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Short term Insurance
Wednesday, June 10, 2015 - 02:16
Playing gatekeeper

International research indicates that 60% of UK consumers buy insurance online directly through an insurance website, or through an aggregator. In fact, aggregators were listed as one of the fastest growing categories in the Financial Services industry in the UK. South Africa lags international trends by 2 – 3 years, so could the SA insurance industry see significant change come about through the introduction of aggregators in the near future?
Although aggregators enjoy huge success in European markets, local research has indicated that only 20% of consumers currently make use of online websites or aggregators to purchase or renew their insurance online, comments Christine Sheffield of the Innovation Group. “Why this low adoption rate?” She says the answer lies largely in the competitive nature of the industry, with insurers being wary of laying bare information that could give their competitors insight into their business model. The result is that insurers currently focus more on developing standalone e-Commerce channels that will not compromise their own product offering.
“An aggregation route that is, however, popular in South Africa,” says Sheffield, “is the use of broker accessed websites. Broker focused aggregators have become very appealing to intermediaries as a way to face up to alternative distribution channels that are threatening their income streams.” Utilising aggregators provides brokers with access to a wide variety of value added products that enable them to provide superior customer service and to select the most appropriate product whilst improving their speed to market delivery.
For consumers, it’s also a matter of trust. More and more people are looking to social media for advice on the best deals, and changing insurers on an annual basis is a common practice. Legislation like Treating Customers Fairly will go a long way to help re-establish trust in the insurance industry backed by smart, efficient use of data that will improve convenience and flexibility. There will always be a place for the broker as the consumer champion, making sure that the right clients are getting the right products.
Sheffield says this does not mean that insurers should sit idly by and ignore international trends. “With the recent launch of Google Compare it is becoming increasingly important for insurers to start thinking about competitive advantage, speed to market delivery and customer service using online channels.” Although only available internationally, Google Compare is able to deliver approximately 100 insurance quotes in 30 seconds with very basic customer information. With access to data that enables better customer profiling (Google Maps, Gmail, Google Plus and others) it could well challenge the standard insurance delivery model. While aggregation is not set to become a major game changer in the South African insurance industry for the time being, service providers need to ensure they build upon their existing digital strategies with effective data analytics and more open online, flexible and easily understood online customer experience.

Copyright © Insurance Times and Investments® Vol:28.6 1st June, 2015
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