The Internet as a distribution channel is still in development, according to Insurance on the Internet, a 1997 report released by Datamonitor in New York. The study found only 10 percent of companies with Web sites have sales capabilities at those sites. But intense interest in exploring the possibility of online insurance sales means that percentage is growing fast. Datamonitor expects that 60 percent of insurers with Web sites will have sales capabilities by 2001.

"It's really taking off very quickly," says Matthew Morningstar, an analyst at Datamonitor. However, he believes most companies will use the Internet to sell particular products. For example, he notes, "One Canadian insurer just introduced an annuity that they only sell over the Internet." In general, the report states, insurance companies are likely to put online "policies that take little professional advice and a relatively small amount of information from the consumer." Individual auto, homeowner, and term life now represent the majority of policies being signed and renewed online, and Datamonitor expects that to continue.

In the meantime, the percentage of agent-sold policies is decreasing, but slowly. Currently 80 percent of policies are agent-sold; by 2001, according to the study, the portion will fall to 75 percent; by 2005, slightly more than 70 percent of policies will still be sold by field agents.