As financial services become more competitive, the importance of keeping the higher value business and lowering distribution costs becomes crucial. And as the government encourages more people to take out personal pensions, employment pensions will become a crucial market for Eagle Star and its competitors. By designing a Web site that is easy to navigate and extract information from, Eagle Star has improved the chances of fund managers being persuaded to invest in it. Distribution of information, for the same reason, is significantly cheaper, with the added advantage that users will now bear the cost of printing out documents themselves. One of the issues that analysts overlook when criticising Britain's industrialists for their cautious approach to e-commerce is that some services will probably never be commoditised.
Insurance is a case in point.
It is not in the industry's interest to drive down prices of services, which is the effect many industrialists fear online price competition has. Neither is it desirable to lose access to all the life-style information that can be gathered through meeting potential customers or talking to them on the phone. Even Tesco, which is known for its pile them high, sell them cheap philosophy, is not taking this approach to financial services. Few people would want to type out a form, at their own expense, on the Internet for the benefit of the agent. At least when you are volunteering information to an agent, they have to fill the form out.