Pretoria, Gauteng -- (SBWIRE) -- 03/01/2013 -- Aggregators and online comparison sites are the fastest-growing distribution channel for motor and household insurance in Europe, but are not as firmly entrenched in the South African insurance industry.
According to Sean Hanlon, executive director of sales and distribution at BrightRock Life Insurance, online aggregated policies tend to be stripped down to the essentials and cannot provide the insight of an independent industry specialist. "So while clients may benefit from convenience and low premiums, the cover they buy may not suit their needs or be flexible enough to meet future needs," warns Hanlon.
Based on surveys of consumers in six European countries, research from Finaccord, a market research, publishing and consulting company specialising in financial services, the use of aggregators to buy motor and household insurance is most advanced in the United Kingdom but is clearly now growing in France, Germany, Italy, Poland and Spain. Online acquisition channels have increased in five of the six countries.
Of the combined average for consumers switching a motor or household insurance policy or buying one for the first time, online channels accounted for 42.3 per cent of transactions in 2012, compared to 35.4 per cent in 2008. The UK claimed the largest share of online purchases, with 69 per cent, while France showed the lowest levels of online purchases, at 25.2 per cent for 2012.
The statistics on aggregator use follow a similar pattern, with the UK in first place at 30.3 per cent, and France the lowest at 11.2 per cent. However, this was still more than three times the figure recorded for purchases in all previous years combined in France, which was 3.1 per cent.
While not as popular in South Africa, Hanlon observes that we are starting to see more insurance contracts concluded online, with direct insurers, particularly in the short-term space, increasingly using aggregation technology to supply clients with online quotes.
While online aggregators offer clients considerable accessibility and convenience, a key concern is that clients lack thorough knowledge of their own financial needs and aggregation tools cannot provide the necessary input. A 2011 Deloitte survey found that the majority of United States consumers do not take the initiative to find cover; instead relying on someone - an employer, product provider or financial adviser - to suggest cover. Overwhelmingly, the study concluded that consumers don’t recognise the financial needs met by life insurance and are therefore unlikely to seek coverage.
In South Africa, independent financial advisers (IFAs) remain the leading source of trusted advice. A recent survey conducted by Visa among middle-class South Africans, the Visa Wealth Worries 2013 survey, found that 16 per cent of respondents trust the Internet for financial advice, whereas 32 per cent rely on financial advisers.
The Financial Services Board’s (FSB’s) September 2012 financial literacy survey reported that 62 per cent of South Africans trust financial advisers to provide sound financial advice. It makes no specific mention of the Internet as a resource.
BrightRock offers a solution intended to combine the benefits of technology with the insight and expertise of IFAs. BrightRock’s online quoting tool, Flint, is available to assist in creating a policy that suits a client’s present needs and is able to grow and adapt as their needs change. The tool does an average of 24 million separate calculations per quote to generate the best, most tailored policy for a client.
According to Hanlon, the independent financial adviser remains the best aggregator and the most sophisticated technology available to clients. “Financial advisers are uniquely qualified and experienced to find the perfect fit for their clients’ risk cover needs. They are best able to understand clients’ needs and aspirations and relate those to financial requirements.”
BrightRock was started with the goal of creating insurance products that truly meets consumers’ and financial advisers’ needs. It offers truly individualised life insurance cover that’s built around your specific needs at the outset, and is specially designed to change with you as your needs change. And because BrightRock’s cover is flexible and changes appropriately when your needs change, it’s more efficient. This means both your cover and your premiums remain relevant, and more affordable, throughout your life. BrightRock (Pty) Ltd is an authorised financial services provider, underwritten by Lombard Life Ltd.