One of the biggest changes in distribution was brought about by the emergence of the so-called direct players (think of the big red telephone) which commanded a whopping 32% of general insurance retail sales last year.
However, the rise of the aggregators has arguably had the biggest impact on the distribution of general insurance products in recent years.
According to Deloitte, four out of ten consumers bought a non-life insurance policy through a comparison website in the last 12 months. Meanwhile, 32% of consumers looking for a non-life insurance policy say they are more likely to use a price comparison website than a year ago.
A survey carried out by Assurant Intermediary amongst 2,000 UK mortgage brokers and intermediaries revealed that 28% see the internet and aggregators as one of the largest threats to their business. Brokers appear to be being bypassed by price comparison websites as the internet continues to dominate the market.
So is it realistic for mortgage intermediaries to compete effectively in this space?
Mortgage advisers are already in a stronger position than their specialist general insurance broker counterparts. Whilst they struggle to get in front of consumers, figures from AMI reveal that 90% of people believe that seeing a mortgage adviser is important to them.
They value advice on their mortgage and this provides you with solid opportunities to discuss their other financial needs. To do it successfully, however, you have got to be willing to take the fight to the competition.
I would argue that your best form of attack is to be far more aggressive in marketing your skills and knowledge. If a third of your client base is going to buy online, then your marketing has to evolve to compensate for this.
For example, your average customer hasn’t got a clue how aggregator sites operate. They don’t know that insurers often pay to be at the top of the listings. They only focus on the one thing that these sites want them to see and that’s price.
You can help guide them through the minefield. By taking the time to establish their specific needs, you may well be able to source more appropriate cover at a competitive price yourself. Take the opportunity to show them the value of your advice.
Direct providers and aggregators are renowned for attracting sales with high initial discounts or incentives that don’t follow through on renewal. Brokers who keep up-to-date and aware of what these incentives are, but offer a better balance between advice, premium and value over short-term discounts, have an opportunity to win back and retain business from the competition at renewal.
Front-end incentives via direct channels are all well and good for one year, but a true discount offers value to the customer throughout the lifetime of the policy.
Consider some low cost marketing tactics.
Most intermediaries have a strong client bank that is unfortunately often under-utilised. Send regular, relevant direct mails and emails, whether it is to provide product information, suggestions or simple tips on preventative measures to minimise flood damage. By keeping in touch, you’ll ensure your brand is top of mind when they do want to buy.
If you don’t have a ready bank of marketing material at your fingertips, don’t spend time, effort and expense in sourcing a designer or a copywriter, or take on the responsibility of ensuring materials are FSA compliant, especially if you are looking to promote new lines of insurance. Instead, investigate the marketing support services that intermediary-friendly GI distributors have available – some are even free.
The important thing to remember in any form of marketing or communications is to keep your message relevant to your customer’s ‘pain’ points i.e. scratch the itch.
And, if you can’t beat them, join them.
I’m not suggesting building your own price comparison site, but you could investigate those distributors that are building solutions, ourselves included, to give your business access to customer friendly aggregator sites that pay a fee on sales and renewals.
On average, 91% of those who responded to the Assurant Intermediary survey currently sell buildings and contents, landlords, tenant contents, legal expenses, home emergency, critical illness or life insurance.
Yet, on average just 20% take the opportunity to cross-sell general insurance products that are more difficult to compete on, such as travel or pet insurance. As a result, brokers are potentially missing out on valuable revenue.
Nevertheless, 84% said they would consider tapping into these new covers and linking up with a smaller independent aggregator site is one solution to competing on these products.
When times are tough, as they are now, this can be the best time to market your business and generate new lines of income. Don’t accept being sidelined by direct channels as an inevitability – get out there and prove your worth.
Kevin Paterson is sales and marketing director of Assurant Intermediary