I’ve been working in insurance eBusiness in Central and Eastern Europe for a while now. In this post, I want to talk about what I want 2010 to bring to the CEE region.
Why? Because thanks to its youth and lack of legacy, with a bit of help the CEE region can turn into the digital engine of Europe. Which would be a great way to create economic value and come out of the recession greatly reinforced.
In Poland, if someone offers you a better insurance, you can’t buy it. Consumers are tied to their insurance providers for a complete year. Even at the end of that period, they need to write a letter to their current insurer within a couple of weeks prior to their renewal or they’ll be tied in for another year.
This kills competition, innovation and in the end the customer loses. With no incentive to do better, traditional players offer the same tired old products of yesteryear at prices that would make people in more affluent nations cringe.
At the same time, in Russia an insurer cannot give you a discount for your Third Party Liability insurance, no matter how good a driver you may be. Those crashing their cars every month pay the same as those who have never had evena scratch. And that’s not all – more efficient companies with lower costs cannot offer lower prices either – everyone in the country pays exactly the same. So customers who come to my website and do a lot of the work themselves cannot benefit from lower prices or a free addon. How’s that fair?
So here’s for 2010 bringing mid term cancellation and competitive pricing to Eastern Europe’s motorists.
Many markets in the CEE region still depend on person to person selling. People prefer to receive advice from someone they perceive as an independent expert. Unfortunately, in many case both independence and expertise are nowhere to be found.
Brokers can move customers from insurer to insurer just to maximise their commisions, with no requirement on the amount of information the consumer will receive. The FSA in the UK mandates a one-pager Keyfacts document that would be an excellent template for some CEE markets.
People can be put under pressure and sold a product with no opportunity to cool off and change their mind away from the pressurised face to face sales environment. Again in the UK the FSA mandates a 15-day cooling-off period for all financial products so customers can make sure they’re buying what they need.
So here is to 2010 bringing in more relvant regulation around Documentation and selling, including Cooling Off periods.
Investments and incentives
A key component for successful eCommerce is a reliable universal postal service. CEE governments still control the postal service, and are therefore responsible for investing to ensure everyone can get reliable letter and parcel deliveries. This is also essential for direct mail Marketing, a key element for direct to consumer businesses regardless of their distribution channel (Web, phone or catalog).
Another element essential for the development of eCommerce is data – from databases to detect fraud to those to make the purchasing process easier by providing address resolution, car make and model lookup from license plate, etc. These data are not necessarily created and maintained by the government but legislation must be put in place to ensure regulation around the collection and sharing of such data is clear so that entrepeneurs can build their data businesses in a predictable business environment.
Finally, the third necessary component of any eCommerce transaction is payment. The state should be the first entity interested in replacing untraceable cash by traceable electronic payment. However, in many cases the disincentives in place for the use of electronic payment methods in these markets are enormous, from cost to lack of consumer protection. More needs to be done to ensure universal access to and adoption of electronic payment methods.
The future of eBusiness in the CEE region could be a bright one. Obstacles are not big nor many, but they do exist. With a bit of political will and commercial savvy, these countries could transform themselves and reap the rewards for years to come.
Here’s to 2010 bringing this change!
A lot of the above focuses on insurance, but eBusiness across many other industries is blighted by the same types of obstacles. Do you work in a different industry and have experiences to share? Do you think I’ve got it wrong? Let me know in the comments.