Popularity of online insurance rises

FORGOTTEN to buy travel insurance and have already left? No problem. All a forgetful traveller has to do is pick up the phone or go to the website of an insurance company offering online insurance products and buy one. This avoids the need to visit the offices of an insurance company and means insurance can be bought at any time of the day or night. Insurance companies see sales channels such as this as having great potential, and plan to extend the scope of the products they sell online and by phone much further. Travel, accident and compulsory car liability insurance are the most popular insurance products currently sold online or by phone in Slovakia. On the other hand, the law prohibits some insurance policies from being agreed remotely, in particular those for life insurance.

“For direct insurance, i.e. contracts closed via the internet, a text message, or a telephone helpline, it is important that the products are simple, comprehensible for the client and have an attractive price,” Judita Smatanová, spokesperson for Union Poisťovňa, told The Slovak Spectator. Union Poisťovňa, one of the pioneers in direct insurance in Slovakia, offers a range of direct insurance products from car insurance through travel insurance to accident insurance. “The client can choose a policy according to his or her needs, buy it around the clock and, moreover, obtain attractive discounts.”

Generali Slovensko, another insurance company, sees non-life insurance such as compulsory car liability insurance, household insurance or travel insurance as appropriate for sale online or by phone.

“On the other hand, it is impossible to buy life insurance via the internet,” Zuzana Hliváková, Generali Slovensko’s spokesperson, explained to The Slovak Spectator. The laws that prohibit online sale of life insurance comprise regulations under the Insurance Act, the Act on Protection of Personal Data and the Act on Legalisation of Incomes from Crime and the Fight Against Organised Crime. These acts together create various duties for insurance companies which mean that clients need to sign life insurance policies in person.

Among the products that insurance companies in Slovakia offer online or over the phone are travel insurance, insurance to mountain hikers to cover the cost of rescue in the event of an emergency, household insurance, building insurance, liability insurance, liability insurance of an employee when carrying out his or her job [to cover damages caused to the employer], compulsory car liability insurance as well as comprehensive car insurance.

Allianz-Slovenská Poisťovňa as well as Union Poisťovňa report that travel insurance is their most popular online product. The latter also reports sound results from its online compulsory car liability insurance service launched in 2009.

In 2010, as many as 35 percent of all Union Poisťovňa clients bought travel insurance policies via the internet. These accounted for 28 percent of the firm’s aggregate premiums. In terms of compulsory car liability insurance, one in every ten policies was agreed online.

Allianz-Slovenská Poisťovňa reports that currently more than 30 percent of its online clients are young people up to age 30. Compared with 2010 this represented an increase of over one half. Young people use the internet to buy travel insurance in particular, a reflection of their interest in travelling abroad, the company wrote in a press release. Apart from travel insurance, young people are also interested in liability insurance, where they make up almost 45 percent of customers.

Union Poisťovňa’s positive approach to the internet as a potential sales channel was confirmed by its launch of online accident insurance earlier this year. Over the next few weeks the company will also allow clients to buy comprehensive car insurance online too, and in the second half of 2011 it plans to launch online insurance of family houses, apartments and household goods.

Union Poisťovňa is also developing text messaging (SMS) as a sales channel. It started to sell selected insurance products via SMS in 2007, the first insurer in Slovakia to do so.

“A[nother] novelty is the first accident insurance via SMS, which we launched in mid April,” said Smatanová, adding that clients can buy accident insurance for risky groups of tourists and sports. Union plans to further develop insurance via SMS. It says it will boost the range of insurance products it sells via this distribution channel as well as improve the ease with which SMS purchases can be made.

Allianz-Slovenská Poisťovňa is also extending its range of online insurance products.

“With regards to people’s increasing interest in the internet we are developing other products, both simple and more complicated,” Lucia Muthová, spokesperson of Allianz-Slovenská Poisťovňa, told The Slovak Spectator. “More products may be put online as early as this year. Also via the distribution channels of the internet and the phone we are trying to offer clients a more extensive portfolio of our products.”

Online is for 'modern' clients

That the internet and the telephone are attractive environments for the sale of insurance products has been proved by the arrival of the first insurer on the Slovak market to sell its products solely via the internet and by phone. The company, Genertel, entered the Slovak market in October 2010, the SITA newswire reported.

In the initial stage, Genertel has focused on compulsory car liability insurance, but it plans to gradually add other non-life insurance products to its portfolio, for instance accident or travel insurance.

Genertel is a subsidiary of the Hungarian firm Genertel Biztosító a member of the Generali group which controls Generali Slovensko through PPF Holding. However, Genertel is developing its activities on the Slovak market independently of Generali Slovensko, according to SITA.

The new market player says it intends to address “modern” clients.

“The car liability insurance market shows potential among those clients open to new technologies, and who do not need personal contact when selecting the most advantageous products,” said Miroslav Chovan, director of the Slovak arm of Genertel Insurance, as quoted by SITA.

By the end of 2010 the insurer had sold over 5,000 car liability insurance policies.

“We are pleased with the number of clients,” said Petar Dobric, a member of the board of directors of Genertel, as quoted by SITA in mid January. “The results of our surveys, showing that Slovaks are not afraid to prefer new sales forms over traditional means, were thus confirmed.”

According to a survey conducted by Media Research for Genertel, more than 23 percent of Slovak drivers would use an online insurer to buy compulsory car liability insurance. The survey also showed that even though Slovaks are interested in quality of service, price is the most decisive factor, Doprava a Logistika magazine wrote.

Based on results in Slovakia to date, Dobric regards the project as very successful.

“We are an insurer for responsible drivers who do not cause car accidents and do not drive expensive cars,” he said. “To these people we can offer really reasonable prices.”