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The Warsaw Voice » Business » March 18, 2009
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Direct Car Insurance Catches on
March 18, 2009   
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Insurance sold over the phone and online is gaining popularity in Poland, especially among car owners. More drivers are buying car insurance using direct sales channels.

Liberty Direct, a U.S.-based company that launched telephone and online sales of auto insurance policies on the Polish market in September 2007, reported zl.42.6 million in gross written premiums for the first three quarters of last year and has attracted 70,000 customers so far. According to Michał Kwieciński, general manager of Liberty Direct, these figures make Liberty Direct the fastest growing direct insurance company among those operating in Poland.

Liberty Direct has strong competition in Commercial Union Direct, which launched its operations just three months after Liberty Direct and collected zl.38.6 million in gross written premiums between January and September 2008.

In terms of the value of direct insurance, Link4 leads the way on the Polish market, having collected zl.195.6 million in gross written premiums between January and September last year, 28 percent more than a year earlier. Axa Direct is second, with zl.57.3 million.

Direct insurance sales are based on modern technology that eliminates the need to hire agents and other intermediaries in the transaction process. Insurers operating in this system do not need to invest in traditional offices as they contact their customers directly.

In the days when insurance was still sold by brokers and agents, building a distribution network required considerable investment. Customer service through call centers and online is cheaper than paying commission to agents and other intermediaries who sell insurance. Low operating costs are the key factor that contributes to the growth of direct insurance sales.

Even traditional insurers are increasingly deciding to use the direct sales channel. The PZU insurance company, which controls over 50 percent of Poland's market for auto insurance, began selling car insurance online and on the phone Dec. 18, thus joining the group of insurers such as Link4, Liberty Direct, and Commercial Union as well as MTU, Benefia24.pl, Allianz, and BRE Ubezpieczenia. PZU hopes that its familiar brand name will appeal to those customers who have never purchased insurance policies directly so far.

A major advantage of buying an insurance policy directly is that the price is lower than in traditional sales channels and the procedure of taking out an insurance policy is simpler. Customers are served at a time and place that is convenient for them. The direct sales system is available around the clock in most cases and helps save time because customers can arrange all the formalities from their homes.

The downsides of direct sales include the impersonal character of transactions, which makes some customers distrustful and wary of online swindles. Other problems include the low popularity of electronic signatures and the fact that most insurance products are quite complicated.

Still, market analysts say telephone and online sales of insurance policies, auto insurance in particular, will continue to grow-from less than 10 percent of Poland's car insurance market at the moment-and insurers will expand their services.

Agnieszka Chmielewska
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