NEW technologies are impacting the insurance industry and several companies in Slovakia now sell insurance policies via the internet or mobiles – along with reporting an increased interest from clients in these channels.

Most often it is short-term travel insurance, compulsory car liability insurance, motor hull insurance and home insurance, insurers say, and rates are usually lower than when buying the same product in a traditional way. But not all insurance policies, especially those which are more complex and adjusted to each client’s needs, are suitable for this distribution channel. In general, insurers offer some non-life insurance products online, while other products still require a face-to-face meeting.

“Purchasing insurance policies via the internet saves time, is convenient and clients can buy the product literally at any time,” Dušan Quis, the general director of ING Životná Poisťovňa, told The Slovak Spectator. “People expect that financial companies will make available for them as many products as possible via the online sale.”

Marek Kopča, the director of direct sales at the Union Poisťovňa insurance company, added that online purchases do not include any paperwork, as the client obtains all the documents in electronic form and can decide whether to pay via internet banking, QR code or other methods.

“People who buy insurance policies via the internet know what they want and what they need,” Kopča told The Slovak Spectator. “These are educated clients whose opinion is extremely important for us.”
On the other hand, the internet is not suitable for selling more complex products like long-term life insurance, set individually for each client based on their life situation. Ordinary clients may not be able to correctly decipher what they really need.

“Insurance is firstly a service, which protects us in case of unexpected and displeasing events,” said Kopča. “Thus, in the case of more complicated insurance products … we do not expect that the internet would be able to fully replace the personal contact with an agent. But in the case of life insurance technologies, like video-chat or sharing the screen with an operator in a call centre, these will play an increasing role.”

Lucia Makayová, spokeswoman for Generali Poisťovňa, pointed out that the legislation in Slovakia hampers the online sale of life insurance policies as laws on insurance, protection of personal data, legalisation of incomes from criminal offences and the fight against organised crime set various duties for the insurer.

Union was one of the first insurance companies in Slovakia to offer an online option. The first online product - travel insurance - launched in 2001. Now it offers 10 products in four classes, including travel insurance, compulsory car liability insurance, accident insurance and home insurance.

“Over the last two to three years the number of clients entering our websites via mobile devices like smart phones and tablets has been increasing,” said Kopča.

ING Životná Poisťovňa registers that people actively search for online purchase of insurance policies. In 2011 it launched the online sale of accidental life insurance.

“Clients most often buy in this way simpler products, like accidental insurance,” said Quis. “We register also interesting increases as well as volumes in products of secondary and third old-age pension pillars.”

The biggest insurance company in Slovakia, Allianz–Slovenská Poisťovňa (ASP), opened its online selling channel in 2005 and now offers products related to travel and liability insurance, according to its spokesperson Artur Šturmankin.

“The interest of purchase of insurance via the internet is increasing and this is seen especially among clients in the age between 20 and 50 years,” said Šturmankin, adding that they are most interested in online travel insurance, car liability insurance and household insurance.

Aegon is the latest insurance company to enter the online insurance market. In late April it began offering policies for insurance of real estate and households.

“We started this [property insurance] because home insurance is simple and easily understandable and because not so many individual factors affect it as is the case in life insurance,” Ján Ďurech, from the marketing department at Aegon, told The Slovak Spectator.

Groupama Garancia Poisťovňa will not yet offer online insurance until later this year, while they plan to focus primarily on travel insurance and car liability insurance.

“The interest in online insurance is growing, especially in the younger generation, but also among people who want to solve their insurance now and without waiting,” Tomáš Kalivoda, the head Groupama Garancia Poisťovňa in Slovakia, told The Slovak Spectator.

According to Kopča, a new trend in online insurance is that clients want an individual approach when buying an insurance policy.

“More than one-third of our online clients prefer the possibility to combine their own package of insurance coverage,” Kopča said, adding that the bank offers this option in the form of pre-defined travel and accidental insurance packages. This enables clients to include in the package insurance for pets, like dogs or cats, as these often accompany their owners on holidays abroad.

Kopča also remarked that the financial and technical literacy of Slovaks is increasing.

“The price of the insurance policy continues to be important, but more and more clients also follow the amount of the insurance coverage, its extent, the reputation of the insurer and when picking a product they also decide based on the recommendation of their friends and acquaintances.”

Prices differ

The prices of insurance products offered online and in person at a branch office usually differ, with online products costing less or the same.

Union considers the internet in the sale of commodity retail products of key importance and this is why it offers many online products with discounts. In the case of one-year travel insurance the client can save 5 percent, while the discount for compulsory car liability insurance is 10 percent.

ING Životná Poisťovňa offers an 8.8-percent discount for accidental life insurance. At ASP the price difference ranks between 5 and 20 percent depending on the product.

Generali offers discounts as the process of signing insurance contracts online is less costly for the insurer than in a brick-and-mortar branch office, according to Makayová.

At Groupama, which is only planning to launch online insurance, the price might be the same, but there may be differences in the parameters of the product.

Market share

Insurance companies report quite a dramatic increase in online sales of insurance products, but these still make up only a small portion of the total policies sold.

At Allianz–Slovenská Poisťovňa online sales are less than 1 percent of the total, but the sales increase in tens of percents annually, said Šturmankin.

Union registers an annual two-digit increase in the percentage of new policies sold online. In 2013 every fourth travel insurance policy and car liability insurance policy was purchased via the internet, mobile or phone. In 2009, when Union entered the car liability insurance market, the online share was only 5 percent.

ING Životná Poisťovňa admits that the online sale on the total sale of policies is still small, but it is the distribution with the biggest growth dynamics. According to Quis, they registered an annual increase of 75 percent in April.

Generali puts the share of online products at 2-3 percent, while this share has not changed fundamentally over the last few years.

Expectations

“Insurance is basically a very conservative financial sector and thus the traditional way of agreeing [over conditions] during personal meetings when solving complex insurance solutions may not disappear in a short period of time,” said Makayová.

Insurance companies expect to see more innovations in their businesses. Allianz–Slovenská Poisťovňa expects an increase in the sale of policies via phone, while this distribution channel is able to secure a high level of comfort and, contrary to the internet, it enables the sale of a wider range of products, as it offers consultancy, according to Šturmankin. Union expects that the trend of the sale of simple insurance products via networks of other retail players is coming to Slovakia too. In the Netherlands, insurance policies are being sold via the retail chain HEMA, and in Greece there is cooperation with the retail chain Carrefour.

“Also in Slovakia there have already been experiments with a similar distribution model,” said Kopča. “Maybe the proper time for this type of cooperation is only to come.”