Online life insurance prompts security fears

By Kim Tae-jong

Big industry players such as Korea Life Insurance and Kyobo Life Insurance are planning to sell Internet-based policies from the latter half of the year. But the move has prompted concerns over the security of customer information amid increasing cases of fraud.

“The security problem could become very serious,” Hwang Jin-tae, a researcher at the Korea Insurance Research Institute (KIRI), said in a recent report. “Contracts are made online with confidential information included, and personal data cannot be properly protected.”

Hwang added that Internet-based products make it hard for customers to be properly informed about complicated terms and conditions, which can result in unsatisfying coverage.

Demand for Internet-based life insurance policies has been growing. Currently, other financial firms such as non-life insurers and banks have been actively promoting Internet transactions and contracts. The use of mobile and online banking has seen a dramatic increase in recent years, on the back of the ballooning number of people with smartphones.

But life insurers have not been so enthusiastic about their products being available online, citing complicated aspects of the policies.

“At the moment, we are reviewing what Internet-based products could be appealing to customers,” an official from Kyobo Life Insurance said. “There are a lot of things that we need to take into consideration to launch Internet-based life insurance.”

But he said the company acknowledged the needs of customers in their 20s and 30s who are used to Internet-based transactions.

Market insiders also expect that the launch of Internet-based life insurance products by major firms will encourage others to follow suit.

Hwang went on to say that Internet-based life insurance will help firms decrease premiums and operating costs. He also said customers can buy policies in a fast, easy and convenient way within their budget.

“If the Internet-based life insurance market booms like in other countries, rates will be much lower than the current level,” he added.

Internet-based life insurance products are popular in the United States and Japan.

In the United States, life insurers such as American National Life launched online policies in the late 1990s while Japanese firms such as SBI AXA and Life Net started to sell their products in 2008.

“Life insurers have more interest in the online market, and therefore they should prepare new products for it by establishing a more stable system to minimize any negative elements,” Hwang said.