The rising tide of tech in insurance

 

The executive director of General Insurance Association of Malaysia says the Internet is the 'new frontier' in insurance distribution

IN A business where having the human touch has worked wonders, insurance agents will soon wake up to the fact that technology will become their biggest rival.

The traditional agency force now faces competition from the Internet and the ever ubiquitous mobile phone.

With 40 per cent of the population insured and marginal growth each year, insurance companies are exploring new distribution channels, industry experts said.

One example is AIG General Insurance (Malaysia) Bhd, which yesterday tied up with DiGi.Com Bhd to sell personal accident insurance policies to the telco's customers.

Two years ago, AIG sold travel insurance for AirAsia Bhd customers via the Internet.

The General Insurance Association of Malaysia (PIAM) executive director Lim Chia Fook said the Internet is the "new frontier" in insurance distribution.

This is because of its ability to better attract the younger and technology-savvy market segment.

Younger policyholders are more likely than others to access a variety of distribution channels including the Internet, because they want fast and easy transactions with little or no human interaction, said Lim.

The Internet or mobile phones are becoming more popular because they provide simplicity, he said.

It is also a way for insurers to get access to a large customer base at a lower cost. This is why such "smart partnerships" make sense, an analyst said.

Although it is still new, such tie-ups to sell insurance is certain to grow in tandem with technology advancements such as broadband and third-generation mobile services.

Still, agents may take solace in the fact that these new mediums only allow small-ticket items like personal accident covers.

Major products like life policies must still be handled by agents who need to explain them to potential customers under industry rules.