Professional Documents
Culture Documents
5. Providing new facilities and equipments for customers and possibility of comparing
products and prices in the shortest time period
6. Business development and expansion by removing geographical constraints and
reduction of environmental pollution, traffic jam and population crowd
7. Achieving more consistency between products and services and customers' needs
through innovation and diversity
8. Expansion of customer relationships and delivering high speed services such as
simplicity in compensations
9. Simplicity of cooperation and knowledge transfer among beneficiaries, stakeholders,
agencies and brokers (9).
Disadvantages
1. High costs of required technologies and lack of standards in some communicative
protocols.
2. Insufficiency of communicative bandwidth and software problems and deficiencies
3. Lack of integrity of digital and non-digital sales with production information
4. Troubles in integrating E-business infrastructures with current IT systems of the
organization
5. Safety issues and customers' fear of presenting personal and secret data such as
entering their user name and password
6. Obstacles relating to organizational culture and behavior and its current structure
7. Lack of sufficient supportive services such as banks, telecommunications, ISP, etc
8. Lack of employees skilled in applying E-business
9. Rapid changes in the market and its requirements (4).
Information technology and insurance industry
Insurance industry has experienced various transformations in recent sequential years the
most important of which was deregulation in financial services section along with
fundamental advances in information and communication technologies and these all led to
an increase in competition in this market. In general, the followings are two main changes
occurred:
- Emergence of new capital markets, especially in reinsurance section
- Significant growth of computer networks (such as the Internet) in marketing and
sales of insurance products.
Information technology plays the supportive role in insurance industry. The industry is
currently facing following challenges in IT-based development:
1- Lack of information architecture and standardization of insurance data in order to
provide for aggregating common information and make an intensive and systematic
supervision (on different tasks) possible.
2- Absence of a center for intensive data in central insurance and insurance companies
in order to gain statistical and information needs
3- Lack of mechanization in financial, administrative and insurance operations
62
63
6) The Internet can be used as a marketing tool or loss equity for those insurances having
higher complexity and transactional value such as pension, medical insurance and many
business insurances needing consultancy.
Disadvantages of insurance electronic sales
1) The electronic sales lacks enough pressure to attract potential customers since insurance
must be sold not purchased.
2) It is not appropriate to apply E-insurance for those complicated insurance types having
high transactional value (10).
3) Application of electronic sales requires expansion of insurance culture and its publicity.
4) Deficiency in proper electronic and telecommunication infrastructures for premium and
compensations in developing countries blocks development of electronic sales.
5) Deficient data transfer may affect validity and efficiency of an insurance contract and
generate serious problems.
6) Concern on unrevealing personal information is another obstacle of electronic sales
expansion.
7) E-insurance accelerates transaction steps creates many fraud opportunities.
8) Since electronic signature is not legal, it is hard to sell insurance online.
The effect of IT on insurance agencies
By emergence of changes coming from E-business insurance agencies face big challenges,
opportunities and threats. The structure of many agencies and role of intermediates will
gradually change. Since the main function of these agencies is to provide customers with
sufficient information and insurance, E-business made it simpler and has reduces many of
their costs. Most ordinary insurance products are distributed online, including car and fire
insurances. But those complicated insurances such as liability insurance which have
complicated pricing processes are mostly distributed by conventional insurance companies.
E-business has also resulted in a decline in using independent agency system compared to
exclusive agencies and direct distribution system (growing since 1970). On the other hand,
the role of agencies in guiding and advising customers, on how to optimize their purchased
insurances and on other cases such as providing customers with expensive side services to
custom, is improving. It can be anticipated that those agencies and brokers achieve success
in the future who can adapt to these conditions and present novel methods to provide
insurance services.
Agents can play a dominant role in policyholders' web strategies (8). Most websites lead
customers to agencies through navigations introducing the nearest agency to customers. If
customers want to receive a price list or purchase insurance most websites lead them
toward agencies.
Only a small number of websites of insurance companies present online price lists and some
of them have direst sales for customers. In fact, companies having direct sales websites are
still emphasizing on the role of agencies through promoting a multi-channel strategy or on
using the web as a complementary strategy of the current technology.
64
Indeed, as websites lead customers toward agencies to gain more information and purchase
a policy agencies' role improve. It was once believed that the Internet omits agencies but
leading more transactions toward them increases their role. Moreover, insurance websites
become more efficient by relating agencies to conventional and computer systems of the
company (6).
Conclusion
Onset of information and communication technologies in Iran made many organizations use
various tools to equip themselves. Meanwhile, they received new rules and disciplinary
principles. In these circumstances companies grew well and benefited from IT that changed
their business approach and strategies. However, diversity of products or, in other words,
services in insurance industry, wide range of customers and market's geographical
expansion created certain conditions in which making correct use of IT can solve many
problems.
Main challenges faced by insurance industry for IT-based development can be summarized
as follows:
- Most of recent actions were not coordinated. These inconsistencies and challenges
are direct results of management approaches dominant in the industry. Hence,
insurance industry has not been successful in developing IT compared to other fields,
despite its economic dynamicity.
- Software development respecting local characteristics and ability to provide
integrated services
- Developing hardware infrastructure in sales agencies and central offices to generate
a common framework
- Expanding communication infrastructures based on geographical expansion and
sales network in the industry
- Public education and human resource in IT development lead insurance companies
from product-orientation toward customer-orientation
- As policyholders have less searching costs, more clarity is observed in pricing, quality
and insurance services. This reinforces the discipline of competitive market.
- Another important aspect of IT in insurance industry is an increase in its clarity,
- especially for policyholders. Not only the policyholder is able to compare different
- fees and make the best choice but also can compare insurance companies based on
their financial capacities. One of the traditional justifications of legislating for policies
and their fees was that policyholders always face problems in making proper
insurance use, comparing different fees and quality of various insurance companies.
Making use of insurance in conventional manner may cause policyholders purchase
insurance solely based on rate differences and do not notice that (1) policies of
different companies may not be compared directly and (2) those companies offering
cheap fees have lower-quality services and are prone to bankruptcy while online
insurance provides customers with the opportunity to compare and choose costs
and qualities with better understanding and more information.
65
References
Emrahimi, A.( 2004). "Information technology, E-commerce and E-insurance". Danesh
Publisher.Tehran.
Kazemnejad, M., Hasanzadeh, A. "The role of information technology in insurance
business". Samt publisher.Tehran.
Haghighi, M.& Seihoon, A.( 2008). "Presenting an electronic maturity model for service
providing processes".Tadbir, Isfahan.
Abedi, K., Eyvaz zadeh, Sh. (2008). "Anticipating Iran's insurance evolution".Resalat
Publisher, Shiraz.
Alikhani, A., Bahrami, A.( 2007). "Examining and identifying obstacles of implementing Einsurance in". Samt, Tehran.
Kazemi, M., Fayyazi, M. (2008). "Investigating obstacles of making optimal use of IT in
insurance industry".
Kameli, A.(2004). "Insurance marketing and sales in E-commerce". Takhassos-e-Asia
quarterly.
Karimi, A.(2004). "The role of It in insurance industry". Takhassos-e-Asia quarterly. ISSUE
30.
Ramadani, A. "What is E-insurance?"Islamic Azad university Publisher, Yazd.
Habibi, A. Aftab, "What is E-insurance?", Danesh Publisher.Tehran.
66