Swiss Re Sigma Study Examines E-Commerce Impact on Insurance Industry

June 30, 2000

The release by Swiss Re of a Sigma Study entitled “The Impact of E-business On the Insurance Industry: Pressure to Adapt–Chance to Reinvent,” is the third major report the company has issued in the last two weeks.

Coming as it does when E-commerce and E-business are being examined very closely, the Study is especially timely. It predicts that on-line channels in standardized personal lines insurance will “have gained a market share of 5-10 percent in the US and 3-5 percent in Europe by 2005.”

Significant cost cutting measures can be achieved by dealing on-line. “US personal lines insurers will, in the long term, decrease their expenditure on sales, administration, claims settlement and claims payments by up to USD 15 billion, or 12 percent. Given the high level of advisory services and tailor-made products in commercial insurance, the potential cost cuts are USD 11 billion, or 9 percent of total expenditure,” says the report.

On line business will see increasing competition. The study notes that it’s now possible to enter a market without setting up an extensive sales and service network, and that companies already doing business on line, such as banks, online brokers, internet service providers and financial service providers, can easily add insurance capabilities.

“These companies take advantage of their internet presence and brand name,” says the report, “to add insurance products to their existing product range. The new breed of internet insurers is able to exploit to the full the potential which e-business offers for increasing efficiency, without having to be concerned about legacy business systems. Established insurers are thus facing growing competitive pressure.”

Swiss Re sees an increase in the use of e-business to formulate and manage the more complex types of coverage,” pension products in life insurance, commercial lines insurance and the strong growth of integrated risk management (IRM) products.”

But it also warns that,”Insurance brokers in the area of standard products, where there is little need for advice, are finding themselves faced with considerable competition on account of falling information costs in the internet.

As with other Swiss Re reports,” The Impact of E-business On the insurance Industry: Pressure to Adapt–Chance to Reinvent,” can be obtained from the company’s website at

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