Online insurance cheapens work of brokers

Online insurance cheapens work of brokers

Online insurance cheapens work of brokers

Online insurance and insurance comparison websites are diminishing the importance of seeking advice when purchasing insurance while also training consumers to believe they should shop on price alone.

These are the observations of brokers who have spoken with Insurance Business after a series of recent stories highlighting further moves by various groups to offer insurance products and services online.

Australian Risk Advisers managing director Paul Murphy says the push to provide insurance online and without any intermediaries has trained the Australian public that price is the only issue.

While he admits that areas such as car, home and contents insurance may be hard to reclaim from online and direct providers it is the lack of brokers now that is of concern.

“Now that brokers have been driven out of that space or had to vacate it because they could not afford to operate in that space the only groups left to drive the agenda are the insurers themselves,” Murphy says.

“Brokers have driven innovation in areas such as claims processing and policy options and not for price purposes but for client benefits. The concern now is that in other spaces where brokers are trusted as the expert, such as the SME space, this type of thinking may begin to creep in.”

Brecknock Insurance Brokers account executive Andrew Bourke says this type of creep is already happening with some SMEs opting not to use brokers.

“They need to understand that online providers are often just a single provider and comparison sites are often comparing the products from a single insurer with the main focus being on how much can be saved.”

“Yet they would not do this with their accountant or lawyer. Brokers have being trying to advocate for professionalism, training and development and many of the online offering set these things back,” Bourke says.

“Every product and services needs to be viable, even for those purchasing, but it has to be about more than the dollars it costs to buy and that is the problem with the online and direct market. They create a stigma where price is the only variable and advice is bypassed.”

Murphy says the other concern around the online space is where will it end?

“The move of brokers from personal insurance is seen by many as the thin edge of the wedge. Brokers have to have professional indemnity insurance, financial systems, trust accounts, education and licensing but what expertise can they bring through a website offering a commoditised product?”

“It is a very uneven playing field which even the regulators know about but they are not doing much to police or regulate it.”

Insurance Business will be speaking with brokers throughout this week about the competing in an online world and how they can promote the value of broker based insurance advice. Contribute to this discussion via the comments box or contact Insurance Business at .

  • Shane 20/02/2013 12:24:59 PM
    Brokers have to realise that online should be their friend rather than the enemy.

    Our website generates dozens of quality leads for our business every day. From the customer's point of view we are a very convenient way for them to access business insurance, but at our heart we are still driven by qualified broker staff that analyse each request and communicate with the clients.

    Being an online business we do have to compete on price, but we never let price be the driver of the recommended policy.

    So we may not technically be an 'online insurance' company in terms of offering instant quotes and cover, but that's more or less how our clients see us, initially at least.

    If you want to be a broker who continues to fight against online opportunities, you’re only hurting yourself because this trend isn’t going to turnaround any time soon.
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  • Arnold Getz/City Acceptance Corp 20/02/2013 1:14:05 PM
    Present and future problems will occur with online insurance particularly Life and Income protection insurance because without full completion of application forms and medical information, underwriting is ONLY done when consumer notifies that there is a claim.

    It is in the consumers best interest to have underwriting done at time of application.

    Bad underwriting practices leads to ANTI SELECTION against the underwriter and consumer is totally unaware that if he/she does have a medical condition, pre-existing conditions are excluded.

    Some advertisements say "free service" - there is NO free service, the TV advertiser gets up to 120% commission - consumer does not know this. It may imply false advertising!

    When a quote is required in writing, a lot of the TV advertisers advise that "they cannot do this". Whereas a Licensed Insurance Broker has to submit all paperwork and disclose commission as required by the Regulators.

    Furthermore, this only leads to increased premiums to pay for excessive claims.

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  • Ken K 20/02/2013 2:36:46 PM
    I recently had to go into bat for a Commercial client who had purchased on line cover for their Home & Contents.
    The Insurer had insisted the client must accept a reconditioned item as replacement for their damaged iphone when their policy clearly indicated that replacement value was the basis of settlement.
    As the client was a business Insurance client of mine I felt obliged to help out. The client was very grateful for my assistance and expertise in getting the correct claim settlement and was so impressed that they are now shopping around for on line motor cover and want my advice on which is the best!
    Can you believe this?!!

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