Abstract
The influence of internet on the insurance industry is increasing in accordance with the spread of internet retailing. Quotes submitted and policies purchased through internet grew 23% and 29% respectively from 2004 to 2005. The proper adoption of a strategy in line with the changing trends of the internet channel can become a company's competitive advantage. This paper explains the changes in industry forces brought by the internet, value chain of insurance business, and future trends of the internet insurance market. The industry force analysis addresses how the internet has changed the industry forces in the insurance business. The major changes are in the threats of rivalry and buyers which have increased in strength. Even though barriers to entry are high under the traditional model, the internal competition among incumbent companies has significantly increased owing to the competitive business environment. Companies are competing not only on price, but on quality customer service. The barriers to entry are reduced due to the existence of the internet. New comers will struggle with their business mainly due to the lack of brand recognition and high level of capital needs.
