profile companies quickly followed suit. As a result, Forrester Research predicted the move would “spark an all out Internet war” in the insurance sales business.

Some companies, however, have been reluctant to move their operations online, fearing consumers will demand face-to-face interaction with insurance agents.

Rapid Ascent

Healtheon/WebMD, while still not showing a profit, continues to forge strategic alliances in its effort to become the premiere online healthcare company.

Through a dizzying string of acquisitions, the company has surprised some industry observers by its aggressiveness in forging new deals. According to some analysts, the company’s entry into the online insurance business is yet another example of Healtheon’s desire to expand its range of services.

In April, Healtheon/WebMD co-founder Jim Clark said he is looking forward to expanding the company’s scope even further by including all elements of the health industry. Clark said he expects the company to show a profit sometime this year.

Most analysts, however, do not believe the company can become profitable until the first quarter of 2001.

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