By GENEVIEVE CUA
WHEN Whittington Group chief executive Anthony Hobrow conceived the idea of selling non-life insurance online, many believed it would not work.
Now DirectAsia.com has exceeded its sales targets, just after eight months of operations. The next major challenge, says Mr Hobrow, is to take the model to the region.
His confidence in the model and its potential is so strong that Whittington is transforming itself to make DirectAsia its core business. The group plans to sell its assets in London to focus on developing and expanding DirectAsia in Singapore and the region.
Whittington is one of the largest managing agents for Lloyd's of London. It has five syndicates under its wing with a combined capacity of £500 million (S$1.03 billion).
'We're in the process of potentially divesting all the UK business. By the end of next week, I'll know if the offers and valuations are at the levels that we hope for. The proceeds will be invested in DirectAsia. And then Whittington will be a wholly Asian and Singapore-centred business,' he says. The group is hoping to raise roughly S$80 million from the sale.
Whittington chose to site its headquarters in Singapore in 2006. Mr Hobrow was convinced that the future in terms of growth was in Asia.
DirectAsia was launched last June after about a year-and-a- half of groundwork. It was launched just a couple of months after Aviva went live with its direct online car insurance portal.
To date, DirectAsia has sold some 10,000 policies, mostly motor. It also sells home content, travel and personal accident plans. Its main appeal to an Internet-savvy market is lower premiums as it cuts agents out of the sales process. And, you can get a quote and buy a plan in five clicks. Drivers with a safe record enjoy a best- price guarantee. No one has yet claimed on that guarantee, he says. DirectAsia's reinsurer is Munich Re.
'We're ahead of plan on income and all other measures. All the research that we did pointed to this market being accepting of a direct, non-agent approach to sales. Incumbents said it wouldn't work . . . We were very excited when we sold 50 policies a day.
'Now we're in the mid-80 (policies) almost everyday. One hundred is tantalisingly close.'
The firm aims to set up in an Asian country this year, and two more next year. He declines to specify which markets.
In Singapore he is looking into expanding the product line to include simple health plans, for instance. The firm is exploring 'gap' insurance to cover the shortfall between the car's sale value and an outstanding car loan.
Now appears to be a relatively opportune time to sell the London assets. 'We're the leading incubator for start-ups coming into Lloyds. Anyone coming into Lloyds is forced to go in with an existing managing agent that incubates new syndicates for 3-5 years . . .
'Lloyds have pretty much closed to new entrants. They don't want more capacity; it's a soft market . . . And it takes too long to get up to speed on Solvency 2 work. Lloyds can't afford to have anyone fail on Solvency 2 work. Because we're well ahead, we can do that work for start-ups.'
Solvency 2 is Europe's risk-based capital framework for insurers and reinsurers. Lloyds is reportedly requiring 80 syndicates in the market to provide details of their capital requirements by October.