Carriers Must Transit from Information-based to Transaction-oriented Portals or Face Being Sidelined

IDC: Current dynamics and expanding role of the Web for online insurance in Asia/Pacific.

The growing importance of the Internet channel, observing that in South Korea for instance, Premiums generated by online auto insurance accounted for a paltry 0.2% of total auto premiums in 2002, but this figure rocketed to 10.2% or US$836 million by 2005.

Amongst the Asian financial services verticals, the insurance industry has traditionally been a technological straggler when it comes to embracing IT innovation. However, prodded by cutthroat industry competition and threat from external players, the insurers have raised their collective priority on Web-initiatives within the last few years, utilizing the Internet as an interfacing channel between customers, independent agents and employees.

While previously, growth was fueled by second-tier insurers wagering on the Internet to compete with the incumbents, present expansion is being driven by major insurers dipping their toes into the water to explore what seems to be a opportune market. Li-May views that this bodes well for e-insurance growth because it will transform the inherent perception that online insurance is inexpensive but are inferior quality products offered by smaller carriers. Indeed, with players poised to extend marketing activities, Korea's online auto insurance for instance, would account for 30% of all auto insurance sales in the next five years and surpass 50% within seven years.

Predominant advantages of e-insurance include cost efficiencies afforded by Web-based technologies, wider penetration into previously unreachable segments, and heightened visibility for carriers. Through this report, readers will gain an understanding of the key functionalities required of an e-business portal and explore the development constraints encountered in utilizing the Internet for non-life insurance sales.

For insurers, technical requirements for the e-portal roll out include the need for an extensible architecture, an adaptable system that can integrate with legacy applications, and a fail-proof, secure-rich environment. Other initiatives comprise improvements to the Web functionalities and marketing of uncomplicated products that integrate well with offline channels.

Conversely, for the industry vendors, they should collaborate with third-party products and services, offer secure-rich infrastructures, deliver continuous virtual availability and reliability, and ensure quick implementation turn-around.

Insuring Asia's Future Online - The Changing Face of e-Insurance Publ 20060615