Youngsters today will struggle to understand how it was possible for their parents to do research and analysis without the internet. I remember how, as a student reading law in the late eighties and early nineties, I spent many hours in the library making notes and thousands of photocopies. We wrote down info from many resources, cross –referenced and double checked – a process similar to comparing car insurance quotes and prices!
How did we compare insurance quotes and rates before the internet?
Almost all financial decisions were made with the assistance of financial advisors. These financial advisors worked for specific financial companies or had “broker agreements” with financial service providers and insurers. Research, analysis and quote comparisons were performed by the broker and a solution offered to the client. Very little communication took place between the clients and insurers – apart from policy documentation and updates from the insurer; almost all communication was between the client and his broker and between the broker and the insurer.
How did the internet change the comparison of car insurance prices?
All this changed with the birth of the internet. The internet made it possible for the average Joe to do research with ease and gather information from sources previously unknown. Not only was it easier and faster to gather information and do quote comparisons, but many new insurers came to existence. The internet allowed insurance companies to be created with an “online business model”.
The consumer does not anymore need to call tens of companies from the telephone directory and spend hours in meetings talking to insurance companies and their agents! We have seen the fast rise of direct insurers and insurance aggregator and our older insurance businesses had to change their traditional business models to cater for the sharp increase in online insurance business.
How can we use the internet to compare insurance quotes?
We have stated earlier in this series on car insurance comparison that we would like to discuss the process of insurance comparison in a manner that is both practical and easy to understand. We would like to provide a summary of the comparison process and how it is to be done online:
Insurance research / Information gathering
To make an informed decision about car insurance we need to start by gathering information. Information to be gathered includes information about the essential elements of insurance, information about the various insurers / product providers, information about the specific products and prices, etc.
Where do we find this car insurance information?
- Financial Industry Websites
We have previously written about the important aspect of asking questions. To ask questions to the insurers and third parties we need to have some understanding of the topic we are enquiring about! There is no purpose in asking about “excess payment” if you do not understand what an excess is.
Financial websites and websites from the insurance industry will provide information about insurance terminology and the various terms and conditions. They will also provide very important independent insights on the business models, financial sustainability and reputation of a variety of car insurance companies.
- Insurance Company Websites
Someone remarked a few years ago that if businesses in future do not have websites, they will not have business. All the insurers nowadays have websites. These websites are even more important for the direct insurers who do business only online or through call centres.
The websites of insurance companies will give you information about the insurance company, their insurance offerings and the terms and conditions. Many of these companies have a frequently asked question section or FAQ’s. Information included in these websites will allow you to gain a better understanding on which aspects you need to address for further clarification.
- Consumer Websites
In the post on car insurance and the need to ask questions we referred to the importance of asking friends, family and colleagues about their current and previous insurers. Clients are the best at providing an honest account of how they have been treated as policyholders by their insurers. Not only can the consumer experience be measured through conversations with clients, but also by going online and visiting consumer websites.
Consumer websites provide clients with the opportunity to share their positive and negative experiences and also allows insurers to respond to these complaints. Some insurers such as MiWay have taken the brave step in allowing clients to share both positive and negative experiences on the company website.
Car Insurance and Price Comparison
Once the vehicle owner has gathered all the necessary information about the insurance offerings and the insurers he needs to approach, it is time to request car insurance quotes and compare the rates and benefits. This could be done online through two methods, namely;
- Car Insurance quotes from the insurance companies
The client can approach the insurance companies online and request an insurance quote. These are the insurers who will only provide their own quotes. We find nowadays that more than only the so-called “direct insurers” allow consumers to complete and submit quote requests online. More and more insurers who have traditionally operated through brokers have come to realise that consumers will use the online ease and functionality of quote request forms, if available!
- Car Insurance quotes online via insurance aggregator websites
We have, in an earlier post discussed the increase in insurance business through insurance aggregators. Insurance aggregators have been described as “price comparison sites” – online portals with the specific objective of allowing comparison between the insurance quotes from various insurers. The Insurance Aggregator develops the “quotation portal/ search utility”, markets this medium and agrees with the participating insurers to be paid a referral fee for policy contracts concluded based on the client information provided to the insurers by the aggregator.
How does it work?
Consumers fill out a quote form and are offered a number of quotes from different insurers. Consumers can gain instant and easy access to quote and price comparison through insurance aggregators. The consumer can take these quotes and compare them, helping them to find good coverage at an affordable rate.
In South Africa the well known insurance aggregators are Hippo and Insurance Hound. The well-known financial website, Moneyweb, has also recently launched Moneywebmarket.com – an independent insurance provider comparison website.
Insurance aggregators are important tools in insurance comparison. They can provide important guidance on price differences. The consumer has to be alert however that not all insurers might be participating insurers and there is a need to question the independence of the specific aggregator.
The internet is providing an easy and effective method to compare insurance quotes. It also makes it very cost effective to monitor your portfolio and re-assess your needs and financial well-being! We can only expect that more and more car insurance business will be concluded via the internet!