Aviva’s move to sell motor insurance (followed in few mths time by home and travel insurance) here marks a return to Asia for the UK insurer, which exited general insurance (except for some inconsequential exceptions) when it sold its general insurance operations in Asia in 2004 to Mitsui Sumitomo Insurance. Aviva’s non-competition agreement with Mitsui Sumitomo, which was part of that deal, expired this year.
More to the point, the Pru’s hubristic Asian ambitions, should have played a part in the decision to return.
Although new to Singapore, online insurance is established in Western markets. For instance, 60 per cent of motor insurance in the UK is bought online according to BT.
As FT reports,”Parts of Asia boast some of the highest internet penetration rates in the world, and managing an online operation beats teams of agents – Aviva has had to add precisely one extra member of staff. It is cheaper, too. By eliminating 15-17 per cent commission rates, Aviva can hand customers cheaper contracts and cream off more profit itself to boot [Aviva talks of pricing its products 7% below existing rates]. Whether Singapore will be fertile ground remains to be seen. The motor insurance market, worth about US$700bn, is saturated with two-thirds of the business shared by one domestic* and two international players. But as a platform for online Asian growth this looks just the ticket.”