Ag­gre­ga­tors & Value Com­para­tors Em­brace or Avoid?


Insurance - - CON­TENTS - Text Kevin Steer | Pres­i­dent & CEO | One Two One Ad­vi­sor Sdn Bhd

With con­sumer de­mand for greater aware­ness and trans­parency in In­sur­ance & Taka­ful, in­sur­ance ag­gre­ga­tors have es­tab­lished sig­nif­i­cant pres­ence in US, Europe, Aus­tralia and are grow­ing in Asia Pa­cific (no­tably China and In­dia). Con­sumers want trusted sources to com­pare be­fore de­cid­ing to buy, and In­sur­ers and Taka­ful op­er­a­tors are ex­plor­ing how best to pro­vide com­pet­i­tive prod­uct com­par­isons on their own or third party sites.

A key con­cern of the in­dus­try is whether ag­gre­ga­tors will give a fair com­par­i­son or will they be pri­mar­ily driven by profit. This ar­ti­cle ex­plores the po­ten­tial and risks as­so­ci­ated with us­ing ag­gre­ga­tors and value com­para­tors as an al­ter­na­tive to set­ting up a di­rect on­line chan­nel.

In a 2014 study on vi­a­bil­ity of in­sur­ance ag­gre­ga­tors in Sin­ga­pore, it felt that “the in­sur­ance ag­gre­ga­tor is an in­evitable devel­op­ment … Though trig­gered by lo­cal reg­u­la­tory re­quire­ments for life in­sur­ance; the ag­gre­ga­tor has an es­tab­lished pres­ence in other parts of the world where fi­nan­cial ad­vi­sory is at a ma­ture stage.” 1 Over the past few years, a num­ber of gen­eral and life ag­gre­ga­tors have emerged in Sin­ga­pore; some in­de­pen­dent (http://www.clearly­­pare.html) and some reg­u­la­tory driven (http://­pare­

The trends in Sin­ga­pore are rel­e­vant to Malaysia with the Bank Ne­gara Life In­sur­ance and Fam­ily Taka­ful Frame­work2 re­quire­ment for all Life In­sur­ers and Taka­ful Op­er­a­tors to have an on­line di­rect chan­nel by Jan­uary 2017. One ques­tion comes to mind – should the Life and Taka­ful as­so­ci­a­tion form their own ag­gre­ga­tor (e.g. sim­i­lar to Com­pare­First) or leave it to mar­ket driven chan­nels as is

hap­pen­ing in other coun­tries (e.g. Alibaba China)?


In the 2015 sur­vey by Bain & Com­pany3, glob­ally 8% of life in­sur­ance and 10% of prop­erty and ca­su­alty is cur­rently sold on­line and ex­pected to grow to 15% (life) and 23% (P&C) over the next 3 – 5 years. The sur­vey iden­ti­fied a num­ber of po­ten­tial ben­e­fits for in­sur­ers:

● 37% in­crease in dig­i­tal cus­tomer ser­vice after dig­i­tal pur­chases;

● 26% re­duc­tion in use of cor­tact cen­tre;

● Re­duced prod­uct devel­op­ment life cy­cle; and

● 20% in­crease in auto-un­der­writ­ing and auto-ad­ju­di­ca­tion.

The ini­tial fo­cus of ag­gre­ga­tors was on sim­ple fi­nan­cial prod­ucts (e.g. loans, credit cards) which evolved into of­fer­ing manda­tory gen­eral in­sur­ance (e.g. mo­tor, travel); and now of­fer­ing sim­ple Life & Fam­ily Taka­ful pro­tec­tion prod­ucts (at times driven by reg­u­la­tory ini­tia­tives).

Europe has rapidly em­braced on­line in­sur­ance pur­chase4, with the UK be­com­ing the lead­ing mar­ket for ag­gre­ga­tor and di­rect growth.

In their anal­y­sis “Evo­lu­tion of Ag­gre­ga­tors” 4, Ac­cen­ture iden­ti­fied a num­ber of trends why UK con­sumers were quick to adopt on­line in­sur­ance (both ag­gre­ga­tor and di­rect):

● Well es­tab­lished di­rect chan­nel with more than 40% pri­vate mo­tor mar­ket share,

● Con­sumers are very sen­sative to price and view in­ter­net as a low cost chan­nel,

● Co­sumers are open to new in­sur­ance brands via cor­po­rate part­ners or ‘bran­das­sur­ers’ (es­ti­mated 18% of pri­vate mo­tor is dis­trib­uted via non-fi­nan­cial ser­vices),

● Sig­nif­i­cant progress in web­site us­abil­ity, safe­guards for on­line se­cu­rity and mech­a­nisms to col­lect elec­tronic pay­ments.

DataMon­i­tor’s7 anal­y­sis of the UK bro­ker mar­ket saw that the mo­tor ag­gre­ga­tor busi­ness plateaued at 56%, but the home in­sur­ance is ex­pected to grow from 30% to 38% in 2015.

In Asia, the per­sonal re­la­tion­ship is a fac­tor that may slow adop­tion of on­line in­sur­ance and Taka­ful; as well as per­ceived lack of safe­guards in col­lect­ing on­line pay­ments. How­ever, in other sec­tors e-com­merce is well ac­cepted. The EY “Asia Pa­cific In­sur­ance Out­look 2014”8 saw Asia ag­gre­ga­tor web­sites in­crease 44% and 50% for mo­tor in­sur­ance and home in­sur­ance re­spec­tively, be­tween July 2012 and April 2013.


The role of the In­sur­ance & Taka­ful Ag­gre­ga­tor:

● Pro­vide po­ten­tial client with com­par­a­tive in­sur­ance quotes based on price com­modi­tised lines (e.g. mo­tor, travel),

● Act as a re­fer­rer send­ing re­fer­ral de­tails to in­surer and leaves in­surer to con­tact and con­clude the in­sur­ance sale,

● Ag­gre­ga­tor is paid a re­fer­ral fee for poli­cies con­cluded,

● In­sur­ers look­ing for sig­nif­i­cant in­creases in vol­ume of busi­ness by pro­vid­ing “stripped down ba­sic poli­cies” to ag­gre­ga­tors,

● In­sur­ance Ag­gre­ga­tors would not be the cor­rect medium for very com­plex in­sur­ance prod­ucts

● Sup­port reula­tor ini­tia­tives in­tro­duce ba­sic Life In­sur­ance & Fam­ily Taka­ful ag­gre­ga­tion

“Cus­tomers are gain­ing a bet­ter un­der­stand­ing of the ad­van­tages of di­rect in­sur­ance and will ap­proach ei­ther the di­rect in­sur­ers or ag­gre­ga­tors to find the de­sired in­sur­ance cover at the low­est price”

In sum­mary, the ag­gre­ga­tor fo­cus is to pro­vide con­sumers with the best value for money. How­ever, that is pro­vided that the con­sumers un­der­stand what they are buy­ing. From re­cent anal­y­sis, 26% of con­sumers find it hard to know whether they are get­ting value for money6, for Life and Fam­ily Taka­ful the per­cent­ages will be much higher, es­pe­cially when com­par­ing con­ven­tional in­sur­ance against Taka­ful.

This opens op­por­tu­ni­ties for an al­ter­na­tive com­par­i­son model i.e. the Value Com­para­tor.

The vi­sion of the Value Com­para­tor is to be­come an on­line one-stop In­sur­ance & Taka­ful ad­vi­sory, giv­ing con­sumers ad­vice on a range of in­sur­ance so­lu­tions, tai­lored to their per­son­alised needs. Help­ing the cus­tomer choose prod­ucts based

on value rather than price by list­ing based on how well prod­ucts could meet cus­tomer needs.

The Value Com­para­tor at­tempts to iden­tify prod­uct op­tions based on needs as well as per­sonal de­tails, and use com­mon ter­mi­nol­ogy and graph­ics to sim­plify ben­e­fit com­par­isons.

We be­lieve that the Value Com­para­tor has great po­ten­tial to be­come pop­u­lar to fill the gap as

many cus­tomers strug­gle to work out if an in­sur­ance/Taka­ful prod­uct is value for money. How­ever a busi­ness model needs to evolve to en­sure the Value Com­para­tor can con­tinue to pro­vide im­par­tial ad­vice.


To­day users con­stantly switch be­tween smart­phone, tablet and PC screens when brows­ing on the In­ter­net, buy­ing on­line, man­ag­ing fi­nances and plan­ning hol­i­days. Thus, the ag­gre­ga­tor and value com­para­tor sites must be re­spon­sive mo­bile to cater for the con­sumers’ in­sur­ance and Taka­ful buy­ing jour­ney be­low.

Typ­i­cally the Ag­gre­ga­tor role in the buyer jour­ney is Step 4 in pro­vid­ing price com­par­isons, of­ten pro­vid­ing re­fer­ral links to talk to in­ter­me­di­aries; whereas the Value Com­para­tor plays a wider role from Step 2 through Step 6 by pro­vid­ing in­for­ma­tive con­tent that can be posted on so­cial site linked to prod­uct com­par­isons and may in­clude di­rect pur­chase within the site it­self. How­ever, with this wider role, Value Com­para­tors have to con­tin­u­ously pro­vide new con­tent to main­tain traf­fic, thus in­creas­ing their op­er­at­ing over­heads.


Ag­gre­ga­tors are tar­get­ing con­sumers who are will­ing and have the abil­ity to ini­ti­ate In­sur­ance & Taka­ful pur­chase process on­line:

● Driven by a con­scious or manda­tory need for in­sur­ance and Taka­ful;

● Fa­mil­iar with ter­mi­nol­ogy, terms and con­di­tions of what is be­ing com­pared; and

● Look­ing for the best price and are are will­ing to spend time & ef­fort to re­search.

Value Com­para­tors are tar­get­ing dig­i­tal savvy con­sumers who like to shop on­line but are un­fa­mil­iar with In­sur­ance & Taka­ful, they seek out trusted ad­vice be­fore de­cid­ing to buy on­line:

● Driven by a con­scious need for In­sur­ance & Taka­ful;

● Un­famil­liar wit ter­mi­nol­ogy terms and con­di­tions, but want to un­der­stand; and

● Look­ing for best value for money, spend­ing time, ef­fort to re­search and open to chat­ting on­line with ex­pe­ri­enced ad­vi­sors.


Un­less you can com­modi­tise Life In­sur­ance & Fam­ily Taka­ful, it is un­likely that a siz­able seg­ment will pur­chase via ag­gre­ga­tors – un­less it is man­dated by reg­u­la­tors or driven by events. This has been ob­served in mar­kets where ag­gre­ga­tors have a ma­ture pres­ence.

In Malaysia to­day, with per­sonal re­la­tion­ship sell­ing still high on the con­sumer’s thoughts, Life In­sur­ance & Fam­ily Taka­ful prod­ucts are “sold not bought”. Thus, cur­rently life of­fer­ings on ag­gre­ga­tors have been pri­mar­ily con­strained to sim­ple term or mort­gage in­sur­ance for sim­plic­ity and as com­ple­men­tary of­fer­ings such as home loans

Value Com­para­tors on the other hand, although more ‘ex­pen­sive’, pro­vide the value added ad­vi­sory re­quired and thus, have the po­ten­tial to of­fer Life In­sur­ance & Fam­ily Taka­ful di­rect.


With the growth of ag­gre­ga­tors and the emer­gence of value com­para­tors else­where, there are sig­nif­i­cant con­cerns as to whether Ag­gre­ga­tors & Value Com­para­tors will com­ple­ment or dis­rupt ex­ist­ing dis­tri­bu­tion chan­nels.

The po­ten­tial ben­e­fits are:

New sources of cus­tomers to cross-sell/up­sell higher value prod­ucts,

Greater In­sur­ance & Taka­ful aware­ness in emerg­ing mar­kets,

Po­ten­tial to im­prove SEO rat­ings through ad­di­tional links to the cor­po­rate sites,

Shared costs as an al­ter­na­tive to of­fer­ing di­rect on­line chan­nels, and ● Value com­para­tors have the po­ten­tial to build greater aware­ness and trust

Which come with as­so­ci­ated risks:

● Man­ag­ing chan­nel con­flict with agents and bro­kers,

● Poor con­sumer aware­ness on how to com­pare prod­ucts may limit ag­gre­ga­tor traf­fic vol­ume (es­pe­cially for life and fam­ily Taka­ful),

● Ag­greators em­pha­sise on price com­par­i­son at ex­pense of prod­uct ben­e­fits and ser­vice,

● Value com­para­tors em­pha­sise on prod­uct ben­e­fits and ser­vice but at higher prices,

● Blur­ring of "paid ad­ver­tis­ing" ver­sus im­par­tial “com­par­i­son” on ag­gre­ga­tor and value com­para­tor sites,

● Readi­ness of In­sur­ers & Taka­ful Op­er­a­tors cur­rent on­line ca­pa­bil­i­ties to sup­port ag­gre­ga­tor and di­rect on­line busi­ness


“In to­day’s mar­ket, in­creased use of the web – ei­ther di­rect or via com­par­i­son web­sites – is cre­at­ing fur­ther dif­fi­cul­ties for in­sur­ers, as on­line cus­tomers are more likely to churn”

Ac­cen­ture4 high­lights a num­ber of chal­lenges fac­ing in­sur­ers in mar­kets where ag­gre­ga­tors are well es­tab­lished:

In­sur­ance strug­gling with lower cus­tomer loy­alty with 81% of UK on­line mo­tor in­sur­ance cus­tomers plan­ning to shop around at re­newal;

Price sen­si­tiv­ity of ag­gre­ga­tor cus­tomers;

In­surer dual pric­ing dom­i­nant ag­gre­ga­tors in­creas­ingly con­trol dis­tri­bu­tion of cer­tain prod­ucts, forc­ing in­sur­ers to com­pete hard to main­tain mar­ket share;

On­line chan­nels re­in­forc­ing nega­tive con­sumer per­cep­tions

of value caus­ing in­sur­ers to spend more to counter nega­tive con­sumer per­cep­tions of in­sur­ance, which for most peo­ple re­mains a ‘nec­es­sary evil’; and

● Tar­get for fraud­u­lent in­sur­ance ac­tiv­ity need to ver­ify au­then­tic­ity and po­ten­tial for anti-se­lec­tion.


In­sur­ers & Taka­ful Op­er­a­tors must be con­vinced on the value that the ag­gre­ga­tor/value com­para­tor brings in re­turn for their par­tic­i­pa­tion and need to con­sider chan­nel con­flict is­sues, lost op­por­tu­ni­ties of not be­com­ing early adopters against the costs of de­vel­op­ing and grow­ing their own di­rect chan­nels.

For ag­gre­ga­tors and value com­para­tors to pro­vide pos­i­tive value to the In­sur­ance and Taka­ful in­dus­try, it is nec­es­sary to build crit­i­cal mass, with in­dus­try play­ers’ ac­tive par­tic­i­pa­tion both as sup­pli­ers and ad­vo­cates.

Com­pare your choices

Source: Deloitte/YouGov 2-7 April 2015

Sam­ple: Health (654); home (877); mo­tor (1,424) N. B. fig­ures do not add up to 100% due to round­ing.

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