Designing a Pattern which Describes Factors influencing Success of E-Insurance in Iran’s Insurance industry: An Integrated View to Technology Acceptance by Policy Holders and Insurers’ E-Readiness

E-insurance can be broadly defined as the application of Internet and related information technologies (IT) to the production and distribution of insurance services. In a narrower sense, it can be defined as the provision of an insurance cover whereby an insurance policy is solicited, offered, negotiated and contracted online. While payment, policy delivery and claims processing may all be done online as well, technical and regulatory constraints may not allow these elements to be subjected to full e-commerce application in certain countries. However, insurance legislation worldwide is being continuously modified to accommodate online payment and policy delivery, and outside the discussion of e-insurance metrics, these elements should be included in the narrow definition. The anticipated efficiency effect of e-insurance is twofold. First, e-insurance should reduce internal administration and management costs by automating business processes, permitting real-time networking of company departments, and improving management information. Secondly, it should reduce the commissions paid to intermediaries since it can be sold directly to clients. For insurance sold to individuals, agents typically receive a commission of 10 to 15 percent for non-life policy sales and renewals and from 35 to 100 percent for life insurance policies in the first policy year, but much less on renewal (Bender and Marks, 2000 SIGMA, 2001 Fery, 2000). However, some of the income gained in commissions that are not paid to intermediaries must be spent on online customer acquisition and marketing. Assuming cost savings do materialize in a competitive market, they would be passed on to consumers thereby allowing them to buy more insurance, or other products or services.