E-Business to drive future growth in the insurance sector

Top concerns for CEO's in today's business environment typically include the threat posed by competitors, the need to control costs, and to find new opportunities and improving responsiveness, customer focus and service delivery.

E-business has been touted as the panacea to deliver these benefits – but how?

Rhys Collins, head of operations for SSP says without proper planning and thought on how IT systems can be used to improve the long term competitive advantage, insurers might be inadvertently creating the legacy system of tomorrow by investing in a short term tactical solution.

“There are many tangible benefits which companies are deriving from the internet however these benefits are achieved not by technology alone, which is an enabler, but rather by addressing strategy, technology, organisation, people and business processes as an integrated whole and making changes in all these dimensions,” says Collins.

When compared to the UK landscape, South African insurers are lagging at least 5 to 10 years behind their European counterparts in terms of IT systems. Collins says in 2009, research showed that 60% of UK consumers had purchased insurance via the internet at least once; 40% were also likely to use the websites of traditional affinity partners and 90% of consumers solicited quotes from at least three web sites prior to purchasing.

This percentage is however shrinking due to the status of the big four aggregator sites in the UK. Interestingly, only 25% of consumers were comfortable with using a site with no telephone support.

Collins says this growing trend of online insurance purchasing can clearly be seen in the increase in the number of internet quotes SSP has processed globally over the last two-year period. The number of quotes has risen by 500% and the conversion rate for web quotes has risen to 40% in some cases.

Although South Africa is still behind the UK, a new survey by technology research consultancy, World Wide Worx, has revealed that internet users in South Africa have grown by 12.5% to 4.5 million in the past year. Collins says this is the fastest growth since 2001 and is largely attributed to the growth of the country's broadband services. Seacom is expected to dramatically increase internet usage in South Africa with international bandwidth increasing 40-fold. Collins says in reality this represents a seismic shift in the internet landscape in Africa and spells the birth of an entirely new industry, although the prevalence of mobile devices may well cause web usage to by-pass the traditional desktop / laptop…

“One only has to look at the rapid emergence of local insurance sites over the last two years like Insurancejunction, Hippo, Quantisure, Insurancehound, Youinsure, Thinkmoney and Carandhomeinsurance to realise the significance of this growth and the direction in which things are going.”

Collins says within the Sub-Saharan African landscape where brokers dominate, there has been a slow take up of technology due to the high connectivity costs (satellite) and a lack of robust IT infrastructure / bandwidth. Insurance systems used are equally not geared up for web and the web is used primarily for marketing and forms download

Moving forward however, Collins believes cost reductions in connectivity will create exciting opportunities and open up a whole new era of internet distribution channels. “These will be designed for multiple channels B2C, B2B, B2E with a thin presentation layer to allow for maximum flexibility. They will provide a dynamic and intuitive interface for clients.”

“The bottom line,” says Collins, “is that insurance isn’t very exciting but the web experience can be. It really allows one to drill down into customers’ expectations and present information and services accordingly. It also provides the customer with a single holistic view of the company and vice versa. Once the strategy is in place generic aggregator solutions and various value added services can be incorporated, delivering competitive advantage and differentiation,” concludes Collins.