Only the largest brands will survive, warns Defaqto report on motor aggregators

Smaller brokers that list on price comparison sites risk extinction due to spiralling costs and the creation of super-aggregators, Defaqto has warned.

The financial research company’s mid-year report on UK motor insurance aggregators, reported exclusively in Insurance Times, said the explosion in the number of price comparison or aggregator sites had sparked a resurgence in the intermediary market for internet-savvy brokers.

But Michael Powell, consultant for general insurance at Defaqto and the author of the report, said: “There will no doubt be a peak, then the aggregator market will reduce significantly. The businesses that survive will be those that have the largest marketing spend or which have built up a recognisable brand.

“This is where the intermediary market may suffer in the future, as the cost of obtaining business may become too expensive and only the intermediaries who have a sizeable market share and brand awareness may still be able to compete with the direct insurers. This is another challenge that the intermediary market must face in order to meet the direct insurers head to head.”

The report arrives on the heels of a scheme introduced by software provider Open GI, which charges price comparison sites £1 for every transaction made with a broker. Other software houses such as CDL offer a similar service.

Defaqto’s report, which looked at 41 aggregators, gave Tesco Compare the top rating of 77%, while and Lloyds TSB tied for second place with 76%. Ratings were based on a range of criteria, such as whether the site requested a password or security question, the minimum number of screens to complete and the voluntary excess default.

The report echoed the Financial Services Authority’s recent review into general insurance comparison sites.

“We have noted that there are some examples where comparison sites are trying to follow the FSA view of good practice,” said Powell. “However, there are still a number of sites, including major players within the market, that are not providing the consumer with clear, accurate and full details.”

The FSA’s review followed pressure from Biba, which on Tuesday granted membership for meeting FSA criteria. In the past Biba has been critical of comparison sites but said it supports Gocompare’s model because it provides clear and fair information, and does not mislead consumers. is also said to have expressed interest in becoming a member of Biba.