What do Canadians do before they book a holiday? They visit Expedia to find the best rates on flights and they go to Trivago to compare hotel prices. What do Canadians do when their insurance is up for renewal? They stay with their insurer and accept rate adjustments because it takes too much time and effort to shop around.
But things are changing. Online rate comparison shopping has seen an exponential increase over the last five years. A study from Ernst & Young in July 2017 found that 18% of Canadians use rate comparison websites to search for the most cost-effective option when shopping for personal finance products. That percentage is only likely to grow as “the snowball effect” takes hold, according to Justin Thouin, CEO of LowestRates.ca.
“Canadians have been slow in the uptake of rate comparison shopping for two key reasons. The first is a widespread lack of awareness that easy one stop shop solutions like LowestRates.ca exist, which can enable consumers to compare the entire market. Secondly, I don’t think consumers are aware of just how much money they can save by visiting rate comparison sites. People who visit our site for auto insurance rate comparison save about $500 on average and some save over $1,000. Of course, some people will save nothing, but that means their current provider is getting the best deal for them,” Thouin commented.
“That’s changing as the snowball effect pans out. At LowestRates.ca, we realized very quickly that we would not be able to outspend the insurance companies with regards to advertising and marketing,” he added. “Instead, we have focused all our efforts on providing an exceptional customer experience, with the hope that once people use our site and are delighted by our service, they will tell their friends and families to give it a go. It’s that viral multiplier effect, just like a snowball.”
In the past five years, LowestRates.ca has seen an 8,022% increase in leads processed, the majority of which were in auto insurance. The firm claims to save consumers $250 million per year in auto insurance alone. But it hasn’t been an easy road. For the first three years, Thouin took no salary and the company made almost no money, but a strong “gut feeling” and six years of hard work have resulted in some fantastic growth.
“I see no reason why the popularity of rate comparison sites in Canada cannot match where they are in the UK, where about 70% of consumers use rate comparison sites as their first stop when they’re making a personal finance decision,” Thouin told Insurance Business. “There’s no reason why Canadians can’t just automatically go to a site like LowestRates.ca for their insurance shopping in the same way they would go to Expedia or Trivago when they’re making a travel decision.
“It’s quick, free and easy, and the worst thing that’s going to happen is you discover that your current provider is the best provider for you. The best-case scenario is that you save a lot of money and gain some really important financial information.”
Will the rise of online rate comparison sites threaten the insurance broker? It doesn’t have to. In the UK, where penetration is so high, there is still a thriving broker population. They’ve simply adapted the way they provide services and communicate with clients, bearing in mind the fact that most consumers carry out price comparison research before shopping.