SINGAPORE: Market watchers say technology is set to change the insurance business, with many companies leveraging on IT systems to automate processes and cut costs.

But they warn that the lack of face-to-face contact could lead to a rise in fraud cases and hurt customer relations.

Insurers are increasingly looking to technology to unlock new business opportunities.

For instance, companies like Aviva, DirectAsia.com and Munich Re have all launched online insurance options to Asian consumers earlier this year.

Observers said this trend is likely to continue.

Li-May Chew, Associate Research Director for IDC Financial Insights Asia/Pacific, said: "On average we see that insurers spend, maybe, 0.75% of their revenues on IT whereas a bank might be spending 2% to 3%. So for the insurers, they do not have the luxury of cumbersome IT systems, and so what we're seeing is that there is a lot of focus on business re-engineering projects around selected areas."

Experts said some projects could include automating policy claims and management systems as well as business analytics.

But the focus on technology is not likely to put insurance agents out of jobs.

Kevin Goulding, CEO of Chartis Singapore, said: "There's going to be customers who are not comfortable with technology and there's going to be some who are. So you have to make sure you're not alienating the customer that is not comfortable with technology, just to benefit those who are comfortable with technology."

Observers added that technology can also help insurance regulators monitor the industry and streamline regulatory processes.

But the lack of face-to-face contact may embolden cyber criminals.

Vida T. Chiong, Deputy Commissioner of the Insurance Commission, The Philippines, said: "Regulators are worried.....there should be anti-money laundering measures......we look at it really very seriously. While we admire that there is such a thing as online business interactions with prospective policy holders, we have to have the safeguards."

Going forward, industry players said being customer centric remains the top priority and key challenge for insurance companies.