Insurers go online in S.Korea; pressure on AXA, Ergo

* Samsung, AXA, Ergo to offer more insurance products online

* AXA sees S.Korean online insurance growing dramatically

SEOUL, Sept 24 - Auto insurance companies in South Korea, led by Samsung Fire & Marine Insurance <000810.KS>, are scurrying to build a presence in the online market, in which French insurer AXA and Germany's Ergo had already established a niche.

AXA <AXAF.PA> and Ergo <ERGG.DE> have been major beneficiaries of the shift to cheaper online car insurance policies from offline channels since 2001 in South Korea, where 18 million vehicles are registered. That means almost every household owns a car in the world's No.7 insurance market.

Competition could intensify as online insurers continue to rely on customers to switch from offline products in the saturated car insurance market, valued at $9 billion by premiums.

Insurers who had stuck with offline sales are also broadening their range of online products, which are about 10-15 percent cheaper, to cover travel accidents, medical expenses and household injuries.

"We are planning to increase the number of products sold online, focusing on simple, small products such as household accident insurance," an official in charge of Samsung Fire's online business said on Thursday.

"We think it will help expand the market by creating demand," he said on condition of anonymity because he was not authorised to speak to media.

Samsung, which launched online auto sales in March, expects the new channel to account for close to 5 percent out of its total car insurance sales by year-end and 7-8 percent next year.

AXA, which only sells products via the Internet and by telephone, has launched travel, driver and medical insurance products online, expecting contributions from those products to balance its business portfolios.

"Direct insurance will outgrow traditional insurance, because it is more adapted to consumer needs and eliminates high distribution costs," Guy Marcillat, who leads Kyobo AXA General Insurance, the South Korean arm of AXA, told Reuters.

He predicted medical insurance to become an important target for direct sales via Internet and telephone.

A spokesman for Kyobo AXA played down the possible threat from Samsung, saying Samsung's active marketing would help increase the size of the online insurance market.

Ergo-Daum won regulatory approval this month to offer six new products, including casualty and health expense insurance.

The online car insurance unit of Hyundai Marine & Fire Insurance <001450.KS> was also preparing for approval to launch new online products, its spokesman said.

Marcillat said the online auto insurance market could represent almost 30 percent of South Korea's overall auto insurance market in five years, compared with 40 percent in Britain.

South Korea's online auto insurance market grown rapidly since its inception in 2001, expanding 10 percent last year.

Paris-based AXA commands a 26 percent share in the South Korean online auto sector, which represents a fifth of the $9 billion auto insurance market. Ergo-Daum, a majority owned by Ergo, ranks third with a 12 percent share of the online auto market. Ergo is part of Germany's Munich Re <MUVGn.DE>.