Are price comparison websites rendering brokers redundant?
Consumers and business owners can compare dozens of insurance products at their fingertips – but what does the growth of price comparison sites mean for brokers? Insurance Business TV speaks to elite broker Andrew Faber from MGA Insurance Brokers and Alex Parsons, CEO of RateCity.com.au to find out.
Video transcript below:
Stephanie Zillman, Insurance Business TV
Stephanie Zillman: Brokers may be sitting comfortable when it comes to the service being provided, but does that knowledge flow through to the market. Andrew Faber of MGA Insurance Brokers says it’s upto everyone in the industry to communicate the benefits of the service and emphasize the key differences between brokers and price comparison websites.
Andrew Faber, MGA Insurance Brokers
Andrew Faber: One thing that the online service offerings can’t do, certainly at this point in time is provide service upon a claim. I think that’s at the end of the day, that’s what insurance policy is all about. There is no point spending over hundreds of thousands of dollars at the start of the year, to find out when you need to claim you can’t speak to anyone, you are being forced to have an email shoot, you are dealing with call centres, where you are waiting on hold for 30 minutes etc. So I think brokers need to focus on the services we provide as an end to end provider.
Stephanie Zillman: Alex Parsons, CEO of ratecity.com.au says they don’t see price comparisons sites as a replacement for brokers.
Alex Parsons, CEO, ratecity.com.au
Alex Parsons: I think there is scope for price comparison websites and brokers to work really hand in hand. I don’t see necessarily a direct conflict between the two. I think at the end of the day, we are all there ultimately to get the consumer the best product for that consumer. You know, where brokers have a really deep personal relationship with the consumer, ratecity today is not as deep and personal as the brokers today. We offer slightly different things at different times to consumers as well. At the end of the day, we are there to save consumers money and to get them a better deal on their consumer financial products.
Stephanie Zillman: While Parsons says brokers will by no means become redundant, the role may need changing to tap into shifting demands of the market.
Alex Parsons: I think that you know with data at people’s and consumers fingertips really 24/7 and their ability to get a deeper understanding, the value that a broker delivers to a consumer is definitely changing and I think that’s one where it’s a much deeper relationship at a point in time where the consumer has some knowledge, but that broker will help that consumer really convert at the end of the day.
Stephanie Zillman: However, when it comes to the sheer 24 hour availability of data, price comparison sites may have the edge.
Andrew Faber: The direct insurers and yeah these price comparative websites, they are able to crack these systems and yeah they have got the technology budgets create an online quoting system that the general insurance brokerage can’t provide in terms of an end to end service. But we need to try and find some kind of middle ground that allows the customers at 9 o’clock, 10 o’clock at night to be able to login, communicate with an insurance broker in some way or form, get what they need and then to be able to go on, on their way. So I think we probably need to look at our technology delivering to our clients and see what we can do in terms of upping the way we have our, the way we are able to deliver our service to our clients.
Stephanie Zillman: Faber says that because price comparison sites fall down in not being able to provide risk and industry specific advice, brokers aren’t going anywhere.
Andrew Faber: That’s where I think what the brokers are able to provide, the direct comparison websites can’t is that, risk advice is specific to their industry and is specific to their business itself. And I think that’s where we certainly are relevant and I see that relevance staying strong for certainly the future.
Stephanie Zillman: In communicating the benefits to consumers, Faber says that it’s important to emphasize that going online won’t necessarily result in a better deal.
Alex Faber: Speaking to some SME clients, a lot of them out there think that they can get a better deal themselves going online. I think that’s probably the biggest misconceptions that I come across is that they always think that, “oh if do this myself, I am going to get a better deal”. And 99 times out of a 100, they are actually going to pay more for a policy that’s actually giving them less than if they went through a broker.
Stephanie Zillman: Parsons says the site’s rank search results based on price, because that is the consumer preference and research done online may well be the starting point between a consumer and their broker.
Alex Parsons: And I think price comparison websites can quite quickly enable consumers to understand their certain set of circumstances, their certain set of variables and what’s available for them as individuals whereas brokers can take that one step further and have a much deeper more valuable relationship with that consumer and help them get to that point of decision making. And I can’t see, you know I think for a lot of brokers, that should be, that should hopefully be a win-win situation for both them and the price comparison sites.
Stephanie Zillman: This is Stephanie Zillman reporting for Insurance Business TV.