Internet sales will account for 5-10% of the personal lines insurance market in the US by 2005, finds a survey. It also states that ebusiness will cut costs by up to 12% for US insurers.
But the global-nature internet will also increase the level of competition.
Sigma's study – 'The impact of ebusiness on the insurance industry' – finds that most standard personal lines insurance will gain significant market share through internet sales.
But most life and pension products, health insurance and commercial cover have only a limited suitability for sale via the internet.
In addition, the nature of the internet allows new entrants to gain a foothold within the industry without the traditionally high start-up costs.
Lateral companies, such as banks and internet service providers with good online brand awareness, will take advantage of their internet presence by adding insurance to their growing list of services.
Reduced costs and stiffened competition will mean benefits are passed on to the consumer.
The vast amount of information that can be disseminated quickly and efficiently via the internet will likely lead to more insurers outsouring specialist areas of their business.