The impact of e-commerce on the insurance industry

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E-commerce and insurance are two things that work great together. In order to prove a point, we show how it looks in practice. The customer pays for insurance with a credit card, gets a policy through the mail, sends the documents, and receives the necessary assistance from the insurance company if an insured event happens. And all this can be done even if the client and the insurer are in different parts of the world. So what can we expect from e-commerce and insurance collaboration in the future?

The peak times for e-commerce

The Internet is becoming more and more a part of people’s lives. Thanks to the Internet, you can communicate with the entire world, get the required information, find friends and buy different goods and services. And since goods and services are sold on the Internet, isn’t it possible to insure your life, property, or trip by agreeing with companies without leaving home? It turns out you can! Travel insurance is a source of getting new impressions, emotions, and knowledge that is available for now everywhere due to Online Shopping Travel Insurance and the development of e-commerce.

In a dynamic world, the existence of long-established sales channels is nonsense. There are a lot of predictions related to the development of the world in the next decade. What awaits the insurance industry in this context? At the turn of the 21st century, according to some estimates, the total volume of e-commerce in the world was about $10 billion. About $250 million (2.5%) of that was accounted for by insurance. It’s off to a good start. What lies ahead for the insurance industry? First, understand the basic concepts and consider what online insurance is.

What is online insurance?

Insurance implies two interacting sides: the insurer and the policyholder. The insurer provides insurance services, and the customer buys insurance services. It is as clear as daylight. So what does the relationship between the insurance company and the insured look like now, during the  World Wide Web development? Currently, insurers are working on their websites that perform informational functions and provide a full range of insurance services through the Internet.


Today, almost all major insurance companies offer to buy a policy online. It saves the client a lot of time. To order insurance services, you only need to make a few clicks. And this is available 24/7. If all the technological innovations are used, all communication can be organized more quickly and transparently. Now take a little closer look at the significant benefits of online insurance.

Chief advantages

Internet insurance has several chief advantages. The main one is saving transaction costs due to communication transfer between the client and the insurer from the office to the virtual environment. In addition, Internet insurance reduces the geographical scope of markets and employee costs, makes it unnecessary to open expensive offices, increases investor interest in insurance, and makes insurance available worldwide. Thus, both policyholders and insurers benefit from the overall development of online insurance. 

International practice shows that insurance companies can reduce their costs by 9-12% because of introducing online policy sales. They achieved this effect by simplifying the insurance procedure, saving on insurance agent fees, resulting in cost reduction and profit increase for the insurer. In addition, customers benefit from saving time on buying policies and from not having to purchase additional services, such as life and property insurance, that insurers offer.

Think big

Fitch Ratings report says that technological innovation and the growing popularity of e-commerce will change the landscape and structure of the global insurance market. For example, the coronavirus pandemic has forced many insurers to revise their digital capabilities in sales, underwriting, risk assessment and claims. As a result, insurance companies will shift their distribution model from a traditional intermediary to digital platforms. In addition, the Internet boom and the growth of smartphones` popularity have changed the way people make purchases over the past decade. 

A growing number of Internet users are processing their financial transactions online. To expand market reach, the insurers will be more active in partnering with third-party online platforms. Here it is a question of social media, e-commerce and professional online insurance intermediaries. They will also devote more resources to upgrading or building digital platforms to attract customers as the younger generation prefers to shop online. Product innovation is vital to the success and expansion of digital insurance. 

New product development will largely depend on the degree of operational integration between digital technology and insurance practices. Applying technologies such as big data, artificial intelligence, cloud computing, and blockchain will help insurers launch more new products to meet their customers’ needs in an innovative and timely manner. However, experts claim that upfront investment in technology will undercut insurers’ efficiency in the nearest future. 

And even the favorable prospects for the growth of digital insurance may not help here. Digital insurers need time to ensure a satisfactory level of financial return that justifies the capital invested by their shareholders. As a result, regulators may introduce additional measures to manage the emerging risks of business conducted through digital platforms. New measures cannot be avoided if the financial stability of insurers is at stake. 


The rapid growth of information technology and e-commerce has contributed to the expansion of opportunities for insurance companies to interact with existing and potential customers. Thus, the impact of e-commerce on the insurance industry can be described as follows: online insurance, as a relatively new type of distribution of insurance services, is going through many difficulties, caused by specific conditions of distribution. Nevertheless, all the weaknesses of this process always act as a potential for growth and development. Furthermore, given the strong interaction between modern society and the virtual environment (more and more customers prefer to buy policies through the Internet), online insurance has a promising future. 

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