Direct auto insurance market heats upNonlife insurers are jumping into direct auto insurance to diversify revenue sources and better cope with rapidly changing market trends.
According to industry insiders, LIG Insurance will start a direct auto insurance business by launching LIG Magic Car Direct in April.
LIG is expected to provide direct auto insurance premiums that will be 12 percent cheaper than traditional premiums.
The savings is possible because traditional insurance policies are sold face-to-face by sales agents, whereas direct insurance policies can be purchased by customers via the Internet or by telephone. The simplified process helps insurers cut costs by eliminating commission fees provided to salespeople. Market observers estimate LIG’s decision will not only generate healthy competition among insurers but broaden consumes’ choice.
Currently, Dongbu Insurance is the leader in the country’s direct auto insurance market with 21 percent share, followed by AXA General Insurance’ at 19.6 percent, and Samsung Fire and Marine Insurance’s at 14.5 percent.
Samsung Fire and Marine Insurance plans to introduce telemarketing for accepting applications in addition to the current Internet-based application system to reach more of potential customers. The new service starts in April.
“People’s awareness of direct insurance has improved greatly compared to several years ago, and telemarketing will help us win over more customers to cement our position in the rapidly growing market,” said an official at Samsung Fire and Marine Insurance.
Market observers say the outlook for direct auto insurance is bright in Korea. It is expected to account for half of all auto insurance sales this year, compared to 36.6 percent in 2011.
Meanwhile, AXA General Insurance, the local unit of French global insurer AXA S.A., aims to expand into the direct nonauto insurance market.
Xavier Veyry, CEO of AXA General Insurance, said Wednesday the company’s goal is to double its non-auto direct insurance revenue - currently 13 percent of its business - within four years.
“Korea is a fast-growing market, and it’s a very important market for us,” Veyry said.
Veyry said he is interested in introducing a direct insurance policy where middle-aged people can prepare for life after retirement, which is already popular in the French market.
By Kim Mi-ju [firstname.lastname@example.org]