One of the pioneers of Internet broking in Britain, Mr Barry Davys, has found that his clients buy far more insurance products online than they would doing business in the traditional way. Mr Davys, who was in Dublin to speak at a broker conference hosted by Hibernian Life & Pensions, said that people would buy more if they felt in control and the process was easy. He estimated that they bought about 50 per cent more online.
The former Royal Air Force officer set up an Internet site to sell insurance products in 1995 and it was profitable within six months. He recently sold his business to IFG Life & Pensions, the UK independent financial adviser arm of the IFG Group. Www.davysdirect.co.uk has targeted specific niches in the market by tying in with mother and baby, house-buying, personal finance and consumer sites. Instead of advertising, Mr Davys has raised the profile of his business through press or website coverage. The days of a broker operating with a geographical niche only were almost over, Mr Davys said, and brokers would have to be able to back up their services with an efficient Internet arm.
"The client is already well ahead of the broker and has access to vast amounts of information. The cheque and form system, which involves a time delay on the transaction, will be redundant in the instant-buy future."
He said there were two types of e-business developing in insurance. One is the transactional approach, which is a minimum service with rock-bottom commission on sales. The other is the more drawn-out advice-based approach where the service provider builds up a relationship with the client, retains their details for repeat business and charges them more for the privilege. Internet broking is also developing a more participatory element where existing clients can visit a site and check up on their policies or carry out administrative tasks, such as changing address.
Mr Davys said that there was nothing preventing the public using an advice-based site to arm themselves with information and then moving on to a discount site for the transaction. However, he said, clients still wanted reassurance and ongoing service and although they might use the discount route once, they were less likely to repeat the experience.
While it is clear that there is a finite number of clients per broker who can be looked after properly online, Mr Davys has found that he can provide services to a greater number of people at lower cost for the same commission or less. An added bonus for the e-broker is the option of a distance-working lifestyle. Mr Davys' office is based in Cambridgeshire but he lives with his family in a log cabin in the Scottish Highlands. It takes only ten seconds for him to locate the full file of any client who calls or e-mails and in the time that he saves he can always do a spot of salmon fishing on his land.
