In the United Kingdom, the aggregator model of insurance distribution has exploded. In 2009, more than half of private automobile insurance sales were purchased online, and 36 percent of home insurance sales were purchased online.
Property Casualty 360 recently published an article of mine, titled “Rise Of UK Insurance Aggregators Suggests Change Is Ahead For US Insurers.” In it, I discuss some of the reasons for the success of aggregators in the United Kingdom.
Aggregator success in the United Kingdom
There are a few reasons for aggregator success, and the first is price sensitivity. The UK insurance customer is highly price-sensitive and sees the online channel as low-cost. This is compounded by low brand loyalty. Further, UK insurance customers are also more comfortable purchasing insurance without advice from an agent.
Another key driver of aggregator success is marketing. UK aggregators have invested heavily in marketing, establishing strong brands and winning customer trust. They have also invested heavily in online systems to optimize user experience, customer insight and search engine performance.
Strategies for success
As the aggregator model makes its way to the United States, US insurers will have to adapt accordingly. This includes:
- Investing online with user-oriented services, richer experiences and value-added content.
- Increasing deployment of customer analytics, such as CRM solutions, transaction monitoring tools, price elasticity models and dynamic rating algorithms.
- Tailoring sales and service blueprints for different customer segments.
- Having the ability to accept in-bound quotation messages and respond within a strict time limit.
- Being able to adapt to changes in aggregator functionality, such as new questions or option wizards.
There’s no doubt that aggregators have changed the UK insurance market and that the model will eventually take hold in the United States. US insurers have the opportunity to adapt now and position themselves for a competitive advantage.