Despite the aggressive growth plans of online comparisons sites like iSelect, one financial services consultancy believes such expansion could prove to be a positive for traditional insurance brokers.
In the UK 25% of all transactions go through iSelect-style comparison sites, while only 1-2% of insurance transactions in Australia use this method. With iSelect looking to raise funds for expansions, it was feared that could take a bite out of insurance brokers’ business.
However, Hein Kuiper from financial services consultancy Heinsight International believes evidence from the UK market suggests the rise of online comparison sites might not be all bad for Australia’s insurance brokers.
“It is a common misconception that the massive growth of price comparison sites in the UK has led to the demise of the brokers,” Kuiper told Insurance Business.
“In fact, even at the most aggressive growth stage a few years ago broker market share was actually growing. How? British brokers played an active role on price comparison sites themselves. In motor insurance – the most important online price comparison market in the UK – panel providers account for around 35% of all aggregator sales.
“So, the imminent growth of price comparison sites in Australia need not necessarily mean massive loss of market share by the brokers,” said Kuiper. “I often stand up in front of broker and insurer audiences outside of the UK to talk about how the British market has evolved as a possible pointer to the future.
“Some British brokers have learned harsh lessons but others have undoubtedly profited. One thing that brokers in all markets around the world agree on: sticking your head in the sand is not an option,” he added.