Celent published a report “Life Insurance e-Business : Trends and Best Practices in September 2012.
The report starts by outlining the well documented macro trends in the increase in the use of mobile devices.
The rest of the report is dedicated to examining progress insurers are making to sell life insurance business on-line in a pure direct model. It includes clear advice and examples from insurers in the region. Some of the highlights of this analysis include:
- A Celent prediction that online premiums will grow from about 1% of total GWP in 2012 to just over 4% of GWP in 2017
- A summary of the regulations across the region that have enabled electronic regulations (and e signatures)
- A summary of the characteristics of products that are suitable to be sold on-line
- Detailed examples of current on-line distribution processes
Characteristics of Life insurance sold online in Asia
- Products where the customer already knows they have a need
- Easy to understand benefits
- Where time is an important factor i.e urgency to buy
- Minimal underwriting
- Specifically designed to be purchased on-line
The report identifies travel insurance as a product meeting all these criteria – but as it is a non-life product it falls outside the scope of a strict definition of life insurance. Term insurance can meet most of the criteria (except the urgency to purchase and perhaps arguably customers may not be aware of the amount of cover they need).
Online opportunities are correlated with the size of the target market ?
It is interesting to note that the size of the potential market )measure in terms of popluation size) , as opposed to level of income, seems to be a key determinant of current activity for online selling. The report covers in some details activity in selling on-line in Japan and India.
In Japan, there are specialist online insurers , such as Lifenet & Nextia selling a range of term, health and disability solutions. In India, by contrast, more than half of the insurers are experimenting with on-line sales of term insurance and are willing to tackle head on any perceived channel conflicts. The report also provides data from one of the Japanese providers that clearly shows the younger age profile of on-line purchasers of insurance – this is somewhat obvious but does suggest that insurers need to wholeheartedly embrace digital marketing to attract these younger consumers.
Comment from The Digital Insurer : direct sales of life insurance are clearly in their infancy and whilst there is clearly room for “pure play” online model our view is that some of the most successful models will be “hybrid” and are likely to offer a range of products and sales methods to cater for customers different requirements. Insurers who are able to co-partner with their existing advisor sales forces and provide on-line solution to existing customers that also benefit the advisor could build attractive new revenue streams. Customer portals / apps have a very strategic role to play in the development of these hybrid models (readers maybe interested in the article “Customer portals : Moving beyond information” ).
Recommendations from Celent
For Asian life insurance companies that plan to leverage the online channel to distribute life insurance products, Celent has some suggestions:
- A successful concept delivery and product introduction is essential. The use of multimedia, well-organized information, an honest introduction to the insurance concepts and the products, etc. will build a long term and sustainable online distribution capability
- Focus on user experience; provide user-friendly interface and process.
- Use simple words and active voice and employ direct speech.
- Leverage various communication tools, such as live video chat, to help potential clients whenever they need help.
- Support various devices, such as PCs, mobile phones an tablets.
- Leverage various marketing tools, including social media, to generate traffic to the website as well as build a relationship with the individual customer.
In summary the Celent report has original research that will be of interest to life insurance practitioners responsible for direct online businesses (or thinking of doing the same).
To get the full copy of the report you need to contact Celent directly – this link will help.