E-commerce has to be embraced by the insurance world or risk becoming a dinosaur which has become a casualty of the information superhighway.

This is according to Tim Flaherty, vice president of systems integrators alliance portfolio at Avaya Communications. He was addressing the 100 delegates at the three-day Strategic Research Institute's Cyberinsurance Conference at the Southampton Princess yesterday.

In a talk on the state of the industry, he said that insurance was `vigorous', but this left businesses with opportunities to either succeed or fail in a short space of time.

Mr. Flaherty said: "Every day, a whole suite of new challenges confronts us.

Each is an opportunity for both success and failure. Insurance firms recognise that overarching need to create e-business strategies to succeed.'' He said that the market opportunity for insurance was huge and business to business financial services opportunity for e-commerce was growing from $14 billion in 1999 to an estimated $80 billion in 2003. "Online insurance sales will grow in the same time frame from $1.9 billion last year to $11.1 billion in 2003 -- a compound annual growth rate of 54 percent.'' He added that 36 percent of consumers who said they were likely to purchase insurance on the Internet, said they would probably buy from an insurance carrier against only four percent from a bank.

"The challenge is to leverage traditional strengths in the new space to build an effective e-business. But how many firms recognise that simply opening a storefront in cyberspace does not constitute an e- strategy. How many understand that what they are using technology for is to build communication up and down the organisation, in aid of a single focused objective -- building relationships,'' he said.

He said there were three stages of building this relationship. First technology was focused on having a presence on the web, with static information about the company and its products.

The second was focusing on using web sites to generate business transactions, where companies are at the moment.

He said businesses had to aim to get to the next level to get a successful business e-strategy. This is building and maintaining the personalised relationships that create loyalty and trust, which will enable growth and profits, with communication a corner stone of the third phase. "Effective business has always been about personal communication and building long term relationships. The same principles apply to creating an e-business strategy.'' He said that the opportunity was there to create an e-strategy looking at the whole company end-to-end. Overhauling the IT structure is not enough, the relationship with every customer has to be strengthened. "It is what prevents a company from becoming just another disintermediated dinosaur, another casualty on the information superhighway. The massive investments in IT infrastructure need a guiding principle to keep them effective. Most successful on-line enterprises have been built by established, successful mortar and brick companies that used the Internet to catalyse process improvements up and down the value chain.'' State of E-industry: John D'lusio of HRC Insurance Solutions BUSINESS BUC