E-business and the Government's stance on ISAs and stakeholder pensions mean insurers must "learn to do things better, quicker, and with fewer people," said Royal & SunAlliance UK chief executive Paul Spencer.

"The extremely low management charges for ISAs and stakeholder pensions will condition customer expectations and effectively drive down the expenses benchmark for all insurance products - both life and general. And customers increasingly expect low-cost, high-quality products with improved service."

This new climate contrasts vividly with UK customers' "amazing tolerance of poor service in the past," he said.

"E-business is likely to be as important for financial services as the rise of supermarkets was for retailing. I believe it will completely transform many aspects of our business over the next decade."

He went on: "We must get our act together or face the consequences. We must stop thinking about the last war and start preparing for the next. Just as Amazon has revolutionised book selling, so a Charles Schwab could do the same in insurance."

Spencer said that insurers need more skill in handling customers. "We must start to develop a 'hybrid manager' - someone who can bridge the disciplines of insurance, finance and IT and help design customer propositions for the new millennium."