A Comparative Study of Business to Consumer Electronic Commerce within the Australian Insurance Sector

Electronic commerce is causing fundamental changes in the insurance sector. Inherent opportunities of this innovative sales channel are driving the development of a new customer relationship paradigm, development of new products, pursuit of low cost ‘self service’ strategies, and emergence of ‘virtual brokers’. The Australian insurance sector is well positioned to take advantage of electronic commerce due to the high level of PC penetration, high Internet usage, and extensive broadband infrastructure. The perception is that the Australian insurance sector is meeting these challenges. Surprisingly, despite the emergence of electronic commerce as a ‘hot topic’ in the information technology and insurance sector literature, little empirical research has been reported. Much of the extant literature can be criticized as being too generic and superficial. It is argued that until research is focused on specific aspects of electronic commerce, we will fail to capture meaningful insights. The aim of this research project is to develop a research framework appropriate for electronic commerce, research and to apply it to a specific sector (insurance), in a specific geographical region (Australia), using a specific electronic commerce, medium (Internet), for a specific purpose (business to consumer sale of risk products). The research objective is to discover which Australian insurance companies are using electronic commerce for what. The survey found that of the 21 largest Australian insurance companies only 18 have web sites. These sites are mainly used for promotional purposes and not for directly generating sales. Only six companies offer customer-specific pricing of their products. And of these, only four companies sell any of their products over the Internet. Paradoxically, despite pressing business drivers in the insurance sector and a favourable electronic commerce environment in Australia, these findings demonstrate a significant gap between appreciation of the importance of electronic commerce and realization of commercial potential. Whilst most Australian insurance companies are well aware of the special importance of electronic commerce, many fail to take full advantage. Although further qualitative research is recommended to understand why this is so, it is clear that a significant gap remains between the technical capabilities of electronic commerce and actual practice in the Australian insurance sector.