A new report has recommended that life insurers in Asia use simple language, multi-media and a well organised menu structure that allows prospects to easily analyse how much of one type of insurance protection they need as key points in the online sales process. Ronan McCaughey reports.
The report, which was recently published by consulting firm Celent, explained that although the internet
has entered the sales process for life insurance in some Asian markets for about ten years, its use and the premium generated through this channel are minimal.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
For example, it said that many companies that have agents as their major distribution channel are cautions about channel conflict and reducing agents’ motivation.
Furthermore, the report said life companies that already have online distribution in Asia do not generate much premium income through this channel yet, so other life insurers are concerned about the return on investment when they start thinking about developing the channel.
Given these challenges, the report argued that an insurance website serves more functions than direct sales, and it can be used as a marketing tool as well as a lead generation tool. It is also a platform for customer service and agent service, noted the report.
Mobile ‘the key’
The report explains: "Many consumers in developed countries/regions — such as Japan, Korea, Singapore, and Hong Kong — own more than one device to access the internet. In developing countries, such as India or Indonesia, the mobile device is the major tool for customers to access the internet.
"Overall, customers in Asia are increasingly using mobile devices to consume content. We believe that the culture change brought to the society by mobile technology has the potential to increase the use of technology by agents, as well as increase the use of electronic channels by consumers to get insurance information and purchase insurance."
In terms of e-business product trends in Asia, the study says travel, accident, and health insurance are the major products sold on life insurance companies’ websites in China.
Meanwhile, in Singapore, the report says 75% of life insurers do not sell life insurance products online, while 25% of life insurers sell travel insurance on their website, and less than 7% of life insurers provide online applications for term insurance and critical illness.
From a content perspective, the report highlights that some insurers use many paragraphs of text to explain the benefit of a product.
However, it says consumers are scared when they realise that they need to read so much in order to understand the product.
The report therefore recommends that by making the products more easily understood, life insurers should be able to sell a broader range of products online.
When it comes to regulations, the report says some countries also have regulations or guides for insurance e-business. For example, the report explains that in:
– Korea, the Electronic Financial Transaction Law came into effect in January 2007. It said the Korea Life Insurance Association (KLIA) issued the Guideline on Uniform Provisions of Electronic Financial Transactions in March 2007. The guidelines specify procedures and responsibilities for life insurance contracts made in an electronic way.
– In Hong Kong, a guidance note on the use of the Internet for insurance activities was issued by Office of the Commissioner of Insurance in January 2001.
– in April 2011, India’s Insurance Regulatory and Development Authority (IRDA) issued guidelines for issuing policies electronically, enabling insurance companies to sell all polices — life, pension and nonlife – electronically, says the study.
– According to the report, the guidelines state that an insurer issuing "e-insurance policies" must utilise a registered repository, which compiles and stores data about policyholders on behalf of insurance companies so that customers need not provide address and age proof every single time they buy a policy.
– The infrastructure in India will also enable insurers to easily check the authenticity of the policyholders and verify them.
Social media strategy
The recommendations made in the Celent report come following an investigation by Life Insurance International into social media best practice by life insurers.
David Broom, global head of media for Aviva, says the main challenge facing financial service companies within social media is the conversation.
"Research shows that once customers purchase an insurance product they often have little reason to engage with the insurer, other than for renewals or claims," says Broom .
He adds: "Financial products tend to deliver functional satisfaction, so they rarely come up in conversation. We know that emotionally engaged customers are more likely to recommend than functionally satisfied ones, so we need to identify how digital channels can make people feel emotionally connected to our brand and products."
In Broom’s view, to be successful in social media insurers need to recognise customers as individuals.
He says: "We need to make things easier for the customer, reward their value to us and ask for their opinion so we can act on their preferences."
