Online insurance sales loom as problem for agents and the less healthy
Insurance companies and agents have a lot to worry about these days and will soon have to wrestle with rising competition from online sales.
There have been some internet insurance sales in Hong Kong but most of the 10 million policies in the city have been sold by its roughly 80,000 salespeople. Insurance experts have warned though that the buying habits of clients may soon change.
Many people still buy insurance products sold by their friends who may be insurance agents or bank staff. But many companies see the writing on the wall and have started to sell online. Online insurance sales could be cheaper and can be personalised according to the individual’s needs.
Insurance companies can collect the data themselves or team up with digital companies such as Alibaba or Tencent to get a good picture of the lifestyle, buying habits and interests of potential customers. The insurers can then sell customised products directly online.
That will make insurance products cheaper as insurance companies will not need to pay hefty commissions to agents, leaving agents and salespeople out in the cold.
Another issue is that many insurance policies nowadays feature standard pricing for certain groups of clients. Insurance companies can manage the risks and make profits this way because the same group of clients at the same age would have some who are healthier and are less likely to need any compensation and some in poorer health with a higher chance of requiring compensation from the insurer.
The standard pricing allows insurance firms to smooth out the risks of taking on less healthy clients.
On the net, insurers will have more details of each individual’s health and lifestyle that could be used to determine their insurance policy pricing. Healthier people would enjoy cheaper pricing while those in poor health would need to pay more. It is possible some insurers might even consider their risks to be too high.
This would create a new problem if the less healthy could not afford to pay a higher premium or could not get coverage at any price. Who is going to help them out and provide protection for their families?
