Editor’s Note

Finding out who’s in charge of regulating the Internet reminds me of my youth. Mom would always wait until we were all at the dinner table and then she would spring the question. “Who put the hole in the wall?” We would all look at each other, acting completely ignorant of what she was talking about. Sometimes we actually were ignorant, depending on our individual guilt or innocence.

I picture the Internet in much the same way. Legislators, regulators, attorneys general and business personnel all gathered around the table with various looks of dismay, innocence and tawdriness. “Who’s in charge?” they would repeat, looking around the table for answers.

The Internet’s moving faster than the rule-making process and the consumer is largely reliant on self-regulation by web-based enterprises. Sure, there are many laws that transcend the medium—rules on theft and business practices. The Attorney General steps in with hackers and threats to security. And some legislation has been enacted. But there are lots of gray areas and lots of indecision.

Recently I approached the Texas Department of Insurance with a brief question. Is online binding of insurance legal? My question was prompted by the weekly announcements I was receiving by newcomers to the online insurance field, each touting its unique ability to bind insurance online.

It just seemed odd that it could be that easy. After a quickly called meeting, the TDI consensus was that it was legal if it included three elements: a written application signed by the insured must be submitted and on file; PIP & UM rejection forms must be signed; and there must be a written offer for installment plans. Of course, this all can take place after a consumer presses the button that says “purchase coverage now.”

I don’t think TDI is alone in being surprised by the rapid advancement of online commerce. I would bet many smaller states have yet to even go there. With a relatively flat budget, high turn over and little direction from the legislature, TDI isn’t prepared for the online onslaught that is no longer looming in the distance, but in the building with all of us.

If the “ILOVEYOU” computer bug taught me anything, it was that the Internet is a lot like Mother Nature—seemingly benign and friendly with the ability to produce catastrophic storms.

I’ve talked to several companies joining the online insurance fray. What I’ve heard frankly scares me.

Let me preface my thought by saying some of these ventures are entering online insurance sales correctly and will thrive while giving consumers exactly what they want and need.

That said, some of them are not. The potential for fraud and bad advice is unmeasured, but massive. They are technology-driven, not knowledge-driven. How much coverage a family needs is secondary to how fast they can get a consumer to press that final button that says “charge my credit card, please.”

If you know me, you know that I’m naturally optimistic. I am as dependent on the Internet and e-mail as anyone, and don’t feel it necessary to constrain my use of either. It’s just my gut that has a bad feeling about consumers buying insurance online from producers that have no insurance history.