Insurance Aggregators Uncovered: an interview with GoCompare and a leading marketer

Hayley Parsons, Managing Director of GoCompare.com and Andrew Akerman, Company Director of a leading insurance marketing company speak their minds about insurance aggregators in an interview with Insiders View.

Insiders View has managed to sneak an inteview with two bright minds of the insurance industry with two different lenses. It’s rather revealing as both give their professional thoughts on insurance aggregators, marketing, technology and future developments. We’re kicking things off with insurance aggregators:

…I had real concerns when we first left Confused…

…aggregators are not the problem, they are just a symptom, incorrect pricing strategies are the problem…

…this is a very naughty question to ask me!…

For those that don’t know your company, could you give us a short introduction and tell us what it stands for?

Hayley: Gocompare.com was set up by a team of people from within the insurance and IT industries, and with our vast experience of the aggregator market, simply wanted to do things better (your words which I think are perfect!). The desire to start our own company came from our belief that we could improve on the earlier models of aggregators, which in our opinion seem to have remained stagnant, ignoring potential for any type of growth or innovation and don’t seem to appear to want to offer the customer more for their time and money.

We want to be entrepreneurs with control over our own business, and we did not like being part of a business that was owned and controlled by a large corporate insurer. All members of staff are shareholders and we are passionate about what we do and the way in which we do it. We want the best customer process and the best insurer relationships in the aggregator market and given our previous experience, we have no excuses for not delivering on this.

Insiders View: Nice and short, thanks Hayley!

Andrew: We test and benchmark the performance of general insurance providers – gathering critical business intelligence on price, service and customer satisfaction. This is achieved through a combination of in-house mystery shopping teams and external consumer panels. Because the information is collected and analysed independently our findings are truly unbiased. We work with pretty much every major Insurer in the UK.

Insiders View: See how the marketing approach meets the brief …”short” introduction! Great stuff, let’s start digging!!

GoCompare, have you had any problems now that you’re no long under the Confused name? Has it even helped you in any way?

Hayley: I had real concerns when we first left Confused. How would the market take to us? Would Confused try and stop insurers working with us? Thankfully the insurers gave us great support and welcomed Gocompare.com to the market place. Our Confused background has helped us greatly. When we first launched Confused.com, it was a new concept and we built the business the best we could with what we knew at the time. Now 6 years on, we have learnt an amazing amount of lessons from our experience, but we have come away with the ability to build a new comparison service from nothing while utilising cutting edge technology, not widely used in the market.

Our use of new technologies has given us the advantage of being able to create product ranges much more easily and quicker than other comparison services who presently use legacy systems. We have also found that insurers have been desperate for other aggregators to come to market, as they’ve seen the balance of power switch from the insurers to the aggregators (allowing the aggregators to dictate terms and pricing).

On aggregators – who are the good guys in the industry? Who are the bad guys in the industry?

Hayley: This is a very naughty question to ask me! Nowadays insurers and brokers are good guys. As for aggregators we all have different business models and different ways of working. Current aggregators don’t really understand or care about insurance or consumers, marketing and money is all they are interested in. Insurers are looking at ways to offer cheaper prices through aggregators and the latest stunt is stripped down or basic policies (I prefer to call them accidental damage fire and theft policies because that’s all you get!). Bell Flexi (one of the Admiral brands) is often seen quoting the best price on Confused, however, they don’t mention that personal effects and windscreen are excluded and all the customer is shown is the headline price – that’s not really what’s best for the consumer!

Andrew: Good and bad are very black and white descriptions. However the entire industry is bad in the sense that it has manufactured a process of selling that rewards consumers for being disloyal. In the sense that the best way for a consumer to get the cheapest price is to keep shopping around every year. So the goals of the consumer (cost minimisation) and those of the insurer (profit maximisation) are fatally misaligned. Aggregators are thriving on the misalignment and will continue to so until then industry wakes up and changes it’s processes. Aggregators are not the problem, they are just a symptom, incorrect pricing strategies are the problem.

Where do you see the role of aggregators going in the next year?

Hayley: I see many companies trying to create aggregators in the coming year. I think a lot of these companies underestimate the work involved and have very ambitious plans, but will they be able to deliver? Any company that believes that they can just waltz in to a highly competitive market with no real understanding of the insurance industry is in for a shock and could lead to costly mistakes where their customers are concerned. I certainly believe that the aggregator market will continue to grow and I also believe that Gocompare.com has a window of opportunity during the next 6 to 12 months to become one of the top aggregators in the market before the others try to follow. We have already seen a few insurers adapt our occupation process and Insurance Wide have tried to copy our 5 star rating.

Andrew: Aggregators will continue to thrive and there will be more of them, Tesco and Saga are joining in. Before too long you will need an aggregator of aggregators to deliver truly accurate and meaningful quote.

It’s clear there are set to be many aggregators joining the market in the coming year, do you think the market is at capacity or is there still room for newcomers. Is there an optimum level for insurer resources/customer brand awareness?

Hayley: I don’t think the market is at capacity yet, I believe that aggregators are having the same impact on the insurance market now that Direct Line had in the market when it launched in 1985, it’s the new distribution channel! Out of Direct Line came Churchill, from Churchill came Admiral and from Admiral came Hastings – all very successful direct operations. No reason why we can’t have a few more successful aggregators!

Andrew: There is no maximum capacity, just diminishing returns and consumer confusion. Eventually (within 12 months) you will be an aggregator of aggregators. More interestingly, scientific principles show that there is one too many people in the insurance bed right now, the consumer, the aggregator, the intermediary brand and the underwriter. One of the aggregator or the intermediary needs to disappear as part of the evolutionary process. The question is who is the fittest, who will survive?

Where do you see the role of brokers going in the next year?

Hayley: Well being an ex-insurance broker myself, I think they will be fine! Aggregators actually help the brokers with distribution and I certainly think the super brokers will continue to grow and compete with the direct writers.

Andrew: There are some interesting models out there with brokers acting as super call centres in the shape of Budget and Outright and this may be a way for the larger brokers to survive. Large capacity, excellent cost control, small margins. For the smaller brokers it has GOT to be about service. Service is the reason that brokers survive in places like the US and they have to be seen to build on their local relationships.

How do you think the general public perceive aggregator brands? Do they merge in with all of the other insurance brands? Do they differentiate between aggregator and traditional brokers?

Hayley: I think customers are starting to understand the differences between aggregators and brokers/insurers, although it’s taken them a while to realise! Confused.com customer research always showed that customers don’t know the difference between the AA and Confused – do they really care as long as they find a cheaper policy? I hope they do start to care, Gocompare.com offers a full quote process, we don’t default questions or give just indicative pricing!

Andrew: I think they think of them as “my champion”. The aggregator goes out and fights for the best price for me. Previously, many held the view that the broker would sell them the policy that delivered the most commission but now the aggregator is helping them get the lowest price. Perception is all!

Do you think any new aggregators (such as GoCompare) can ever overcome the first brand advantage of Confused and MoneySupermarket?

Hayley: The team at Gocompare.com launched Confused.com, we know what made it successful (unlike the staff working there now). I don’t ever think we can overtake them, but I do think we can attract business from them, do things much quicker and better than them and be one of the top 3 aggregators in the market.

Each person plays a big part in driving Gocompare.com forward and we are no longer told what to do by a board of directors that wear many different hats! We only care about Gocompare.com and what is right for that business – the workers make the decisions! We have more fight and ambition in us now than we had when we launched Confused.com, so we’ll certainly do our best to achieve the best results we can possibly achieve! We are not just employees this time around, we really do have our necks on the line to make this work.

Andrew: Tesco, with brand awareness, a huge database of customers and a large marketing budget can overtake them both – and quickly. And Confused and ISM know it, hence the reason why they are up for sale right now. Their owners are getting out at the top, before the 500lb elephant arrives and steps on them.

If someone was looking to build an insurance aggregation tool today, what sort of major problems will they come up against?

Hayley: Loads, they should all give up and go home now ;o)

Andrew: Market access/money. Aggregator tools are easy enough to build but they only work if you can drive enough traffic to them. It’s the age old “build a better mouse trap and the world will beat a path to your door”. It simply doesn’t work like that. To be able to drive traffic you need to get good positioning in the search engines and very efficient key words. Or incredible PR. Both need bucks. Alternatively, you could go for small and niche, look to aggregate in a specific space. Not a market I would want to enter right now though.

Insiders View: Hayley may have something to say about aggregator tools being easy to build …but interesting to get these two views of the insurance aggregation market.

Coming soon…

We’ll release the rest of the interview soon… Hayley and Andrew answer some interesting questions on technology, marketing and the future of the insurance industry.