In spite of the collapse of new technology stocks over the last year, no one would deny that internet usage generally, and purchases via the web, will increase over the coming years. In fact, the recent fall in the FTSE seems to represent a consolidation towards the players that have the brand and the systems in place to deliver their promises, whether it is cheap flights, CDs and books, or financial products. Where required, many of these players have continued to attract extra funding through venture capital or internal investment to expand their operations further.
For insurers and brokers considering how to exploit new channels, a number of challenges lie ahead: What needs to be put in place behind the scenes? How should marketing be conducted? What to be aware of? What to avoid?
The first step is to evaluate the size of the potential market. Supposedly, around 1% of all insurance purchased is now bought over the internet. Of this, around three-quarters is motor insurance. Irrespective of how much this might grow and at what speed, there are currently very few potential customers being fought over by the major players. To evaluate the market, new classifications are constantly evolving to attempt to categorise people on whether:
Once the decision to sell insurance over the internet has been made, a long shopping list unfolds:
As an example, Ethel, who lives with Albert (who has the same surname) and has been living at the same address for thirty years, should probably be treated differently to Jason, whose partner Debbie has a different surname and who have been at that address less than a year. This information needs to be stored somewhere, so that it can be seen immediately and used to create a strategy of how to deal with this enquiry.
So, while volume is key, it is picking the best sites to sit behind that is producing good returns for some insurers. Only a view of the big direct writers can generate the economies of scale derived from the high number of visits to their sites, others are being shrewder by ensuring representation behind other successful sites such as Fish4.