Insurers brace themselves for online competition

Two thirds of insurers expect non-insurance and technology companies to start selling financial services online within the next three years, according to a survey by Accenture.

Jeremy Lefebure, senior principal of Accenture’s insurance practice, said internet giants such as Google and Amazon are well placed to “beat the incumbents at their own game” because of their recognised brands and mastery of big data.

Lefebure told The Times that non-technology companies with a customer base such as retailers, car manufacturers and utility companies could also start selling insurance online as insurers were slow to adapt to changing technology.

“Paradoxically, insurance is better suited to digital than most other sectors. It is an intangible service and has no physical product to move around. People buy it reluctantly and it is a hard product to understand. This makes it perfect to market, distribute and service through digital media,” he said.

Accenture forecasts that the volume of insurance products sold online will surge to €25 billion (£21.2bn) by 2016. Last year €12 billion (£10.2bn) of property, casualty and life insurance policies were sold online.

Nearly 90% of the insurers polled said they believed that competition in key markets would intensify in the next three years. And more than three quarters of insurers planned to increase their investment in online technology and policy sales, spending an average of €27m (£22.9m) over the next three years, Accenture found.

Google launched its own aggregator, Google Compare, last year. The European Commission is currently investigating whether the search engine is abusing its dominant position by favouring its own services and downgrading competitors’ content.