Insurance Going Web-Based - Research Paper Example

Insurance Going Web-Based Introduction Web based insurance is a difficult phenomenon that will take a long time to work effectively. Many companies all over the world have begun moving most of their business activities to the online or e-platform. Insurance companies have not been left behind by these changes in the business field as propagated by the rise in the use of the internet. Web based insurance is difficult, it is faced with many problems that will take time before it can match other internet services like internet banking. Though there are benefits of a company moving towards web based insurance, the problems are still many and the future is still bleak. Problems with implementing web based insurance The first problem is the lack of customers’ (private and corporate) willingness to purchase and handle their insurance issues over the internet. This can be attributed to many internet scams that rob people of their money. It can also be attributed to the fact that insurance is something critical that will always require face to face communication and signing of agreements and this could be difficult on the internet especially where the company offering the insurance is far placed. Thus the internet could be seen just as a facilitator and not a place where insurance transactions can be conducted. People view the internet as an insecure medium and would not wish to make huge transactions over the internet. It also deters the transmission of confidential information which is essential for insurance policies. This is a major problem for insurance companies which see the move as difficult to implement (ADB, 9). The second problem is the fact that insurance companies and firms will always go on to design their own internet products and services unique to their company and will not corporate in the field. Cooperation is important in any business field. There must be competition but the products offered should be the same with varied features and characteristics. If a company offers totally different internet insurance services from the other, customers become confused on what is best for them. They cannot make any purchase decisions because there are no other people to compare with and find out if it truly addresses their insurance needs (Garven 106). The third problem is that the internet is particularly suitable for products where contact with the company is more frequent. Insurance on the other hand is usually taken infrequently, every couple of years or even once in a lifetime. Once a policy is concluded, the insurer and policy holder will barely meet and this is true for certain kinds of insurance unless an insured event occurs. Another thing is that existing insurance policies can be difficult to cancel and will require a little effort on the part of the policy holder and this makes such transactions over the internet very difficult (Bolot and Lelarge 12). The fourth problem is that little knowledge exists in web based insurance as compared to other internet services like internet banking. Many people understand internet banking because of the many studies that have been carried out and the vast amount of knowledge that exists in this field. People are afraid to commit to web based insurance because of the fact that there exist little knowledge on its operations and what to expect. Internet banking has been successful because of the people understand it and can be referred by others who have successfully used it and can speak positively about it. It is difficult for web-based insurance to work when there exist little knowledge (Arora 27). The fifth problem is that, in many cases it is very difficult to standardize claims settlement for example, as this involves a lot of investigation and decision making. The entire process will often involve people who are not in a contractual relation with the insurer. As with other services offered on the internet, standardization is an important element as similar procedures are followed by everyone. For insurance this has proven to be a very difficult task (Arora 28). The sixth problem is with the complexity of some products for example tax-efficient insurance policies. These policies increase the consumer’s need to get specific advice from the insurance company agents. It is not yet possible to automate the provision of information but it can be assumed that the continuing advances in technology will avail new opportunities for automated solutions. The complexities of many insurance products can often be reduced by design modifications. This is also a big problem if web based insurance is to be implemented (Kesan, Majuca and Yurcik 12). Benefits of implementing web based insurance Looking at the above issues we can conclude that web based insurance is something difficult as insurance is different from other services that are offered on the internet. This does not mean that it is essential impossible to accomplish. Many companies have moved towards the web based platform to provide insurance to consumers. The only disadvantage they have faced is that they are not able to offer all their insurance products on the internet. Some as we have seen above are difficult to take place over the internet and will require that the client physically visits the company and talks to the agents him or herself (ADB 9). The first benefit of web based insurance is that it brings significant efficiency improvements in the distribution, administration and claim settlement. For example the biggest problem for a non-life insurer is usually claims settlement. Online distribution will bring a direct reduction in the distribution costs. Also many savings can be made as a result of the automation of the insurance processes which in turn brings a reduction in the administration and claims settlement costs. Modern information technologies can help a lot in better data analysis which improves risk selection, insurance fraud can easily be detected and this can greatly reduce claims costs (ADB 9). Another benefit is that it will change the structure and role of intermediaries. At the moment there are insurance malls that allow individuals to get quotes from different companies instantaneously. The function of agents was to information transmission and facilitating transactions. The move to web-based insurance will make these transactions much easier and less expensive (Garven 112). Conclusion It can be concluded that there exist many problems in insurance going web based from the manual method. The many complexities in insurance products make it difficult to implement it. There are a few benefits that can be identified but the problems are still many and difficult to solve. Recommendations For insurance companies to manage the move to web based insurance, a lot of changes will be required. These changes will necessitate cooperation among the insurance companies. Companies need to standardize products so that they can be offered on the internet. Secondly companies need to define which products can be accessed by the internet and which ones will need individuals to visit the insurance companies. Third it is also important that research is conducted in this field to avail information that can help people make informed decisions about web based insurance to remove the fears and distrust that exists in customers (Holliday 30). Works Cited ADB. "Electronic Insurance Commerce." 9 Septemeber 2002. Asian Development Bank. Web. 22 November 2011. Arora, Anshu. "E-Insurance:Analysis of the Impact and Implications of E-Commerce on the Insurance Industry." May 2003. Cass Business School. Web. 22 Novemeber 2011. Bolot, Jean and Marc Lelarge. "A new Perspective on Internet security using insurance." October 2007. INRIA. Web. 22 November 2011. Garven, James R. "On the Implications of the Internet." Risk management and Insurance review (2002): 5(2):105-116. Print. Holliday, Nick. Internet Marketing for Insurance Agents. New York: CreateSpace, 2010.Print P.Kesan, Jy, ruperto P. Majuca and William J. Yurcik. "Cyberinsurance as a Market-Based Solution to the Problem of cyber Security-A case Study." 2005. Web. 22 Novemeber 2011. Read More