Those of us who spend much of our time browsing the internet would have noticed the ads from Insurance Aggregators on most of the popular websites. But what are these aggregators – what do they do and do we have to take notice?
This is a topic for several blog posts and we will address the topic in detail on the Car Insurance Blog. In this post we will however not discuss the pros and cons but merely provide an easy to understand overview of the insurance aggregator.
Short term insurance such as car insurance is sold in a number of ways – but you would be able to easily recognize 3 basic methods. In basic layman terms we could explain this as follows:
- The Broker/ Financial Advisor: This is the traditional method whereby the client consults with his broker and explains to him his need for car insurance. The Broker approaches insurers and presents options to the client. The Broker receives a commission from the insurance company selected for the advice rendered once the policy has been concluded.
- Direct Insurance: The Client approaches the insurance company directly. This takes place via telephone or on-line and the client by-passes the broker or middleman and the expenses of broker commissions.
- Insurance Aggregator: This is a website portal or search utility to enable a client to gain several quotes via an electronic e-quote form. The Insurance Aggregator concludes agreements with a number of Insurers to provide a comparative quote based on pre-determined list of specified needs as disclosed by potential clients.
The Insurance Aggregator provides the potential client with comparative insurance quotes and the opportunity to discuss a specific quote. The Insurance Aggregator will transmit the details of the potential client to the insurer and the insurer will contact the potential client to conclude the policy of insurance.
But what is in it for the Insurance Aggregator? 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 contacts concluded based on the client information provided to the insurers by the aggregator.
Internationally there has been a significant increase in the amount of insurance contracts concluded via the internet. The aggregators are developed with this in mind and are marketed as an “ultimate online one-stop insurance shop, giving consumers instant and easy access to a range of insurance solutions, tailored specifically to their insurance profile.”
Insurers participating on aggregators might tend to aim at significant increases in volume of business by providing “stripped down or basic policies”. This is why the Insurance Aggregator would not be the correct medium for the client with a very complex insurance portfolio!
It is expected that the insurance aggregator market will continue to grow with many new players entering the financial market. Customers are gaining a better understanding of the advantages of direct insurance and will approach either the direct insurers or aggregators to find the desired insurance cover at the lowest price.