Life Insurance E-Business in Asia: Trends and Best Practices
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27 September 2012Wenli Yuan
My new report ‘Life Insurance E-Business in Asia: Trends and Best Practices’ was published last week. Personally I'm very keen to study this topic. When I worked in e-business department of a Chinese life insurance company twelve years ago, we've already sell travel insurance and term insurance online. In many industries in Asia, the Internet is evolving from being purely an information and communication medium to being an important distribution channel, but in the life insurance industry, though some pioneer insurance companies in Asia have used the Internet as a distribution channel for 10 years, the portion of premium income from this channel is still very small. I'm keen to understand the reason. At the same time, I see drivers for life insurance e-business development do exist (such as the grown-up of young generation consumers, the popularity of smartphones and tablets in the past two to three years, etc.), and think this is the time for life insurers to re-think about their e-business strategies. This report examines the growth of Internet users, mobile broadband subscriptions, and smartphone and tablet users in Asian countries. It looks at life insurance e-business market size growth trends and online product trends, identifying key points in the life insurance online sales process, introducing best practices, and making suggestions for life insurers with regard to improving life insurance online sales. The life insurance sales process can be divided into the concept delivery phase, policy application phase, and policy issue phase. Insurers generally invest in e-business technology focused on enabling the policy application and policy issue phase, making these phases more efficient, user-friendly, etc. The concept delivery phase is usually ignored by insurance companies. The online purchase process usually starts from premium calculation, which is fine for auto or travel insurance, but not good enough for life/health/annuity insurance. An honest introduction to the insurance concepts and the products will build a good image of the online channel. Compared to other channels such as agents, bancassurance, brokers, etc., the online channel is the one that the insurer has the most control of in regard to the product introduction. Insurers could therefore use this channel to build their reputation. By looking at life insurance companies’ websites, we find some best practices in Asia, such as: -Leveraging video in online insurance. The report introduced real world examples of ‘Use of Video to Deliver Insurance Concepts’; ‘Use of Video to Introduce Insurance Products’; ‘In-Built Product Videos as a Compulsory Part of Sales Process’; ‘Use of Video to Introduce Different Types of Insurance Plans (a kind of need analysis) ‘. -Improving content quality and readability. The report introduced real world examples of ‘Use of Simple Language’; ‘Provide Product Comparison’. -Leveraging multiple communication methods. The report introduced real world examples of ‘Provide Toll-Free Number to Explain Product Features’; ‘Live Chat and Live Video Chat’. -Improving the user experience. The report introduced real world examples of ‘Provide Demo of Purchase Process’; ‘Use of Drag and Drop Bars and Dashboards'; 'Use of Audio Guide’; ‘User-Friendly Premium Calculation and Benefit Illustration Tool’. -Creating well-organized websites. The report introduced real world examples of ‘Well-Organized Front Page to Direct Various Users’; ‘Good Design of Each Page’. The functionality of insurers’ websites extends beyond direct sales. They can be used as a marketing tool and for lead generation. Insurers’ websites are a platform for customer service and agent service, and are capable of helping to improve sales quality and straight-through processing of the traditional channels. For Asian life insurance companies that plan to leverage the online channel to distribute life insurance products, I have some suggestions: • A successful concept delivery and product introduction is essential. The use of multimedia, well-organized information, an honest introduction to the insurance concepts and the products, etc. will build the online channel as one of the most trustable distribution channels. • Focus on user experience; provide user-friendly interface and process. • Use simple words and active voice and employ direct speech. • Leverage various communication tools, such as live video chat, to help potential clients whenever they need help. • Support various devices, such as PCs, mobile phones, tablets, etc. • Leverage various marketing tools, including social media, to generate traffic to the website as well as build a relationship with the individual customer. The use of technology is important, such as underwriting rules engine, configurable products, etc., but understanding how life insurance can be sold is more important. I expect to see more insurance companies in Asia really understand customer's needs and behaviour, and provide customers with excellent purchase experience.