Alibaba's rationale for getting into finance is based on making insurance more transparent, easier to understand and "more accessible", he said.

"We wanted to offer a policy that allows customers to see, in easy-to-understand language, what's included in a policy, how much it costs and how to make a claim," he said.

Insurance brokers are more than willing to embrace such formats, as they add a cost-effective distribution channel, said Zhou Xiye, regional vice-president of global health benefits for Cigna and CMC Life Insurance Co.

Those destined for success offer single products on a single site, commit to the direct marketing formula, take ownership of the technology and leverage the database-building abilities of the Web, Zhou said.

But the marketing involved only applies to policies that are easy to comprehend and feature low premiums, he noted.

"For instance, health insurance is not likely to be an ideal product for online sales, because it requires applicants to give a lot of health information, which needs to be verified," he said.

Regulators have given the green light to innovation on the insurance front. In February, the China Insurance Regulatory Commission approved a new online insurance joint venture among the country's leading insurer and Internet companies.

The proposed company, Zhong An Online Property Insurance, co-founded by Alibaba, Tencent Holdings Ltd and Ping An Insurance (Group) Co of China Ltd, was the first completely online entrant in China's 1.55 trillion yuan insurance sector. The company will focus on liability and guarantee insurance.

But it won't have any storefront operations where clients can make claims. It will handle all claims and sales online.

There are risks, of course. Customers have to be sure the policies are genuine, so they need to be comfortable shopping online and informed about insurance, warned Xu Wenhu, head of the insurance department of Fudan University in Shanghai.