Money: Insurance on-line

Stephen Pritchard looks at the potential of the Web for making policies easier and cheaper to buy

COMPETITION in insurance means keen prices, but there's little pleasure in ringing round for insurance quotes or traipsing from broker to broker in search of a good deal. Insurance firms admit that household, motor and travel policies - called general insurance - are bought mostly on price.

The market is relatively lightly regulated - unlike life or pensions policies - and there is often little to choose between insurers. This makes general insurance one of the easiest products to sell on the Internet. Most of the large UK insurers now have detailed Web sites which at least set out their stalls: Norwich Union, Royal & SunAlliance, Legal & General, Commercial Union, Eagle Star. There are also smaller specialists, such as Admiral for car insurance, or WorldCover for travel.

The insurance market changed dramatically when companies such as Direct Line introduced the phone as the way to buy a policy. Rivals quickly followed. The market, insiders believe, will change again as the Internet makes its presence felt. As yet, few insurers actually sell anything through their Web sites. They offer on-line quotations, descriptions of products and claims information. Royal & SunAlliance even gives tips on preventing storm damage. But completing the sale means using the phone or the post.

Analysts who study Internet shopping have a model of the sort of goods that suit it. Anything bulky, specialised or made to order is out: the delivery costs are too high, the volumes too low. Simple items, where the buyer knows what he or she wants, are ideal. Books and CDs are proving popular on-line purchases. The shopper likes the author, or the band. Where they buy the product is decided by price and convenience.

Home, car or travel cover is a little more complicated than a CD, but current technology is perfectly capable of producing a policy quote from details typed in on a Web page. There is little difference between the customer completing the form on-line, and someone in a telecentre typing the same information into the insurer's computer. Persuading the customer to do the work has the added advantage, for insurers, of cutting costs.

This should lead to significantly lower prices for policies. And, because the Internet should make it easier to compare prices and features, the theory is that insurers will work to keep their costs down. This is good news for consumers but, for it to happen, many more insurers need to sell in volume over the Net.

In the US prices have fallen because of Internet competition, but the UK lags behind. "I don't think that the virtuous circle has started in the UK yet," suggests Neeta Patel, head of electronic commerce futures at Legal & General. "I don't think we've sold enough policies to see how it is affecting distribution costs."

For now, most insurers see the Net simply as a pre-sales tool. Legal & General's site, for example, gives the option of submitting a fairly lengthy form to the insurer, and waiting for a postal quote. As an alternative, clicking the "contact us" button gives the option of e-mailing a phone number to the firm. This results in a call back from an agent. This is pretty efficient, with responses in less than 10 minutes.

On-line quote forms are popular with insurers: they appear on sites of Commercial Union, Royal & SunAlliance, Norwich Union and the travel specialist, WorldCover, among others.

One criticism is that the forms help the insurers more than the customers. There is no standard format, and entering the same details over and over again runs up phone bills for time on the Net. It is a pity more insurers are not willing to give indicative premiums on-line - such as those calculated by the Co-operative Insurance Society's site, or by Royal & SunAlliance - or e-mail the results back the same day. Waiting for a postal quote defeats the object of using the Internet in the first place.

Better still, insurers should give firm prices on-line to customers, who can then pay for the policies using a card. One of the few insurers to do this is Eagle Star Direct, which sells motor policies in this way. The site is well-designed and easy to use. If the quote is acceptable, you can buy it there and then. Eagle Star says its policies bought this way are 15 per cent cheaper than those bought over the phone.

q Contacts: Commercial Union: www.commercial-union.co.uk; Co-operative Insurance: www.cis.co.uk; Legal & General: www.legal-and.general.co.uk; Norwich Union: www.norwich-union.co.uk/direct/; Royal & SunAlliance: www.royal- and-sunalliance.com; WorldCover: www.worldcover.co.uk; Eagle Star: www.eaglestardirect.co.uk.

q The author can be contacted at stephen.pritchard@dial.pipex.com

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
a clockwork orange, stanley kubrick
film
Extras
The Tesco Hudl2: An exceptional Android tablet that's powerful, well-built and outstanding value
indybest

Life and Style
food + drinkAuthor DBC Pierre presents his guide to the morning after
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
News
i100
Finacial products from our partners
Property search

Simon Read: The point of having protection insurance? The right cover can help reduce your financial concerns at a time of extreme worry

In May Nicola Groves got a massive shock. The 45-year-old mother of two was told, bluntly, that she had breast cancer. "When I heard the words, 'You do have breast cancer and you are going to lose your breast', I felt as if time stood still," she says.

Mark Dampier: Maybe boom, maybe bust, but we'll probably just muddle along

It's that time again when the media looks back over the past year and forward to the next. I am reminded of an old film, The Day the Earth Caught Fire (1961). Near the end of the film a newspaper prints two headlines – which one it uses will depend on whether the world is saved or doomed.

Sainsbury’s sank 7 per cent to 234p; Tesco fell 3.2 per cent to 180.2p ; and Morrisons dropped 5 per cent to 159.9p

Money Insider: Supermarkets: the real challenger banks

The supermarket banks have always excelled at offering simple, no nonsense products, and savings accounts is another area in which they fare well

Pat and Richard Astbury at their home in Norton Canes, Staffordshire. They have benefitted from the Community Energy Project aimed at helping council tenants with their energy bills. They have had solar panels installed.

Locals in Staffordshire to save hundreds after new council-backed project to install solar panels

The sun is shining on people who struggle to heat their homes and it’s thanks to a sense of community

Gross household debt reached a historic high of around 160 per cent of combined incomes in 2007

Simon Read: Give people struggling with debt some breathing space

Struggling people need help, understanding and forbearance, not ill-thought-out pronouncements

A person walks through the City of London during the early morning rush hour in London

Simon Read: Caught up in the scandal about leaks at the regulator

You won’t find me bashing the banks for the sake of it, but sadly they’ve deserved all the criticism that’s been sent their way in recent years

There were around 750,000 victims of mobile phone theft in England and Wales last year, according to official figures

Money alert: Stolen mobile phones

Gillian Guy, chief executive of Citizens Advice: 'The injustice of shock bills for crime victims must end. The Government must stand up for consumers and cap bills from lost or stolen phones at £50'

Indian workers boil sugarcane juice to make jaggery, a traditional cane sugar, at a jaggery plant in Muradnagar, Uttar Pradesh's Ghaziabad district

Mark Dampier: A hot investment story is taking shape as India lets the light in

Stirring the pot: the Indian Government’s reforms of labour rules offer hope of a brighter future for businesses 

An AA patrol man helping a woman whose scooter had broken down.

Bargain hunter: Whisk up those leftovers instead of just throwing them in the bin

Knight of the road, look out: you’ve got a new rival 

How to raise money for charity this Christmas

There are so many ways you can raise money - and awareness - for charity. Rob Griffin explains how easy it is to donate and reap financial rewards

Simon Read: The Chancellor has stamped on an unfair tax. But will the delight of homebuyers mean misery for others?

Were you surprised by the sudden reform of the rules for stamp duty on property purchases? I certainly was. I've been calling for ages for a change in the tax to make it more fair – and, at a stroke, George Osborne did just that on Wednesday in his Autumn Statement.

Santander, whose ads have been fronted by the Olympic gold medallist Jessica Ennis-Hill, was among the banks where there were potential pitfalls with shared licences

Best savings rates are not all they might seem

Consumers can sometimes think they are shopping around for a rewarding account when in one important aspect, writes Samantha Downes, they are not
The sunlit uplands: switching out of a final salary pension may seem like madness, but there could be cases where it makes sense

Gold-plated pensions – the key to retirement freedom?

With some people are weighing up whether they will be better off cashing in their final salary pension next spring, Samantha Downes asks the experts

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas