HP (NYSE:HWP) is giving hardware and software, as well as consulting expertise, to Delphi Information Systems (Nasdaq:DLPH), an insurance systems vendor that is readying Ebix.com, an online insurance portal. The two announced the partnership Wednesday morning, and the site itself, Ebix.com, is set to roll out Sept. 8, according to officials.
In exchange for the software systems, HP will get a slice of revenues from the site and an equity stake in Delphi, combining several facets of its e-services strategy.
Groundbreaking
HP's willingness to assume a fair amount of risk helped seal a multi-faceted deal for Delphi, according to Robin Raina, Delphi's president.
"We were looking for a partner who had the right technology and was willing to take a risk," Raina said.
Ebix.com was designed to be different from other Internet insurance sites, such as Insweb.com or Quotesmith.com, according to Raina. The site, which won't offer fixed prices on insurance, will conduct entire transactions online rather than requiring users to make phone calls.
"We're talking about redefining the entire way the insurance business is conducted," Raina said. "We are saying the entire process of insurance buying can be done online, can be completed online." Touting the site as the first of its kind to bring the concept of the reverse auction to insurance, Raina said both consumers and interested agents will be able to register. Insurers can place bids for business in a secure environment.
Ebix.com will operate as an insurance exchange of sorts. Buyers will bid to get the business of those seeking insurance. Ebix.com will authenticate insurers, charging them $100 to register for a year, and will charge 50 cents per quote. Successful quotes will mean a $10 fee to the insurer, Raina said. In addition, for normal document transfer between agents and brokers and their carriers using the Ebix.com Broker system, each side pay $20.
Ebix.com will also function as an insurance portal, which will include community features and insurance-oriented content.
One analyst briefed on ebix.com thinks it should appeal to both insurance agents and consumers.
"They're helping out the agent, by giving them less paperwork and matching them with a buyer. From a customer point of view, it opens up insurance anywhere," said Nancy Meachim, e-business analyst at the Aberdeen Group Inc. in Boston, Mass. Meachim also liked that the site will include Standard & Poor's ratings on insurers.
Dollars and sense
Raina said cost in the range of $4 million to get Ebix.com up and running, and the company will spend an undisclosed amount of money to market and continue developing the site. HP's willingness to front services and systems, as well as put up equity, was a major reason Delphi had worked with the company, Raina said.
HP has also taken equity stakes in BEA Systems Inc. (Nasdaq:BEAS), Security First National Bank and Broadvision (Nasdaq:BVSN), and it has entered into a revenue-sharing agreements with Ariba Inc. (Nasdaq:ARBA) and i2 Technologies Inc. among others.
In addition, HP and Yahoo Inc. (Nasdaq:YHOO) recently announced plans for a corporate version of MyYahoo! That was driven by e-services.
