Are aggregators a game changer for the SA Insurance Industry?

Christine Sheffield, Chief Information Officer : South Africa, Innovation Group.

International research indicates that 60% of UK consumers buy insurance online directly through an insurance website, or through an aggregator. In fact, aggregators were listed as one of the fastest growing categories in the Financial Services industry in the UK. South Africa lags international trends by 2 – 3 years, so could the SA insurance industry see significant change come about through the introduction of aggregators in the near future?

Although aggregators enjoy huge success in European markets, local research has indicated that only 20% of consumers currently make use of online websites or aggregators to purchase or renew their insurance online. This low adoption rate, compared to international trends, leads to question why have we not seen an agnostic aggregator hit the SA market?

The answer lies largely in the competitive nature of the industry, with insurers being wary of laying bare information that could give their competitors insight into their competitive advantage. The result is that insurers currently focus more on developing standalone e-Commerce channels that will not compromise their own product offering.

An aggregation route that is however popular in South Africa is the use of broker accessed websites. Broker focused aggregators have become very appealing to brokers who have come under pressure from many directions and find their income under pressure. Utilising aggregators provides brokers with access to a wide variety of value added products that enable them to provide superior customer service and to select the most appropriate product whilst improving their speed to market delivery.

For consumers, it’s also a matter of trust – more and more people are looking to social media channels for advice on the best deals and changing insurers on an annual basis is a common practice. Legislation like Treating Customers Fairly will go a long way to help reestablish trust in the insurance industry backed by smart, efficient use of data which will layer this trust with a level of convenience and flexibility. There will always be a place for the broker as the consumer champion, making sure that the right clients are getting the right products.

This does not mean that insurers should sit idly by and ignore international trends. With the recent launch of Google Compare it is becoming increasingly important for insurers to start thinking about competitive advantage, speed to market delivery and customer service. Although only available internationally, Google Compare is able to deliver approximately 100 insurance quotes in 30 seconds with very basic customer information. Although Google is not considering entering in to the insurance space at this time, one would need to question the future of insurance on a global scale should they decide to do so? With access to data that enables better customer profiling (Google Maps, Gmail, Google Plus etc) they could well challenge the standard insurer to defend their market share.

While aggregation is not set to become a major game changer in the insurance industry for the time being, insurers need to ensure that they build upon their digital strategies and start to employ effective data analytics to secure their place in a very challenging and competitive environment.