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January 23, 2017

Is the Era of Aggregators Ending?

Summary:

The insurance industry will move from claims handler to claims preventer, so comparing products will become much more complicated.

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A conclusion concerning insurance aggregators (aka comparison portals) in the Accenture Distribution and Agency Management Survey is: “Irrespective of insurers’ views on the role of aggregators, it seems they are here to stay.”

This conclusion is supported by many others, but I venture to doubt it . The aggregator business may be nearing a tipping point.

There are (normal business) threats like:

  • heavy competition (usual in a successful and booming market)
  • takeover by the insurers (ending neutrality, a key issue for a serious comparison offer)
  • high cost of acquiring customers (apportioned to the customers)
  • pressure on product development (requiring cheaper derivatives of existing products, producing less transparency for the customer and making the process of buying insurance even more complex)

Maybe those can be overcome but I see a more fundamental threat for aggregators. 

Comparability

Comparison of coverages and premiums is possible because of the standard insurance products we have in all markets. Products were already quite standard, but the aggregation business has forced them to become even more comparable.

See also: The New Age of Insurance Aggregators  

Insurance, which generates little interest among buyers and which has price as the main buying parameter, might have lived happily ever after as a mature, not innovative market, but….

The New Insurance Is No Insurance

Forced by extreme pressure and pushed by new technology, a new type of service is being deployed: The insurance industry will move from claims handler to claims preventer.

Creating a safer environment for the customer and his/her beloved and belongings; optimizing prevention via smart vehicles, homes and people; analyzing the residual exposure and insuring only the part that is worthwhile to transfer — this is where insurance is headed.

There are huge opportunities for the insurance provider that is willing and able to shift to:

  • Real customer-centricity
  • Customer engagement with continuing advice and loyalty programs
  • Long policy life-cycles, away from aggregator dominance and costs
  • New products and services
  • New earning models
  • A safer and greener environment

All will result in customized and optimized interactive protection and insurance services for the complete household. There will be one-to-one services, on the road to living services (see also Fjord Report).

Non-Comparability

So what’s to compare in one-to-one services and products? In living services?

Of course, customers will need some guidance in this new world, as well. But it’s going to be a completely different ball game than the relatively easy “matching and ranking.”

The Peak

There is so much going on, to develop and to learn that this new world will take some time and the mass market has to follow, adopt and adapt. Therefore, I believe the aggregator business has not reached the peak YET.

But, in my opinion, for aggregators the sky is not the limit, and they are not here to stay. At least not in their current modus operandi.

See also: Understanding Insurtech: the ABCs  

Ultimately

The U.K. seems ahead with close to 70% aggregator-involvement in car. So there’s a fair chance that the U.K. will be leading in reaching the peak, as well.

Technology is developing very quickly, and prices are falling rapidly. Tech companies, OEMs, consumer electronics giants, telcos, media and utilities are already rolling out worldwide their connected devices and ecosystems. Millennials and other digital natives do expect continuous connected value added services in return for their effort and data.

Revolution will come suddenly and from unexpected sources.

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About the Author

Ewout van Zonneveld is the founder and owner of Sunfield Consultancy. He is also a partner of Intsure Technology Solutions (ITS) He has more than 30 years of international experience in automotive and non-life insurance (P&C).

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