Research highlights brokers may lose out due to tight online competition
The vast majority of UK consumers use the web at some point when purchasing insurance policies but brokers could be missing out on this boon, according to market research from Finaccord.
The study, entitled Aggregation Metrics: Consumer Approaches to Online Aggregation and Broking of Financial Services in Europe, found that 68% of consumers across the UK researched insurance products over the internet, with 45% buying online. This is the highest use in Europe, followed by 60% and 29% in Germany.
However, the report noted room only for a finite number of competitors, including aggregators and brokers, to succeed in online distribution. David Parry, a financial services analyst at Finaccord, commented: "Price-sensitive consumers are more and more likely to shop around for a better deal as we enter a recession. So far online aggregators and brokers are doing well in personal loans across Europe, but are only thriving for motor insurance in France and the UK; traditional insurers tend to have better brand recognition, and it will take a lot of advertising spend to challenge them."
Finaccord added that branding in this arena was expensive. Moneysupermarket.com estimates that it, Confused.com and Gocompare.com together spent more than £25m on advertising in the first six months of 2008. The report said: "Hence, it is likely that successful online aggregators and brokers will emerge from companies with sufficiently deep pockets to buy sufficient brand recognition rather than from the ranks of traditional brokers, which tend to be smaller.'
