We have recently revealed that there is much pressure on the car insurance industry and the ability to offer affordable quotes. Increased road accidents and vehicle theft are adding to the effects of the credit crunch – making it difficult for car insurers not to increase premiums. We have also discussed how the vehicle owner can find cheaper car insurance premiums by focusing on the way that he drives, focusing on his car and personal needs – and also how shopping around can be the solution to finding these affordable premiums.
I would like to reflect on the internet as a medium to save the consumer from the escalating costs of car insurance. I have come across an article by Sara Rich in the Australian, titled “Internet driving down car insurance costs”
This reflects on the car insurance industry in Australia and significant changes that are happening Down Under!
A few of the interesting facts from this article are:
- Australia has a $7.5 billion car insurance market
- The general insurance market is estimated at $24bn
- The market has been dominated by four players — Suncorp, Insurance Australia Group, QBE and Allianz
- Newer challenger brands in the market include names such as Budget Direct, Cashback Car Insurance, Ozicare, ibuyeco, Real Insurance, Youi and Bingle Insurance – these are predominantly online businesses.
- Other new players include Coles (available at present only in Tasmania), Australia Post and Virgin
The author notes that the internet is stirring up competition in the car insurance market as the online brands are looking for ways to drive down costs and offer much cheaper prices. These savings are often hundreds of dollars.
How do they do this? By setting up shop online, these insurers are able to strip away a lot of their overheads, such as call centres and retail outlets, and pass on the savings to their customers. The online insurers are growing at a much faster rate than the rest of the general insurance sector.
The online insurers are perceived as competitors with a more aggressive use of technology and different business models. They offer bonus payments or more aggressive refunds for loyal customers and often a ‘pay as you drive’ model where people are paying on the basis of kilometres used.
There are always the sceptics who believe that these new insurers, offering significantly reduced premiums in a rising claims environment, are simply not sustainable…
Even though these new players might have to correct their pricing as the financial environment evolves – it might be a good idea for consumers to give them a chance and request quotes via the internet. Competition is good for the industry and the client. It keeps both on their toes and will allow the consumer to save money in times where every small saving can help to address other financial needs such as healthcare or putting food on the table!
Look out for South African companies that are committed to using the internet as a medium to save the consumer from the escalating costs of car insurance. MiWay Insurance comes to mind.