More insurance providers are open to setting up aggregator sites to sell their own and other insurers' products, according to a new study released by professional services firm Accenture.
The report, “Coming to Terms with Insurance Aggregators: Global lessons for Carriers", surveyed 400 insurance companies to determine emerging trends in distribution models and the changing role of agents and brokers.
Accenture found that 57 percent of insurers surveyed were currently considering building aggregator sites, even if it means listing competitor’s prices alongside theirs. Customer demand for a variety of coverage options and plan transparency drive the aggregator model. In return, insurance companies gain visibility, traffic and more business premiums.
“Companies are interested in knowing what a platform economy, similar to Amazon and Alibaba, would look like in insurance,” said Erik Sandquist, managing director of Accenture’s North American distribution and marketing services. “Setting up an aggregator site requires a large expansion in digital presence and customer engagement in order to have a superior online experience.”
It is only recently, Sandquist says, that insurance buyers have been able to purchase a policy through an aggregator site. For a long time the platform would only refer customers to an agent. Today, between 60 and 70 percent of auto insurance premiums in the United Kingdom are completed on aggregators.
“The ability to purchase a policy on aggregator sites varies by geography and line of business,” said Sandquist. “So the challenge for insurers is figuring out how to expand the purchase funnel. Clearly, they’re going to need a lean and agile IT operations team to keep up with the changing market landscape.”
Accenture’s study also found a large disparity in geography when it comes to interest in creating aggregator sites. Only 58 percent of U.S. based companies are in favor of it, compared to 83 percent in the UK where aggregator sites are vastly more popular.
The hesitation on the part of U.S. companies is explained by prominent carrier brands like GEICO who invest large amounts of funding on advertising annually. On one hand, these brands have built up enough equity, but they have also kept smaller insurers from penetrating the market. As it stands, a cost comparison platform would do either side little good.
UK carriers arguably need aggregator sites more to grow business, as they lack U.S. insurers marketing budgets. In 2013, top UK aggregators spent just $187 million dollars on ads compared to over $1 billion for GEICO, according to Accenture’s report. Another issue remains the requirement for U.S. companies to comply with state-level regulations, hindering them from operating on a national level.
Still, Accenture believes the aggregator model is here to stay.
“We believe the future of the aggregator model is a bright one as it will continue to grow into new geographies and from a line of business standpoint,” said Sandquist. “This will be driven by deeper customer engagement and the growing trust in making complex purchases more easily online by customers.”
