In 2000, insurance companies worldwide wrote $2,444
billion in direct premiums which is 7.8 percent of
global gross domestic product (GDP).
During the same year the insurance companies in
developing counties generated $209 billion which is
8.5% of the global insurance premiums.
A developed and functioning insurance sector is
fundamental condition for economic success
The objective of insurance is to provide financial
stability to individuals, organizations and businesses.
As a risk pooling and transfer mechanism, insurance
allows the insured to mitigate pure risk (i.e risk
involving only the possibilities of loss or no loss).
E-insurance can be defined as the provision of an
insurance cover whereby an insurance policy is
solicited, offered negotiated and contracted online.
Everything in an insurance contract may be done via
internet however, there may be some constraints that
may not fulfill the requirement of e-commerce in
Efficiency and effect of e- insurance:
First, e-insurance should reduce internal
administration and management cost by automation
business process, permitting real-time networking of
company departments, and improving management in
Secondly, it should reduce the commission paid to
intermediaries since it can be sold directly to clients.
Objectives of the Study:
To review existing e-commerce practices in insurance
industry of developing counties.
To discuss the use of IT in insurance as well as
To seek for a number of guidelines for companies
which will assess the regulatory implications for the
How things have changed
Internet and e commerce technologies are already
changing the structure of the insurance industry.
Agents= Sales of policies to non business like personal
life, motor vehicle insurance, etc also for small and
medium sized business.
Brokers= Intermediated insurance for large
organizations as well as between insurers and
Middleware is a software that provides connectivity
E-commerce Practices in Insurance
Personal liability cover
Health and life insurance
Issues in E-Personal Insurance:
Online Payment System
Lack of E-Commerce Strategy
Business Process Outsourcing
The reasons of challenges an online risk management
Buyers of commercial insurance often require tailored
Companies with significant assets normally set up their
own risk management departments .
Businesses do not consider the transfer of risk to an insurer
by way of a policy to be the primary motivation for
Companies can also diversify their portfolios on the
securities markets, should they wish to do so.
Reinsurance is rapidly becoming online.
Some companies are marketing and distributing their
own reinsurance products on their websites.
While others are attempting to set up reinsurance
markets or exchanges.
The following list are the pros and cons of reinsurance e-
Buyers get access to multiple quotes from several
Capacity can be larger.
Few players are fully committed, many are developing own
solutions in tandem.
Standardized products may not satisfy buyers' needs.
Aside from reinsures, e-markets need to attract brokers .
IT and insurance
It helps in enhancing the performance of the field
agent or employee.
Wireless devices help the staff to access in the
resources of the data for the distribution improve,
cross selling and speed up loss assessment
For eg Japan , New York life
Reason for building company IT infrastructure
I. Liberalized market and competitive pressures
forcing to increase productivity and efficiency
II. Developed countries require internet based
electronic data interchange for ceding or accepting
III. Any prospective e-commerce strategy needs back
office it that can communicate with an internet-
based front end or website
Supervision of establishing e-
E-insurance was perceived as a distribution channel
would erase national boundaries since a single e-
insurance platform established in one influence could
offer insurance service globally.
More precisely existing regulations relating to market
conduct determine how insurance providers may
conduct the business online.
Competition rules and transparencies add information
requirement from the core market of conduct.
Monitoring of rates, marketing of insurance product,
handling of public complaints, consumer education
and fraud are included under this aspect of
Insurance provides financial stability to individuals,
organizations and businesses.
E-Insurance is the mechanism where as offered
negotiated and contracted online.
Study has the objective to review existing e-commerce
practices in insurance industry of developing
It has addressed the issues on personal and
commercial insurance on the perspective of e-