At last...an innovation with a kick

Hippo is the latest in a range of websites, known as aggregators, to hit the South African market. But what exactly is an aggregator? And how do they affect short-term insurance intermediaries?

"Getting the lowest insurance quote has never been so easy!" says the home page of short-term insurance website www.hippo.co.za. It promises users "some of the most competitive insurance quotes around" in the blink of an eye.

Aggregators

Natalie Bisset, general manager of www.hippo.co.za says an aggregator is "a search mechanism for a consumer to search a number of short-term insurance companies, brokerages and affinities for competitive insurance premiums". This makes it the perfect starting point for today's technology savvy consumers to start their personal lines insurance shopping trip.

An aggregator basically levels the playing field between intermediary and insurance company in that the same marketing platform can be used by both.

Choice?

A visitor to the website is exposed to several short-term product offerings and is at liberty to complete their insurance transaction with whichever partner they prefer. The products offer different pricing and service different target markets.

At the moment www.hippo.co.za is dedicated to companies in the Budget Insurance Holdings stable. This UK-based holding company owns 100% of Telesure Investment Holdings (Pty) Limited and Budget Insurance SA. The partners listed on the website include Auto & General, First for Women Insurance Brokers, Budget Insurance Brokers and Unity which are all wholly owned subsidiaries of Telesure. Other partners like Woolworths and AA Insurance are Telesure 'Affinity' partners. Angelo Haggiyannes, director at Auto & General, says that all of these partners offer distinct products, benefits and premiums and pride themselves in operating totally independent call centres.

Expectations

Although www.hippo.co.za has experienced one or two hiccups since its launch Haggiyannes says they're extremely happy with what it's done for business. There have been some complaints from disgruntled consumers who feel that the website is a marketing 'front' for Auto & General; but these complaints were dismissed by the Advertising Complaints Commission (ASA).

There is probably a slight difference in how the consumer and insurer view an insurance aggregator. Consumers might view the site as an opportunity for price comparison when it's really more about finding the correct solution.

More options

To be an effective aggregator a website needs to offer a substantial variety. We asked Haggiyannes whether there were plans to expand the current website offering to include other short-term insurers. His response: "We would like to get more on board – but there's a great deal of sensitivity over pricing structure." The problem is to get insurance companies that are extremely sensitive about their underwriting and premium structures to agree to be part of a 'common' database to facilitate price comparisons.

Challenge to the industry

Short-term insurance aggregators like www.hippo.co.za and www.ratecheck.co.za should be welcomed by the insurance industry as a viable alternative for insurers to expand their marketing and distribution channels. If more people that can be brought into the insurance pool, through whichever channel, everyone benefits from lower premiums and better claims ratios.

Such sites also demonstrate the innovation that's been lacking in the industry for some time. And it's this innovation that keeps a company like Telesure on the growth path, when other insurers are taking drastic measures to deal with the current market downturn.

The trends never lie – and right now the younger generation is moving online. If you want to grow your business you have to facilitate their desire to complete every manner of financial transaction online.

Proactive brokers

These trends will affect brokers as well as insurers, and again highlights the importance of educating your clients about the value of using a broker. The average consumer is probably not interested in the difference between a broker and an aggregator – they just want an easy and quick solution to their insurance needs. Very few consumers will know that all the companies on www.hippo.co.za belong to the same group. And even if they did, it is likely that the convenience factor will outweigh any negative perceptions about this fact.

Brokers have to offer their clientd more, or...

Unless brokers can offer their clients more – better advice, more convenience, more peace of mind, superior service and greater claims efficiency, they will lose the battle against technology.

So the challenge to short-term insurance intermediaries is to think of creative ways to get technology to work for you.