In terms of the internet's impact, one thing is clear: it is being adopted at a faster rate than any previous technology. Historical forecasts of internet growth have invariably proved to understate the outcome. Present estimates predict there will be more than 500 million users by 2003. In 1999, Forrester Research estimated that on-line insurance sales will reach US$2.1 billion in 2001.

The growth is being driven by the desire to sell goods and services over the web. However, of equal or greater importance is the web's potential to reduce operating costs, brought about by decreases in the cost of data storage, processing and transmission. For the insurance industry this can translate to significantly increased productivity, more efficient and effective customer service, new sales opportunities and lower purchasing and marketing costs.

The challenge for business is to predict tomorrow's business model. Whereas most e-commerce applications have so far involved no more than marketing and selling products and services, in future e-business will extend to cover what you are as an organisation, your philosophy, your markets and your value to customers. However, there are a number of assertions that can be made with certainty in respect of the web right now.

As more people access the web, the use of negotiated pricing mechanisms will grow. Technology will enable negotiated and auction pricing to be integrated into existing sites. As a result, many products and services are likely to be standardised. There is already evidence of this to be found in the insurance industry in sites like, and, which quote on a range of non-life products.

The increasing use of easier-to-use appliances such as interactive TV and smart phones will encourage developments that will increasingly interface a company's supply chain with its customer. Trusted third-party certification services will emerge worldwide to meet the authorisation needs for electronic transactions as governments and businesses invest in secure infrastructure for payment systems.

Clear implications
One of the major impacts e-business is having is to cut out the involvement of certain intermediaries in business transactions. People who have traditionally been used by sellers as a distribution channel, and who helped customers navigate a sea of complex options, will be replaced by web-based technology that lets customers collect and analyse data themselves. There are clear implications here for insurance brokers and agents, although it would be a mistake to conclude they are automatically destined for extinction. Rather there will be changes to the functions they perform.

'Infomediaries' are emerging to capture customer information and develop detailed profiles for use by third-party vendors. The main difference between the new infomediaries and the old intermediaries is that the new breed add value to exchanges between producers and consumers by managing information.

Software tools integrating video with call centres will mature. Examples include the ability of a customer service representative to send personalised content to the customer's browser or take them on a tour of web pages, and, eventually two-way video interaction with customer service representatives. This has important implications for the development of personalised financial planning services to enable insurers to capture the lifetime value of their customers.

Customer relationship management and customer retention will grow in emphasis as a balance is struck between consumer privacy and the use of customer information to improve customer service and speed of delivery. Successful e-businesses will continue to organise and leverage information and knowledge about customers to create competitive advantage.

These assertions need to be taken into account by all companies in building an e-business strategy. A review of the activity of major insurance companies world-wide suggests that although some have started to leverage e-business, few have taken it to the point where they have begun to transform the industry. In fact many companies seem to be having difficulty in defining their e-business strategy. It helps if it is recognised at the outset that the ability of a company to use the web to reconfigure its business is constrained by the technological capabilities of the web. There are a number of standard software tools available to aid this process:

- E-business catalogue: a content management system for presenting customers with information on a web site
- Web commerce server: a tool that includes the ability to present goods, accept orders and process payments.
- Shopping cart: holds a record of selections a customer is considering until they are ready to buy
- Configurator: a software tool that allows a customer to define a product that meets a given need and whose features and options can be combined to work together.
- A personalised engine: a software package for tailoring the data presented on a site to a customer based on profile information, demographics or prior transactions. An effective personalised engine makes repeat visitors to a site feel the company is recognising their interest and their needs.

PricewaterhouseCoopers' assessment of the use of the Web by the insurance industry is that for the most part there has been little progress beyond channel enhancement:
- Most web content is directed at awareness, marketing and sales generation
- Where quotations are provided on line, they are usually followed by manual transactions with actual on line transactions being an exception
- Personal lines and low-end commercial lines are starting to be standardised
- The web is seen as just another distribution channel and the is great concern about channel conflict.