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WhatU.K.CanTeachaboutAggregators

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Inthelast10yearsorso,thesinglebiggestdevelopmentwehaveseeninU.K.personalautoinsurance
distribuonisthephenomenalriseofaggregatorsknownotherwiseaspricecomparisonwebsites.
Top aggregators in the U.K. marketplace such as Confused.com, Moneysupermarket.com and
Comparethemarket.com have grown, leveraging the high usage of Internet among U.K. households.
According to the latest industry reports, aggregators accounted for around 56% of the new motor
insurancepoliciessalesintheU.K.in2013.

TheoverallpotenalofaggregatorshareintheU.K.personalautonewbusinessiscappedataround
60%,whichmeansaggregatorgrowthisfastapproachingstagnaon.Thoughthisisevidencedbythe
aening growth we are seeing in recent years when compared with earlier periods (when market
sharerocketedfrom25%in2007to45%in2009),aggregatorsareheretostaypurelybecauseU.K.
customerssllseecheapercostasthemajorpreferenceinchoosingautoinsurance.

Forinsurersandbrokerswhooperateinmarketswithaheavyaggregatorpresence,theoponsare

preyclearandsimpleeithertopartnerwithaggregatorsortocompetewiththem.Therearepros
andconsinboththeseapproaches.
The advantages brought about by aggregators to customers are too obvious exposure to a larger
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variety of auto insurance products, compevely priced quotes and, most importantly, an ecient
purchasingprocess.Forinsurersandbrokersspecically,aggregatorsprovidemediumandsmallsized
players(whodonthavethescaletocompetewiththebiggies)theopportunitytogeneratebusiness

byadversingtheirproductsatalowmarkengcost.Also,throughtheironlineplaorms,aggregators
WhatU.K.CanTeachaboutAggregators
collectlargequanesofcustomerdataaroundcustomerwebsitevisitsandbrowsingpaerns.These
canbegainfullyusedbytheinsurers/brokerstobuildabeerpictureoftheircustomersproleand

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risksaswellasputinnecessarychecksforimprovingfraudcontrol.

Keyrisksare:
Toomuchemphasisonprovidingthemostcompevelypricedquotebasedonaminimalsetof
quesonsresultsinquotesincorrectlypricedandabelowparunderwringperformanceforthe
insurer
Consumers get the ability to make purchase decisions based on whatif scenarios (like inpung
lowermileageorswitchingthenmaindrivertoseetheresultantreduconinpremiums),possibly
inducingthemtoprovideincorrectinformaonandpurchasingunsuitablecover
Reduced due diligence at the underwring stage associated with online policy acceptance can
resultinincreasedriskoffraudulentclaimsincludinginstancesofintenonalfraudsuchasuseof
stolencreditcardinformaon,deadleerboxaddressesandidentyfraud.

Some large insurers in the U.K. have withdrawn from partnerships with aggregators to compete
directlyinthisspace.Aviva,forexample,oersaquotescomparisonfacilityonitswebsite,whileDLG
encouragesitscustomerstogoonlinetoitssitetoavoidpayingaggregatorscommissions.

Afewmajorfactorsthatinuencelargeinsurersandbrokerstomoveawayfromaggregatorsare:

Havingaproductlistedconsistentlylowerinanaggregatorsrankingsisperceivedbyinsurersas
hurngtheirbrand>
Insurers/brokersrelyonopportuniestorewardcustomerloyaltyandretenonateverypossible
point (through crossselling/upselling discounts, etc.) to maximize their revenues, while
aggregators thrive on customer churn, leading to a possible conict in business models and
weakercustomerrelaonships

Sll, none can deny that aggregators are a xture in the personal auto insurance business for the
foreseeable future. Some larger insurers that oer auto insurance online directly to customers also
agreethatitspossibletobuildeecvepartnershipswithaggregators.Somewaysofensuringsuccess

throughaggregatorchannelsforinsurersandbrokersare:
 Collaborate more closely with aggregators to sell on brand rather than just on price
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insurers/brokerswillprimarilyowncustomerrelaonshipsandhaveprotsharingagreementsin
placethatprovideincenvesforaggregatorstocrosssellmoreofaninsurersproductsapartfrom
auto

Buildsystemstoensurethatthewealthofdatafromaggregatorsiswellulizedforsmarterand
WhatU.K.CanTeachaboutAggregators
morefrequentpricingofautoquotes(forexample,dailyratherthanmonthlyorquarterly)
Design and segment customized auto policies specically for aggregators, with underwring

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models reecng the quesons set Ensure that the aggregator online plaorm is updated on a
periodical basis and that all components reect the preferences of the insurers, brokers,
customersetc.

MorefromVenkatRamachandran
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