Do Insurance Industries Lag behind the E-Commerce?
Overview:Shadow Insurance Regulation Committee (2000) mentioned that Electronic commerce is quickly emerging as a particularly visible and spectacular incarnation of globalization. The rapid expansion of electronic transactions constitutes an unprecedented opportunity for trade and development. The growing importance of Electronic Commerce (E-Commerce) represents a watershed event for insurance markets and institutions, as it does for most industries.
The E-Commerce revolution:Shadow Insurance Regulation Committee (2000) pointed out that:qThe rethinking of the relationship between insurers and clients on how to take advantage of the internet to offer tailor made products at low administration costs, through automating the motions of quote generation, contracting and processing claims;qA migration from expensive closed proprietary network systems to low-cost internet based systems for EDI;qThe 24 hour world-wide and always accessible insurance business;qThe development of Internet enabled software for conducting insurance operations electronically, both for use internally in an insurance operator's offices, as well as for enabling business and communications among insurance operators.
Already, through the Internet, an insurance consumer can:qObtain information about insurance products and insurance coverage;qPerform product comparisons;qApply for, and in some cases conclude, an insurance contract; andqHave contracts serviced and claims handledPotential of E-Commerce in Insurance:International Association of International Supervisors (2002) mentioned that E-Commerce could be utilized in insurance sector forqProviding information (compliance, licensing, fees),qReceiving reporting information on electronic forms,qDirect monitoring of Internet sales and business solicitation,qCommunicating with supervisors in other states and countries and sharing of information on licensed or problem insurers or intermediaries,qProviding reliable information to insurers about agents or brokers they wish to engage in production and delivery of insurance contracts.
McAdam (1998) noted that the insurance industry is highly information-intensive. Insurance providers rely on large quantities of data and information to identify, assess, and price risk in the marketplace. The back-office operations of insurance companies are almost all computerized and operate...