The increased consumer satisfaction in purchasing online will drive the purchases of insurance products as well! We referred to this in an earlier blog post tiltled “Customer satisfaction with online buying could boost direct insurance in South Africa!!”
We often find advertisements on the popular internet portals offering to assist consumers in finding the best and cheapest car insurance. The banner ads refer not to a specific insurance company – but rather to a portal from where quotes could be gathered from most of these insurance companies. These portals are called insurance aggregators or insurance comparison sites.
On television one of these aggregators are advertised with the slogan “Let us do the work for you”. I believe that these aggregators can contribute towards competition in the insurance industry and also in the swift and convenient finding of insurance quotes. I do however believe that they should not take away ALL the effort – and the diligent consumer will still be left with some work before having peace of mind that he purchased the best insurance product.
I would like to quote a few important aspects from the Car Insurance Blog discussing insurance aggregators.
What is an Insurance Aggregator?
Insurance Aggregator: This is a website portal or search utility to enable a client to gain several quotes via an electronic e-quote form. The Insurance Aggregator concludes agreements with a number of Insurers to provide a comparative quote based on pre-determined list of specified needs as disclosed by potential clients.
The Insurance Aggregator provides the potential client with comparative insurance quotes and the opportunity to discuss a specific quote. The Insurance Aggregator will transmit the details of the potential client to the insurer and the insurer will contact the potential client to conclude the policy of insurance.
How does an Insurance Aggregator operate as a business?
The Insurance Aggregator develops the “quotation portal/ search utility”, markets this medium and agrees with the participating insurers to be paid a referral fee for policy contacts concluded based on the client information provided to the insurers by the aggregator.
It is expected that the insurance aggregator market will continue to grow with many new players entering the financial market. Customers are gaining a better understanding of the advantages of direct insurance and will approach either the direct insurers or aggregators to find the desired insurance cover at the lowest price.
International trends support business model of insurance aggregators
Internationally there has been a significant increase in the amount of insurance contracts concluded via the internet. The aggregators are developed with this in mind and are marketed as an “ultimate online one-stop insurance shop, giving consumers instant and easy access to a range of insurance solutions, tailored specifically to their insurance profile.”
There are several contributing factors to the success of insurance aggregators/ comparison websites:
* A multitude of car insurers and car insurance products
* Growing competition in the financial services industry
* The fear of “missing out” on potential business leads
* The growth and acceptance of financial transactions performed online
* The need of the consumer for speed and the ease of use of these systems
The comparison websites / aggregators have thrived as more insurers experienced a fear of “missing out” and joined the pool of car insurers to be compared.
Warning and Advice to insurance clients
It is important for clients not only to listen to the advertising and media hype- but also to understand the insurance aggregator and its weaknesses.
Insurers participating on aggregators might tend to aim at significant increases in volume of business by providing “stripped down or basic policies”. This is why the Insurance Aggregator would not be the correct medium for the client with a very complex insurance portfolio!
It is also suggested that we note the disclaimer to be found on one of these insurance aggregators :
“The quotes are therefore only illustrative and not a binding offer. The quotes are subject to change, based upon the verification and further consideration of more comprehensive risk related information that you will be required to disclose, when you agree to the insurer or broker contacting you.”
The consumer should understand that insurance aggregators will not actually compare the whole insurance market, but will provide accurate pricing of those insurers that have concluded agreements with the aggregator to provide quotes.
For more comprehensive risk related quotes the consumer would have to consult and negotiate with the insurer and his representative directly.
Insurance aggregators are here to stay and expected to play an even more important role in the insurance industry in year to come. The consumer would however be well advised not only to rely on the ease and speed of gaining a quote – but to approach any financial product with caution and a bit of extra consideration!