Money: Insurers wary of catching a cold

Health and life cover are a difficult sell on-line, writes Stephen Pritchard

INSURANCE companies already offer travel cover, home contents policies and car insurance on-line. But they are treading more warily with life policies, pensions, and medical insurance.

These products are much harder to explain, and it is important customers know what they are buying. Even so, insurers are sure that some people will buy even quite complex products without a face-to-face meeting.

Selling a medical insurance policy, for example, needs a certain amount of advice, and insurers are not sure how this can be achieved over the net. Customers also need a "cooling off" period to ponder their choice before parting with their money.

Insurers are approaching this in different ways. PPP says it has "no plans to sell medical insurance via the web at the present time". Instead, visitors to the company website can ask someone from the company to call it and go through its policy options over the phone.

Norwich Union intends to let customers buy over the internet in the near future. It sells some of its health policies over the phone and they are likely candidates for on-line sale.

Legal & General goes further: visitors to its site can buy temporary 14-day medical cover. There is no charge at this stage: filling in an on-line application form generates a certificate for the company's Lifetime Essentials budget medical package, and the software automatically works out the monthly premium. At the same time, Legal & General posts policy documentation and a full application form. To keep the insurance you have to fill in the forms the conventional way.

It may be some time before anyone issues full medical cover on-line. There are some complex underwriting problems to address. There are some in the insurance industry who fear that the anonymity of the internet could encourage people to be less than honest in giving details of their medical history.

Margaret Smith, director of electronic commerce at Legal & General, believes this won't be a problem. "When we started on this route, we thought people might be more open and honest face-to-face than on a remote connection. But they have tended to be more honest on-line."

Even so, Legal & General won't cover known, pre-existing medical conditions and will not cover problems that first occurred up to five years before taking out the policy.

Not all medical insurers operate such a broad moratorium. Bupa tries to "underwrite everybody effectively" before they are insured, says Andrew Briscoe, the sales director . This means filling in a detailed application form, and Bupa might check details with applicants' GPs. The insurer then tells customers which conditions they are and are not covered for.

This approach causes few problems on paper, but is harder to translate on to the internet. Bupa has 20 people working on website development, but doesn't yet sell policies on-line.

Bupa's travel cover is likely to go on sale over the net later this year. Mr Briscoe believes private medical insurance will follow. Bupa is developing software to carry out on-line factfinding about the customer and make a recommendation. The underwriting process will also take place over the internet.

"We are designing our website to be able to do automatic sales of medical insurance, and it will be able to do automatic underwriting," says Mr Briscoe.

He believes the demand is there to justify the time and resources needed to sell medical insurance over the net. "There are consumers who want advice, and there are those who enjoy buying over the phone. But there is an increasing number of people who feel more confident buying completely on-line."

The software cannot remove all human interaction: some applicants for medical insurance will still have to visit their GPs for a check-up. It will be a few years yet before most local surgeries can offer a remote consultation with the family doctor via a video link over the net.

q Links: Bupa, http://www.bupa.-co.uk; Legal & General, http://www. LandG.com; Norwich Union, http:// www.norwich-union.co.uk; PPP Healthcare, http://www.ppphealthcare.com.

q If you have details of financial internet sites, e-mail the author at: stephen.pritchard@ dial.pipex.com.