More seeking coverage online because they can customise policy and it's easier to compare prices
It's quick, convenient, transparent and cheaper - just some of the compelling reasons why a growing number of consumers are attracted to buying insurance online.
In recent times, most general insurers have offered travel insurance online, as it was a simple, one-off purchase.
But just last year alone, four firms with a wider range of insurance products entered the virtual space, allowing consumers to bypass the insurance agent and enjoy greater price savings.
They are: Aviva, CompareXpress, DirectAsia.com and Insure2give.
One online buyer, Ms Molly Chia, 35, obtained quotes from a few sites as her motor policy was up for renewal this month.
'The premiums from these online sites were generally about 25 per cent cheaper than the motor renewal quote from my insurance agent.
'I liked the fact that I could customise my policy, like deciding the excess amount and adding the optional loss of use cover,' she said.
For instance, she found she could lower her annual motor premium if she opted for a higher policy excess.
Mr Simon Birch, chief executive of online insurer DirectAsia.com, sees a window of opportunity for such product offerings here.
After all, nearly seven in 10 or 65 per cent of all car insurance policies in Britain are bought directly online or over the phone. In South Korea, it is around 20 per cent, he said.
Besides motor, the other usual online product offerings are travel, personal accident and home insurance.
These are less complex in nature than health or life insurance, for example hospitalisation plans, and can be bought off the shelf without much professional help.
Mr Albert Lam, IPP Financial Advisers' investment director, likes the 'sheer convenience and comparability' that the Internet offers.
'At any time of day and from any place, while also exploring available alternatives, customers get to take control and purchase only that which they believe they really need,' he said.
Still, cost should never be the only factor when buying insurance.
Qualified agents and advisers still play an important role in giving guidance and ensuring that customers do not end up paying for an unsuitable product that could disadvantage them. This is especially so for consumers who are clueless when it comes to insurance.
Mr Pui Phusangmook, general manager, general insurance division at insurer NTUC Income, said another key shortcoming of shopping online is that it may be difficult to get detailed and comprehensive information about the coverage compared with other modes of buying.
'I liked the fact that I could customise my policy, like deciding the excess amount and adding the optional loss of use cover.' MS MOLLY CHIA, who bought her motor insurance online
Tips before you click
- Credibility of online insurance provider
The legitimacy of the insurance provider is crucial. Find out if it is registered on the Monetary Authority of Singapore website as a licensed entity, said Ms Tang Yin Fong, of wealth management firm Providend.
- Terms and conditions
It is worth your while to read the policy terms and conditions before confirming the purchase online, said Mr Patrick Lim, associate director at financial advisory company PromiseLand Independent. Also, make sure that the policy coverage is adequate to meet your personal needs as coverage and limits generally differ among insurers, said Mr Pui Phusangmook.
- Claims process
It is vital that appropriate claims are duly compensated, said Mr Albert Lam. It also helps to ensure that the insurance provider offers a fully staffed service centre here where you can speak to someone face to face about your claim, said Mr Simon Birch.
- Comparing value
It is a mistake to assume that all the best deals are online, as insurers often discount premiums by removing certain coverage or increasing the deductible. The latter is the first part of a claim, which is paid by customers. To avoid being caught out, online buyers should first understand and then compare the coverage that is offered.
Customers should also note that the insurer offering the best deal yesterday may not necessarily offer the best deal today.
'It's been known for insurance firms to reduce their prices to create hype and then increase them once the customers flood in,' said Insure2give co-founder Ian Porteous.
- Getting the right coverage
The nature of insurance products is such that coverage against unfortunate events is provided for a relatively smaller fee. While it is never prudent to be overpaying or to have unnecessary extras, Mr Lam cautions against being penny wise but pound foolish.
- Contact point
Another key point is to be aware of the contact point for policy queries and claim issues, added Ms Tang.
DirectAsia.com
The portal is so confident about its competitively priced premiums that it offers a best-price guarantee on car insurance for safe drivers.
Chief executive Simon Birch said that its risk and pricing model, which is based on each customer's profile and experience, means that customers are not being penalised by having to subsidise bad drivers, which is traditionally the case.
It also has a claims system where it offers its own network of repairers. 'This ensures we control parts pricing and keep costs down, enabling us to maintain low premiums,' explained Mr Birch.
Launched in June last year, the portal sells car, travel, home and personal accident insurance. It is fully owned by international insurance investment firm Whittington Group, which has its headquarters here.
AVIVA
As the Internet looms ever larger in many people's daily lives, The Sunday Times highlights some online insurance providers.
British insurer Aviva re-entered the general insurance market by offering a direct online car insurance service in April last year. Now, it has travel and home insurance online as well. The composite insurer also offers life insurance solutions via representatives.
Aviva Singapore chief executive Simon Newman said that it tries to differentiate its online offerings by ensuring they are designed to give customers a 'real good deal'.
For example, for car insurance, it offers cost-savings of up to 25 per cent as buyers are able to customise their cover so that they pay only for what they need.
Unlike other motor insurers, Aviva does not reduce your 'no claim discount' or charge any excess if you are not at fault in an accident. All repairs done with its approved repairers are also guaranteed for 12 months. At Aviva, online quotes are guaranteed for 45 days so you can review the policy before making the actual purchase.
COMPAREXPRESS
Calling itself Singapore's first financial comparison website, the portal - which was launched in October last year - currently offers comparisons for car, travel and personal accident insurance.
CompareXpress allows customers to compare benefits and features of insurance products once the consumer provides the required key information on the website.
For example, the firm presents the excess, replacement car and personal accident coverage - which are features that are sometimes difficult to analyse and differentiate - in an easy-to-use format, said MrLaurent Junique, chief executive of CompareXpress.
Presently, it has Etiqa, HSBC Insurance and Liberty providing car insurance and it is adding more insurers for products like travel insurance. It expects three more insurers to come on board before March.
Mr Junique said it pays to compare. He estimated that one can save up to $300 as there are many price variations among insurers.
'We have estimated there are at least 50,000 different customer profile scenarios for which each insurer will price differently. Hence, having online technology to help customers shop makes sense,' he added.
Recently, it launched a comparison service for cheap flights on budget airlines.
INSURE2GIVE
Launched last month, the insurance portal donates 25 per cent of its sales commissions to charity.
It offers vehicle, home, travel, medical and personal accident insurance. Potential clients are asked to choose a charity to support, then to select which product they wish to buy. The donation is not a one-off transaction. Every time you buy or renew cover through Insure2give, you will be making the same donation.
Co-founder Ian Porteous is quick to point out that this service is provided without increasing customers' premiums. 'Our ability to offer this new service quite simply comes from not having to spend large sums on expensive office space, sales staff or advertising. The money we save from this can then be passed on to charity,' he said.
Each donation can be quite significant, ranging from $20 to $30 on individual travel insurance to hundreds or even thousands of dollars when implementing a group or corporate scheme, he added.
It supports six charities: the Salvation Army, the Singapore Red Cross Society, Club Rainbow, the Make-A-Wish Foundation, the Society for the Prevention of Cruelty to Animals and the Singapore Cancer Society.
Insure2give offers both online insurance and the option to call and speak to an adviser. Its products currently come from Tenet and AXA Insurance and it expects to add a third provider soon.
NTUC INCOME & GREAT EASTERN
NTUC Income offers travel, personal accident, infectious disease and home insurance online.
Customers receive an SMS acknowledgement when a travel policy is activated successfully, giving assurance of coverage in instances when they buy insurance minutes before leaving Singapore.
It also allows customers to store personal details for future travel activation. Great Eastern (GE) offers a suite of online products such as motor, travel, home, maid, personal accident and business insurance.
Once payment via credit card is confirmed, the sales receipt, policy schedule and contract are e-mailed to the customers or agents for reference and safekeeping. This has reduced the need for hard copies of sales documents and achieves a near immediate turnaround for customers and agents.
For both Income and GE, going online is one of several ways they distribute their products.
By Lorna Tan, Senior Correspondent