Articles: E-Commerce in the Insurance Industry

The implementation of electronic business processes in insurance companies in general aim for collaboration (collaborative work), tracking of working hours and production time, supporting human resource management, automated payment of employee travel, and for implementing e-learning (eg for tutorials or Internet-based employee training which enables distance learning).

Developing countries, is not participating in e-insurance real this. Effect of efficiency in the implementation of e-commerce technology in the insurance industry can be viewed from two perspectives. First, e-commerce may reduce the need for administration and management. Second, direct sales to customers may be able to reduce the cost of commissions to intermediaries (such as for an agent or broker).

Lilischkis (2003) enumerates the various types of ICT that can be applied in an insurance company that is internet access, computers, world wide web (WWW), e-mail, Local Area Network, Intranet, Wide Area Network (WAN), extranet, and Electronic Data Interchange (EDI).

Use of e-commerce in insurance companies is generally used for four purposes of the official company website (official website), information about insurance products through the website, online sales of insurance products, and procurement (goods) online. Garven (2002) states that the use of E-commerce cause insurance companies to switch from product-oriented approach to customer-oriented approach. Because search costs would be cheaper for the customer, it will bring more transparency of pricing strategy and quality. This will strengthen market discipline in an increasingly competitive environment, namely by making the customers are not interested to move from his insurance company.

The more transparent insurance rates will further empower consumers and encourage insurance companies to experiment with various alternative methods of penetaoan price. Although the existence of conventional agents and brokers diminishing role in e-commerce based environment, they will be able berdaptasi and still can take advantage.

In addition, through reduction of transaction costs, the e-commerce will cause the product and insurance services to more than mediated today. So the form of new intermediaries will emerge over the Internet. E-commerce will also provide important implications for designing insurance products that give consumers more flexibility in managing their risk.

confirmit-wheel-customer-fs-healthcare-insurance-small.gifTaylor and Cluch (2002) states that the distribution of insurance and financial services is undergoing dramatic changes through the use of Internet technology. Many insurance companies are now using the website to provide specific information about the company and to generate sales through the Internet. Online sales of insurance products is estimated to be more influential for products that are relatively complex (or is standard), for example, vehicle insurance compare term life insurance product or home insurance is more complicated.

Impact of e-commerce in general shows that insurance companies obtain a significant impact for some attributes of performance. Attribute the relatively high compared to the other is the change in work process, improved customer relationships and organizational structure change.

While changes in insurance product offerings and relationships with suppliers is relatively lower impact. Implementation of online sales in general give a higher impact on improving customer service quality, an increasing number of consumers, and the efficiency of internal processes than the impact on sales volume, sales coverage, and logistics costs.

The impact on the financial, insurance companies who sell and service over the Internet will have a cost advantage compared to conventional insurance companies, which is about 58% to 71% lifetime customer. The cost savings derived from reduced cost of sales, customer service, and operations, as well as efforts to obtain better information and cheap (Allen and Hamilton, 1997 at the Garven, 2002).

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