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Olexander Shoikhedenko, Chairman of the Supervisory Board of the insurance company "Vuso", talks about the prospects for online sales in the insurance sector.
Why did "VUSO" begin to actively develop online services and an online store?
— When we started developing online activities, we only had expectations. Now these expectations are supported by work experience. The Law "On Electronic Commerce" has been in effect for more than a year and a half, and we have been selling electronic insurance for the same period. The volume of online sales of such inexpensive products as insurance for those traveling abroad has increased threefold in a year.
And this is despite the fact that people, by and large, are not aware of this possibility. If we look at other markets that once went online, for example, retail electronics, tickets, etc., we will see that they also had a period of development. In the 2000s, companies invested in Internet technologies, and it was clearly unprofitable. But people expected that this direction would "shoot", and it did. Now a very large share of goods and services is sold in online stores.
Do you take into account Europe's experience in the field of online insurance in your forecasts?
— In the UK, the online retail insurance market already exceeds the offline market. In continental Europe, this has not happened yet, there is a strong tradition of agency sales. Families have been buying policies from their insurance agents for generations. Agents are trusted. But, again, no one buys cheap products, such as travel insurance, from agents anymore. One way or another, but in Europe the share of online sales of insurance products is approaching 50% of the entire market. In Ukraine, electronic insurance still accounts for only 1% of the total sales volume.
Why is that?
— In Ukraine, the main driver of insurance is still the Civil Liability Insurance. And because of its legislative regulation, Civil Liability Insurance cannot yet be sold on the Internet. You can organize sales, contact with the client, and remote document processing, but you will still need to deliver the policy and collect money from the client.
The market has been implementing the electronic Civil Liability Insurance policy for about six years. A month ago, the National Committee for Financial Services published for discussion the draft Regulation on the electronic form of the Civil Liability Insurance policy. This document will still need to go through all sorts of approvals with the Ministry of Justice, the Antimonopoly Committee and other authorities.
This may take about four months. The implementation of the electronic Autocivilka policy is expected in September of this year, in the worst case - in early 2018. In any case, this process is irreversible. When the policy becomes electronic, there will be no need to go to the insurance company's office to conclude a contract.
Is it expensive to build an online sales system?
— Building any system is expensive if you do it wisely. You can make a website for $2 thousand, and it will sell insurance products. But when sales volumes start to increase, you understand that there is no efficiency. And then you make a second website for $10 thousand, which takes into account the mistakes of the previous one. But then at some point the business reaches such a level that you have to redo everything again.
Is everything ready to work in a growing market? Is the online store complete?
— Everything is ready for the sale of Motor Vehicle Insurance, "Green Card" and travel insurance policies on the "VUSO" Insurance Company website. We are currently working on options for the most correct and effective online sales of CASCO. The company's website is a living organism that is constantly changing, and new technologies are being tested on it. Any, even the most beautiful website, will die in two years if it is not changed.
And how will the insurance online business develop in the near future?
— In the next two to three years, the share of online sales in insurance, even according to the most pessimistic forecasts, will increase from 1% to 10%. This year we planned to receive UAH 30 million from online sales. If the market grows 10 times, then in two to three years this amount could already be UAH 300 million. Ukraine is a fairly educated and interested country, and we can expect high development of trade in goods and services on the Internet from it.
Source: Ukrainian Insurance Federation
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