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Prudence behind online caution: ICA

THE INSURANCE Council of Australia has hit back at claims the general insurance industry was moving too slowly towards online business and risked losing out to new and aggressive electronic commerce providers.

ICA chief executive Alan Mason said it had become fashionable recently for information technology commentators to paint insurers as being apathetic to e-business opportunities and lagging behind other industries.

“Of course, it is in the interests of some technology industry critics, who are also suppliers of services, to see the industry pick up more speed,” Mr Mason said.

He said a number of the pioneering online sites could not be held up as examples of profitable enterprises.

“Despite the hype, Amazon.com has yet to achieve anything but a huge loss for its shareholders,” he said.

“Insurance My Way, the first of the insurance portals in Australia, reportedly earned $2,000 in sales in its first year, on costs of nearly $2.4 million.”

Mr Mason said, while insurance was an ideal product to sell electronically, it was different to every day transactions such as banking.

“Our own research agrees with American and European studies that indicate people are slowly becoming more relaxed about doing business on the Net, but there is no great rush to buy insurance online,” he said.

“Before they buy insurance on the Net, consumers will need to get used to banking and buying non-financial products such as groceries, books and CDs electronically.”

Mr Mason said ICA’s research indicated that only 11 per cent of consumers would buy insurance on the Net. Of those, only 13 per cent would buy from a company that did not have an office in Australia.

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