Simon Cooter says insurers and brokers should embrace aggregators.
There has been much comment recently about the aggregators. Questions are asked about whether they are treating customers fairly and whether the information presented back is clear. However, two key things need to be taken into account when considering the role and performance of aggregators.
First, it is the insurer which is ultimately responsible for how its quotations are presented and, if there is any ambiguity, that would be the first place to look. Second, and more importantly, customers have choice – lots of it. Millions of them are choosing to use aggregator sites to source their private motor insurance, suggesting that they are getting things much more right than wrong.
The model is simple, and arguably not very different from the traditional insurer/broker model, but in a few short years aggregators have had a revolutionary effect on the private motor market. They basically saw an opportunity and had the innovation and dynamism to take it.
As with any change, there have been winners and losers. The new model has enabled many insurers to grow their business without the up-front investment in brand and the traditional acquisition costs. Many brokers have benefited in the same way. These winners tend to be nimble and have very low cost bases.
It’s easy for established insurers or brokers to bemoan the impact of these changes, but doing so is futile. As I see it, the market is made up of three broad categories of businesses. One driving change and setting the agenda, another seeing or predicting the changes and prospering from them, and a third which doesn’t see the change coming or cannot react fast enough to it.
One part of our market that is surely likely to see huge change is the small business market. This could be blown apart on a scale similar to the changes brought to the private motor market by the aggregators.
“The small business market could be blown apart on a scale similar to the changes brought to the private motor market by the aggregators.
Today’s models are losing relevance and the people who have the business today may not have it in two years’ time. The web has a huge role to play and the winning insurers and brokers in this space will recognise that. They will have to be in tune with the rapidly changing needs and buying habits of customers and will need to be able to turn on a sixpence.
This is good news for organisations who lack legacy and want to grow in this market. It’s not such good news for those who currently have a large market share.
For as long as I can remember, people have been predicting the take-off of direct insurance for small business, and the investment being made by the direct arms of a number of the insurers will surely see them gain some market share. It’s also likely that new entrants will make their mark. But, as with personal lines, I think that when we look back in a couple of years’ time we’ll find that some of the biggest winners will be brokers, and insurers working with them, which have embraced online trading.
The challenge for those of us who want to play in the small business market is to make sure we’re not in the third category of business – the losers.
It’s not going to be easy, but the rewards of getting it right could be enormous.
Simon Cooter is distribution director at Brit Insurance.