Earlier this year, the announcement of Google Compare’s shuttering made industry headlines. Articles were quick to point out the intricacies of the insurance industry, the limitations of online aggregators and the expertise that incumbents bring to the table—but it would be incorrect to dismiss aggregators as a failed experiment.
Consider that in the United Kingdom, aggregators have had tremendous impact in personal lines. By 2009, aggregator purchases accounted for 36 percent of home insurance sales and more than half of private auto insurance sales—which has since climbed to an estimated 60 to 70 percent of new business premiums. This success is double-edged, however, as there is evidence that the UK aggregator market is reaching saturation.
Meanwhile, aggregators have not penetrated the US market as successfully, largely due to significant marketing budgets from large insurers. State-by-state regulatory requirements also make it difficult for aggregators to participate nationally.
These trends are reflected in the Accenture Distribution and Agency Management Survey, which found that 83 percent of UK insurers are considering launching their own aggregator site, compared to 60 percent of US insurers. It’s also worth noting that under the umbrella term “aggregator,” there are several models at play: traditional, brand-controlled and networked. Read this blog post for more details on three models of aggregators.
Globally, aggregators are seeing varying levels of success. The extent of aggregator penetration within each market depends on five factors:
- Consumer buying habits and culture
- Marketing expenditure by existing insurers
- Insurer participation in aggregator services
- Digital sophistication of carriers and aggregators
- Distribution cost pressures
While the US market hasn’t been as aggregator-friendly as the UK’s, US insurers cannot afford to ignore aggregators, or the benefits of adopting an aggregator model. Accenture Technology Vision for Insurance 2016 identified five key trends affecting insurers today, one of which is the platform economy. No longer can insurers operate in a silo; partnering with other companies and expanding the value chain is necessary to succeed in an increasingly disrupted marketplace.