Web-Based Technology and the Future of the Insurance Industry

This report will look at the business criteria for web-based technology and the part it is likely to play in the future of the insurance industry.

Influence of E-Business

Assesses how insurance products can benefit from the enormous opportunities in service improvements and quality presented by e-business. E-business facilitates better-tailored products, shorter response times, greater flexibility in cover structures and better risk management support.

The web will influence the insurance landscape of the future by allowing companies to:

• Reduce processing expenses by streamlining the administration of insurance business.
• Reduce commission costs by replacing them with better lead generation and support.
• Design more competitive products by incorporating the speed, flexibility and interactive capabilities of the net.
• Grow markets by generating more leads and expanding markets more quickly at a relatively lower cost thereby increasing revenues.
• Improve investment returns by expanding investment strategies.

Business Models in E-Insurance

The rapid pace of change in web technology will cause a sharper focus on the business models insurers adopt, as the blurring of boundaries between insurers and between insurers and banks/financial services groups will bring providers into direct competition.

• Models will range from the fully integrated global player to the highly focused niche specialist.
• There will be an increasing polarisation of the critical factors driving different business models.
• Most of the new e-business models for web distribution are being developed in personal lines.
• In the B2B sector e-business solutions providing support for policy administration/claims settlement are likely to dominate.
• The new models provide insurance intermediaries with the ability to sell a broader range of products and services.

Strategy Considerations

An assessment of strategic considerations concerning web-based insurance applications, principally:

• How to deal with channel conflict.
• How to prevent margins being eroded.
• Assessing the type of products suitable for web distribution.
• How to strengthen customer relationships and gain new customers online.

Next Generation Technologies

• Ageing legacy systems prevent the e-enabling of back office applications and also prevent insurers from accessing relevant data that could be used in various applications such as CRM. As e-business develops insurers are now shifting their focus from investments in portal strategies with limited short-term payback to strategies where they use new technologies to increase sales effectiveness and reduce inefficiencies from their value chain.
• Next generation technology such as WAP phones and iTV is assessed and how they will continue to widen consumer choice and heighten the challenge of channels management for insurers. Such devices have as yet to find their ‘killer applications’ that will make them an essential feature of modern life but this will occur in the future.
• These applications are unlikely to come from financial services, therefore existing channels, which are likely to retain some 95% of business will remain insurers’ highest priority as they develop such channels to meet new products and the growing web-sophistication of customers. New channels can only enhance value if they are fully integrated into the core data and service network.

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