Aggregators’ “frenzied competition” under fire

Aggregators’ “frenzied competition” under fire

Aggregators’ “frenzied competition” under fire

An Austbrokers boss has become the latest to question the usefulness of aggregators and whether the customer is actually better off.

Earlier this week insurance price comparison site iSelect was forced to defend its commission structure when major health insurer Medibank Private claimed aggregators did little to improve customer affordability. Medibank’s managing director George Savvides said “In fact, I’d argue they’re adding costs because of the commission.”

However, aggregator iSelect, which is said to be listing soon, defended its business model.

CEO Matt McCann said:  “Our incentive is for when a consumer is well advised about a product that’s right for them, they should stay in that product.”

Listed Austbroker’s general manager of acquisitions and development, Fabian Pasquini, told Insurance Business that the bigger question was if the customer was receiving value for money.

“An aggregator brings together players in the market to create frenzied competition. It might be the case that it provides cheaper policies for the consumer but is it actually the best for the customer?

“When it comes down to claims, how much is covered? The aggregator may not provide the sort of help and advice brokers do.”

  • Andrew Bourke 17/04/2013 11:55:39 AM
    Agreed. I still cannot understand why regulators are not able to shut these BS aggregator sites down.

    If the aim of our industry is consumer protection - and doing the 'right' thing re cover and advice.... These sites should not be allowed to exist.

    I have said before - and I'll say again - I don't see aggregator sites for Accountants, Lawyers and other Professional Services firms..... So what makes insurance advice different?
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  • John Elliott 17/04/2013 12:44:48 PM
    There is a place for Aggregation in the market for the right products. However we just need to make sure it highly regulated to ensure the customer is able to make a better informed decision.

    The UK aggregators currently account for 60-70% of all Home, Motor and Travel insurance renewals and new business and was one of the fastest growing distribution methods in the history of the UK market.

    Those who bury their head in the sand and stick to the guns of the "Traditional Broking Methods" as the only way forward for all our clients are just kidding themselves.

    There will always be clients who can only be serviced by an experienced broker and require the advice and support we offer. However there are a growing amount of consumers heading online for quick answers, you can either ignore this fact and miss out on these consumers, or embrace the facts and figures and develop technology and product offerings to capture a portion of this market for yourself.

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  • Former Broker 17/04/2013 1:32:41 PM
    It amazes me the level of insecurity among brokers.

    To Mr Pasquini, what do you know about iSelect's platform and business model? is there something you know about their matching algorithm that we don't? further, what do you know about about their investments in compliance and L&D for their service centre staff that we're not privy too?

    Before we judge iSelect, let's all consider the alternative. Without iSelect a customer would have to fill out multiple online forms from various health insurers to get different quotes - doesn't seem like an efficient way of doing things to me. Alternatively, you could contact a "paper pushing" broker and experience what service you'll get for a few hundred $$ in business.

    And yes yes...the above logic doesn't apply to commercial lines of insurance as business insurance requires more advice not disagree with that...but for highly commoditized products such as health insurance, surely online distribution is more effective.

    I would encourage brokers to at least use iSelect to experience the way the platform cleverly asks probing questions to identify your insurance requirements, and to also spend some time with their sales consultants, before casting any judgments regarding the level of "advice" they provide.

    Regarding Mr Savvides comment: "I’d argue they’re adding costs because of the commission"....hmmm absurd statement in my mind, since when does competition translate to price hikes, perhaps Mr Savvides should speak to the ACCC on this matter.

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