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Online comparison sites will boost Australia’s brokers

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Insurance Business | 27 Sep 2012, 12:03 AM Agree 0
Despite the aggressive growth plans of online comparisons sites like iSelect, one financial services consultancy believes such expansion could prove to be a positive for traditional insurance brokers in Australia…
  • James Markwick | 28 Sep 2012, 09:53 AM Agree 0
    The UK market is great for comparing financial services products. The major players being moneysupermarket.com, gocompare.com, confused.com and let's not forget comparethemarket.com (with their brilliant meerkat adverts). All the players in the UK use complete online completion integrated into their offerings. I have worked in the UK comparison market and have experienced the aggressive pricing that takes place there. All comparison engines use a common data language, Origo Standard, that allows for online quoting and apply mechanism. Sites like moneysupermarket are able to pull data from insurance brokers accounts via xml feeds so that they all have the opportunity to display their 'best price' within seconds. The result is that you end up with approximately 10 insurance brokers pitching for the same client. Most price comparison sites, however do not complete the transaction themselves. They are in the market of selling the clicks for approximately £20 each via a deep-link to the converting website. It is then down to the quality of the site to covert the consumer into a client. You have go to be very efficient to make money.

    The downside is that in order to be top of the list of quotes with the one 'best quote' the brokers get into a pricing war whereby they tweak their commission by sacrificing up to 80% so that they feature at the top of the list to get the traffic. From my experience this ultimately cannabalises the market and the only winner is the lead providing website selling the click. It is so competitive that the biggest carriers in the UK, Legal & General and Aviva have a large team that monitor their price points every day, and tweak their pricing at least once per week.

    Having worked in the price comparison market for 10 years the big weakness to any business in this environment is the risk of claw-backs. I find that this is more of a risk in the online space as there is clearly no face-to-face rapport.

    In summary, I would love a more robust online market in Australia, as it would disturb some big lazy players, however it would come with caution!
  • Mark Thomas | 30 Sep 2012, 11:56 PM Agree 0
    I agree with all your write James.
    Are you Aussie based or UK based mate as I would love to chat with you regarding this market online and where its going.
  • James Markwick | 10 Oct 2012, 11:01 PM Agree 0
    Hi Mark, I am from London however work in Melbourne for Lifebroker. call my office and ask for me...would be good to chat and share some ideas. www.lifebroker.com.au. looking forward to speaking to you.
  • Russell | 11 Oct 2012, 09:46 PM Agree 0
    Our advisers might be interested to have a chat as well
    www.lifeinsurancedirect.com.au/meet-the-team/advisers/
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