The Internet has been hyped by its supporters as a pot of gold into which both sellers and customers can dip. It is supposed to cut advertising, sales and administration costs while increasing competition and giving consumers a wider choice. The insurance industry also sees the Web as an easy way of selling its relatively simple products; more than 100 UK insurers, selling everything from car cover to health-care, have set up shop on-line, reports The Financial Times.However, few allow insurance to be taken out electronically using a credit card. Most simply offer quotes, with applications and payment by telephone. Watch out for roadblocks on the information superhighway. The Net is complex, requires an expensive computer and, at least in the UK, offers few chances to save money. The pot of gold is not as easy to access as its proponents make out.
But there are exceptions. Eagle Star is the most obvious, as it offers a 15 per cent discount on motor insurance through its site, and takes creditcard payment. About 800 policies have been taken out via the web, according to Matthew Holmes at the company. ``It is a very cost-effective way of selling car insurance,'' he says. ``The Internet has a very big future.'' Eagle Star is to add home and travel insurance to its site.
Halifax and Guardian Royal Exchange are dipping into the net, with travel and computer insurance respectively. Both allow the use of credit cards, with GRE's computer cover available only electronically.
The Net should not be considered a simple route to insurance; the problems remain serious. If you are looking for cover, the main feature is the cost; and going through Yellow Pages is still likely to be faster for comparisons than surfing through web sites.
Online brokers - like their high street counterparts - are trying to take away the need to let your fingers do the walking, with varying degrees of success. Screen Trade is the latest to launch, with a flashy site linked to several different insurers. A simple series offorms allows you to select your car model and fill in other details. Then a selection of quotes is presented, and you can pick the cheapest. It even has advice on how to reduce the cost, by increasing the excess, for example. Unfortunately, the computer appears to have a tendency to crash whenever an attempt is made to pay for the policy, a rather fundamental flaw. Drake Insurance has a similar difficulty.
The problems caused by technology are well illustrated by Infotrade. It claims to offer 25 per cent off car insurance and 15 per cent off house contents cover, as well as cheap travel insurance. But quotes only work with Microsoft's Internet Explorer, a piece of software with a history of bugs.Once the technical problems have been solved the Net should start to shine with the glint of cyber-gold, and the insurance industry is poised to lead the way. But for the moment, be prepared for frustration when you surf for insurance cover.
Asia versus the rest:
The bankruptcy ground realities
When acompany in Europe or America can't pay its debt, its creditors force it into bankruptcy, where a judge can fix a repayment plan or liquidate the firm and divide up the assets. But in Asia's most troubled economies, it is more likely to be the creditors who end up in trouble, reports The Economist. A case in point is a trip to the Hong Kong headquarters of Peregrine, the investment bank that collapsed earlier this month, and observing the walls stripped of pictures and empty rooms so efficiently scoured by the liquidators. A similar visit the Jakarta offices of Infiniti Wahana, the holding company for Steady Safe, whose stated inability to pay back $ 350 million loan from Peregrine was the final nail in the bank's coffin is very different. The wood gleams, the pictures shine, the office bustles: business as usual.
In Indonesia, as western banks are discovering to their horror, it is almost impossible to force a debtor into bankruptcy. In South Korea, filing bankruptcy papers is easy-but months ofinaction inevitably follow. In Thailand and the Philippines, the best a lender can expect is ``sorry''. As Asia begins to clean up from the financial meltdown of 1997, this lack of legal process is becoming a serious hindrance. So long as insolvent companies can keep operating with impunity, the restructuring of Asia's over-indebted corporate sector will be indefinitely delayed.
Last year alone, 13,971 firms went bankrupt in South Korea. Among them are eight large chaebol, or conglomerates, which sought bankruptcy-court protection with combined debts of 20 trillion Won($21 billion). These firms are supposed to be working up business plans to be submitted to creditors and the court. But with only four bankruptcy judges, the Seoul district court is in no position to move cases quickly.
The situation is even worse in Indonesia, where the rupiah has lost more than three-quarters of its value against the dollar over the past six months. Some 90 per cent of listed firms are technically insolvent and virtuallyall have stopped paying their debts. Yet not a single listed firm has gone bankrupt. There is, in effect, no bankruptcy law; the vague rules on the books, taken from a century-old law in Netherlands, Indonesia's former colonial master, are simply not up to dealing with Byzantine ownership structures that left banks in effect lending to companies themselves.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
