Insurers promise to offer cheaper polices online

Life insurance firms are seeking to expand their business portfolios to the online insurance market to capitalize on the boom in sales of smartphones. Customers can use these and PCs to purchase policies directly on the Web.

According to industry insiders, Kyobo Life Insurance has sought approval from the Financial Services Commission to establish an online insurance affiliate called e-Kyobo Life insurance.

Others, including Hanwha Life Insurance, KDB Life Insurance and Hyundai Life, are set to join the fray by either establishing separate affiliates or setting up online business units.

“We have sought approval from the financial regulator, and our main target customers will be those in their 20s and 30s who are regular Internet users,” said an employee at Kyobo Life Insurance.

Four non-life insurers including AXA Direct Korea and Hyundai Hi Car Direct Insurance sell policies by combining online access with follow-up phone calls.

Life insurers said their online spin- offs will be different as they will accept all of their policy subscriptions through the Internet. By scaling back telemarketing costs and manpower expenses, they expect to be able to offer policies between 10 and 20 percent cheaper than at present.

Market observers forecast that online insurers will start their operations by the first half of 2013 given that the FSC is scheduled to give e-Kyobo Life Insurance the nod within two months of completing the related evaluation process.

“Online life insurance firms will increase consumer choice and bring down premiums,” said an official at the FSC. “But the FSC will restrict its approvals and only give the go-ahead to those whose sales channels and products don’t overlap with their existing businesses.”

Companies in the United States began selling life insurance policies online in the late 1990s, and online sales now make up 10 percent of the global market, according to the Korea Insurance Research Institute. HSBC and American National Life Insurance are among the market leaders.

Japan picked up on the trend in 2008 with the launch of SBI AXA Life Insurance and Lifenet.

By Kim Mi-ju [mijukim@joongang.co.kr]