SINGAPORE : Singaporeans will get more choice when buying insurance online after a new player, DirectAsia.com, launches its website on Monday.

But observers said there is still a long way to go before these direct insurance players become a threat to traditional insurance companies.

DirectAsia.com will offer various forms of insurance directly to customers through its website and via the phone. These include motor, travel, home and personal accident insurance.

The firm said it offers more competitive rates than traditional players by cutting out the middle person, like insurance agents. This could translate to a 10 per cent cost saving on car insurance, for example.

The company believes direct insurance will gain popularity in Singapore and the region.

Andrew Byrne, CEO of DirectAsia.com, said: "Look around the world and you look at the level of the market share of the direct insurers around the world... the Australian market about 90 per cent plus is direct insurance, but you only have to go to the UK, 65 per cent plus.

"Even in Korea - direct insurance (was) launched in Korea only about 6 years ago, I believe, and it market share is well in excess of 20 per cent for direct players.

"So there's no question about it - in fact, I think the more advertisements in the direct market the better, because I think it's the right model - it delivers the best service to the customer."

But observers said it is unlikely that traditional insurers will move into the online space in a big way as it is a costly investment.

Derek Teo, president, General Insurance Association, said: "To do that is going to be a very, very costly investment because to have a successful online insurance distribution, you first of all have to build a very sophisticated technology to be able to service customers and meet customers expectations, especially after sales service and even before that, the quotation stage as well - how fast and how quickly you can react to the needs of the customers."

The buying culture in Singapore also differs from that of the West. So it may be a while before Singaporeans become confident about purchasing insurance online without face-to-face interactions.

But DirectAsia.com's CEO is not daunted and said he is confident that his team of 40 staff in Singapore will be able to provide the 24/7 customer service support that is required.

The firm, which is owned by the Whittington Group, said it intends to roll out a similar online service in Hong Kong once its Singapore business takes off.