The broker market has weathered many storms. Jason Berry looks at whether comparison sites are the new battle brokers face.
From regulation changes to the credit crunch, those who are good at their job have shown they’re a resilient bunch who can make it through and remain successful. But one of the biggest challenges they face is that of getting consumers to understand their worth.
Good financial advice is, of course, priceless but it’s difficult to convey that message to those consumers who believe they can do just as good a job themselves. And what is it that makes consumers hold such a belief? Primarily, comparison websites.
Comparison websites allow consumers to search the market comparing the prices and features of the products they want. And with ‘insurance’ often cited as being the most commonly searched words on Google it’s clear that the internet has become a key tool for anyone wanting to purchase cover. Needless to say, this is proving to be something of a headache for brokers.
Indeed, a recent survey we conducted found comparison sites were a common bugbear for brokers. But are they all they’re cracked up to be? They can be a helpful tool and are certainly a better option for consumers than just taking whatever your mortgage lender or bank offers. But can they provide the type of service a broker can offer?
Quite simply no.
Firstly there are the obvious criticisms. For example, the best product for a customer is not necessarily the cheapest yet most customers will search insurance and mortgage products by price. And, of course, not all providers are on comparison sites so consumers could be missing out on the best deal.
But there are also more sinister issues at play, which consumers may not be aware of.
Firstly, many of these so-called independent insurance comparison sites are owned (either wholly or in part) by insurance firms – thus removing the ‘independent’ element.
And secondly, many of these sites include clauses which dictate that the insurer must offer their best price through comparison sites. This means insurance underwriters are unable to price for risk (given that most underwriters would see business from comparison sites as higher risk).
As such comparison sites end up working against both brokers and consumers meaning the only winners are the companies behind the sites – who are able to satisfy their vested interest.
But how can the rest of the industry compete? The answer is simple – by investing in technology. Insurance providers must be investing in technology to make sure their websites are easy and efficient to use, in order to give brokers a fighting chance of competing against the speed and ease comparison sites provide.
Brokers have grasped technology well and it’s important that they continue to do so if they wants to avoid being left behind.
Jason Berry is head of key accounts at Uinsure