Approaching the peak
Are Aggregators here to stay?
A conclusion concerning Aggregators (aka Comparison Portals) in the Accenture Distribution and Agency Management Survey is: “Irrespective of insurers’ views on the role of aggregators, it seems they are here to stay”.
This is supported by many others and nevertheless I venture to doubt. It could very well be that the aggregator business is nearing a tipping point.
There are (normal business) threats like
- heavy competition (usual in a successful and booming market)
- take-over by the insurers (losing neutrality, a key-issue for a serious comparison offer)
- high acquisition cost (apportioned to the customers)
- a forced product development (cheaper derivatives of existing products to get higher in the rankings, losing transparency for the customer and making it even more complex)
Maybe those can be overcome but I see a more fundamental threat.
Comparability
Comparison of coverages and premium is simply possible because of the standard insurance products we have in all markets. They were already quite standard for decennia but the aggregation business has forced products and their components into even more comparable ones.
Insurance, being a low-interest product with price as the main buying parameter, makes such development predictable and even necessary/beneficial in a mature and not innovative market.
If the world was not changing as is happening right now in The Third Wave the aggregators maybe would have lived happily ever after. However…
The New Insurance is No Insurance*
Forced by extreme pressure on the sustainability of the current insurance business model and pushed by new technology a trend is being deployed to a new type of service.
Globally supported by hundreds of new initiatives from FinTech and InsurTech the insurance industry will move from Claims Handler to Claims Preventer.
Creating a safer environment for the customer and his/her beloved & belongings. Optimizing prevention via smart vehicles, homes and people. Analyzing the residual exposure and insure only the part that is worthwhile to transfer.
With huge opportunities for the insurance provider who is willing and able to shift:
- Real customer centricity
- Customer engagement with ongoing advice and loyalty programs
- Long policy life-cycles, away from aggregator dominance and costs
- New products and services
- New earning models
- A safer and greener environment
All resulting in customized and optimized ongoing interactive Protection & Insurance Services for the complete household.
One-to-One Services on the road to Living Services (see also the Fjord Report).
Non-Comparability
So what’s to compare in One-to-One Services and Products. In Living Services?
Of course customers will need some guidance in this new world as well. But that’s going to be a completely different ball game than the relatively easy “matching and ranking”. Improved technology, social media, customer reviews and benchmarking with peers will support here as well.
The Peak
There is so much going on, to develop and to learn that this new world will take some time and the mass market has to follow, adopt and adapt. Therefore I believe the aggregator business has not reached the peak YET and there are differences per country in culture and timing.
In my opinion for aggregators the sky is not the limit anymore and they are not here to stay. At least not in their current modus operandi.
Ultimately
The UK seems ahead with e.g. close to 70% aggregator-involvement in car and on the other hand many activities on those new initiatives. So there’s a fair chance that they will be leading in reaching the peak as well.
On the other hand: Technology is developing very quickly and prices fall rapidly. Tech Companies, OEM’s, CE-Giants, Telco, Media and Utilities are already rolling out worldwide their connected devices and ecosystems for some time. Millennials and other digital natives do expect continuous connected value added services in return for their effort and data. Revolution may/will come suddenly and from unexpected sources.
* “The New Insurance is No Insurance” is the title of a next post.
