Defaqto warns sites against greed in contracted market
Brokers and insurers are facing the rise of the “super aggregator”, which will have huge negotiating power over fees and terms, insurance rating agency Defaqto predicts.
The 2009 Defaqto Web Aggregator Report says power is likely to fall into the hands of five or six big players as smaller aggregators without the advertising and marketing budgets struggle to survive.
But the report warns the price comparison giants against greed.
“If the ‘super aggregators’ become greedy, insurers and intermediaries will walk away from them. The next five years will determine whether the aggregation market prospers or fails,” it says.
Those likely to emerge all-powerful include GoCompare, Confused, Comparethemarket, TescoCompare and Moneysupermarket. They will have a “lot of scope” to penetrate the growing car and home insurance market, currently worth more than £13bn in premium income.
The report gives hope to brokers, saying there is strong evidence that intermediaries using price comparison sites can increase market share, especially if they are selling niche products.
“One of the biggest advantages that intermediaries have over the direct market is the ability to place difficult and unusual risks,” it says.
“Non-standard risks, such as a proposer with a major driving conviction, a checkered claims history or an occupation that is high profile, can be placed with most intermediaries’ panels of insurers.
“The direct market is usually more rigid in terms of its underwriting restrictions and therefore certain risk profiles are not acceptable.”
GoCompare came out top in Defaqto’s customer service rating, closely followed by TescoCompare.