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Coming to Terms

with Insurance
Global lessons
for carriers
A few years ago, property
and casualty insurers in
some markets could have
been forgiven for thinking
that aggregators would
take over the world.
The aggregators business modela strong Today, UK aggregators have attained an even
online presence comparing insurance quotes larger share of the private automobile insurance
and coverage, supported by extensive advertising market, accounting for an estimated 60 to 70
to build visibility and drive trafficattracted percent of new business premiums. There are
customers on the basis of convenience and cost. signs, however, that their growth has leveled
off. New entrants in the fieldas well as the
The aggregator model has not changed much. incumbents success in attracting customers
Customers seeking automobile or homeowners may have brought the UK aggregators to a
coverage click on a site and provide basic saturation point, especially as they jostle for
information. For an automobile owner, that position in costly broadcast advertising.
might be year and make of car, as well as the
drivers age and pertinent information about In the US, meanwhile, aggregators have found
his or her driving record. Based on levels of it difficult to penetrate a market in which large
coverage sought, the aggregator site displays a P&C carriers allocate huge amounts of capital
range of carriers and prices; if the customer is to marketing to establish brands and direct
interested in more information, the site allows customer flow, posing a significant barrier
clickthrough to the carriers own site for to entry. US carriers leverage programmatic
further processing. marketing to target customers directly and direct
customer flow to the carrier sites. Another barrier
Aggregators are compensated by the carriers to entry for aggregators in the US is state level
that choose to participate on the site. The regulation; each state has its own rules requiring
aggregator is strictly in the middle with the aggregators to attain licenses, making it hard for
carrier taking all responsibility for account aggregators to participate at a national level.
servicing and claims processing.
In the United Kingdom, consumers were quick
to embrace the use of the aggregator channel to
buy insurance, particularly automobile insurance.
By 2009, aggregator purchases accounted for
more than half of total private auto insurance
sales in the UK, and for 36 percent of home
insurance sales.

About the Authors

Roy Jubraj leads the digital/ Talbert Thomas is a senior

innovation agenda for manager in Accentures Insurance
Accentures Insurance practice Strategy practice. His experience
in the United Kingdom and has been mainly in the areas of
Ireland, including its Digital growth, operations and marketing
Insurance Solution Centre. strategy as well as distribution
He has extensive experience and underwriting. Contact him at
leading business and technology
transformation programs for a In key markets aggregators
diversity of clients. Contact him have proven that they can
at change the way people
Aggregators will continue to think about buying insurance,
grow, but they will face more and in the process change
competitionfrom retailers, the economics of insurance
technology vendors, and distribution.
online giantsas well as from
insurance carriers.

Erik J. Sandquist is a managing

director, and leads Accentures
global Insurance Distribution
and Marketing Services. He
helps insurers reinvent their
distribution models through
strategic transformational
change programs. Contact him at
Pricing is always important,
but so are brands. We have seen
that strong brands can grow
even in a market with a large
aggregator presence.

Some major US carriers have refused to work significant impact on the economics of insurance
with aggregators, leaving the intermediaries with distribution in general and on the broker channel
only lesser-known brand names. Other carriers in particular. In the UK, for example, the broker
have agreed to work with aggregators, but have commission for private auto insurance can range
been unwilling to integrate their systems. This from 10 percent to 20 percent of annual premiums.
can be a major obstacle, because if the customer Brokers can obtain additional fees and revenues
going onto an aggregator site cannot get an from add-ons, negotiating credit packages, and
immediate, accurate quote and complete the handling claims, although recent regulation has
purchase, the aggregator becomes nothing more brought these revenue streams under pressure.
than a lead generator.
Nevertheless, brokers do turn to aggregators to
While aggregators have not generated vast obtain quotes. But, with an average private annual
amounts of revenue, their impact on the automobile premium of 530 (US$828) in the UK,
insurance distribution model in the UK and other the aggregator fee of 50 ($78) would erode 50 to
markets has been much larger than these revenues 85 percent of broker revenue. This places pressure
would indicate. on brokers to retain existing customers and to
cross- or up-sell them rather than risk losing them
In a relatively short period of time, aggregators have:
to an aggregator, or risk using an aggregator to
Levelled the playing field by injecting place the business.
simplicity of service and transparency into
While competitive pricing remains critical to the
the range of offerings and product coverage
prospective insurance customer, it is not the only
provided by insurers;
consideration in a purchase. Brand attributesand
Pushed the entire direct channel to change the perception of value for moneyplay a vital role,
its pricing structures, frequency of customer and strong brands can continue to grow, even in a
contact, volume of quotes and many other market with a large aggregator presence.
features, with insurers forced to adapt their
New research from Accenture also indicates that
systems to integrate with aggregators, generate
insurers are responding to perceived pressure from
high volumes of quotes on a near real-time
aggregators. Our global survey of more than 400
basis, and slash prices to be included in the
senior insurance distribution executives found
top tier of cheapest quotes;
that they are adopting a targeted approach to
Changed customer expectations and purchasing using aggregatorstailoring their products and
behaviors; and using aggregators mainly under the heading of
sub-brands. The percentage of insurers using
Increased the incidence of insurance fraud, as aggregators under a sub-brand is set to jump from
some customers intentionally provide inaccurate 43 to 53 percent over the next three years, with
information, and see the prices quoted online an additional 21 percent answering Perhaps/
come down immediately as a result. Dont Know. Just more than half of the insurers
Aggregators have also helped commoditize surveyed (51 percent) are defining a set of low-cost
insurance, with more and more carriers selling products for use specifically by aggregators, and
customers on an inexpensive, bare-bones product 57 percent said they are thinking about setting up
albeit one from a trusted companyto gain primary their own aggregators. The aggregators focus on
position on aggregator sites and then pushing to price drew skeptical comments from some insurers
up-sell the customers by offering needed features. interviewed, who saw commoditization as a dead-
end street for insurers and, ultimately, for the
In addition, aggregators have changed the way aggregators themselves.
people think about buying insurance, with a

Growing around the world
Although they have not attained the same share The extent of penetration by aggregators in
of market as they have in the UK, aggregators specific markets depends upon a number of
in other countries are enjoying rapid growth. In factors. These include:
France, for example, aggregators have grown at
an average rate of 18 percent per year over the Consumer habits and culture
last five years,6 and while in Spain and Italy Buying habits such as consumers price
they have low penetration they have achieved sensitivity, the value of personal interactions,
the highest growth rates in Europe in the past and consumer loyalty, vary dramatically from
two years.7 country to country. In the UK, for example,
The aggregators growth story is not limited 68 percent of respondents in Accentures 2013
to Europe. In Japan, they now represent Consumer-Driven Innovation Survey named
approximately five percent of total personal lines aggregators as the first place they would go to
insurance sales and are estimated by Celent to get insurance information, but only 42 percent
have grown by 33 percent from 2009 to 2015.8 of German respondents named aggregators
The expanding online market in India is driven by as their first choice. In the US, 45 percent
large aggregators such as and of respondents said they would go first to independent agents to obtain information,
with only 34 percent naming aggregators.
UK aggregators have taken the basic business These consumer traits partially explain the
model of providing price comparisonswhich substantially lower level of penetration
has worked successfully in industry after aggregators have achieved in the German and
industry including travel, energy, and mobile US markets compared to the UK.
phone servicesto other markets in attempts
to replicate their success throughout Europe Marketing expenditure by insurers
and beyond. For example, BGL, the parent There is an emphasis on building strong,
company of, one of immediately recognizable brands through
the leading UK aggregators, has launched Les high levels of marketing spend to attract
Furets in France, Hoy Hoy in the Netherlands customers. The top seven UK aggregators
and comparethemarket in Australia. Admiral allocate more capital to marketing than their
Group, the second largest auto insurer in the UK carrier counterparts; aggregators marketing
(and the owner of aggregator, spend equates to approximately one percent
has launched aggregators LeLynx in France and of the total premium of the UK personal auto
Comparenow in the US. insurance market. That figure is half of what
In the US there are a large number of life the top seven carriers in the US spend on
insurance comparison sites (e.g., SelectQuote, marketing, which is roughly two percent of
PolicyGenius, and AccuQuote) for consumers to total automobile insurance premiums (Figure 1).
use in shopping for simple term-life coverage The US market is at a much greater scale, with
from widely known carriers. Yet, sales originating GEICO alone exceeding $1 billion in spend,
from these sites are not a meaningful source of compared to the top UK aggregators spending
new business for insurers. some 120 million ($187 million) in total.9

Figure 1. Percentage marketing spend by UK aggregators is one-half that of top US carriers

Size of personal auto market in billions Aggregator and carrier marketing spend

Gross written Percentage of

premiums in personal auto
2013 (billions) gross written

18 $181 1% 2%
UK US Top 7 aggregators in the UK Top 7 insurance carriers
in the US

Carrier participation Distribution cost pressures

Carrier participation in aggregators quoting P&C insurers are facing high distribution costs.
and selection services also varies from country In the US, for example, distribution costs
to country. In Germany, three of the top ten represent approximately 18 percent of each
carriers, including the largest carrier, do not premium dollar in personal lines, and the
participate in aggregator sites, in contrast to top 10 personal lines insurers spend
the UK, where the top carriers engage directly approximately $3.8 billion on advertising in
with aggregators to meet customer demands total, with the top five accounting for
for more online interaction and to reduce high $3 billion of that amount.10
acquisition costs.
In the face of such high costs, some P&C
Digital sophistication of carriers and carriers are spending heavily on technological
aggregators advances such as mobile and social media,
bolstering their online and contact center
Some carriers have been much more aggressive presence and essentially bypassing agents,
than others in offering a digital customer brokers and the commissions they receive.
experience, or in using programmatic High distribution costs may also drive more
marketing to quickly identify and target carriers to consider engaging with aggregators,
the most attractive customers. Similarly, especially if aggregators continue to improve
aggregators have seen more success in the experience they provide to the customer
markets where they offer a complete purchase at lower cost.
experience online and a more advanced user
experience than their carrier counterparts.

The future of insurance aggregators
While past performance will not guarantee that they offer or otherwise diminish the
future results, the recent past does provide quality of the product, develop low-cost
strong indications of how aggregators business brands, or reduce their marketing expenditures
strategies will evolve. We anticipate that three in an effort to maintain margins. For carriers
major trends will characterize aggregators future: with established brands, this represents a
competitive dilemma as, in selling through
1. Continued growth aggregators, they may cannibalize their
We believe that aggregators will continue to higher-profit lines. They also run the risk of
grow at a rapid pace, both through expansion diluting their hard-won brand value.
into new markets and offering new products Producers such as exclusive, captive and
such as travel insurance or basic life insurance independent agents find themselves providing
coveragein existing markets. This is driven in at least the same value and personalized
part by consumers growing trust in online advice services for a lower level of commissions
and their comfort with making increasingly after paying the aggregator. They subsidize
complex purchases online. Where aggregators the payments made to aggregators, putting
are achieving success they are concentrating on more pressure on their own profitability and
share of wallet and extracting more value from accelerating the transition to more centralized
the customer relationship; they are also making operating models from branch-based models.
use of their distribution power to obtain better
terms of trade from carriers, whether in the form Customers find it easier to choose insurance
of new pricing models or other concessions. In products based exclusively on price. This erodes
addition, aggregators are using new platforms, customer loyalty, decreasing retention rates
including social media and mobile, to find and and making switching more prevalent. It also
attract new customers. makes customers selecting cheaper options
more vulnerable to being under-insuredas
2. Disruption of insurance industry economics evidenced in the aftermath of the record
Aggregators are disruptive by nature and breaking floods in the UK in 2014, when
will continue to demonstrate their ability to many customers who purchased their
significantly change distribution economics insurance through aggregators discovered
for carriers, producers and customers. they did not have the breadth of
coverage they needed.
Carriers dealing with (or competing against)
aggregators tend to suffer from the winners
curse; that is, they sell more lower-priced
policies, limit the number of product features

3. Evolution of the business model Larger share of the value chain
As aggregators move into their next After diversifying into new products
evolutionary phase, we expect to see new and markets, we expect aggregators to
areas of focus. These might include: increasingly carve out a larger share of
the insurance value chain, expanding their
New geographies value proposition beyond price comparisons.
Successful aggregators are taking their show This includes services more associated with
on the road to markets where they believe producers including evaluations of product
the environment is receptive to their proven features and education, needs analysis,
value proposition, with a particular interest people like you comparisons and even some
in consumer comfort with online transactions policy servicing processes.
and low digital sophistication among carriers. Expanded services
New lines of business Finally, aggregators are expanding into other
Some aggregators have begun to expand business-to-consumer and business-to-
into commodity-type insurance products business services. These include white label
such as pet and travel insurance; adding products, the resale of data and analytics,
ancillary products such as legal expense product endorsements, and experiments
coverage or response to home emergencies; with non-risk goods and services such as
or moving into small commercial lines, such energy and other utilities. Areas under study
as for non-fleet commercial vehicles. encompass renewal shopper subscription
services, financial advice, price auctions and
Aggregators are also in a position to offer name your price initiatives.
simple term-life insurance policies and
some basic financial products such as And, while aggregators seek to expand, they
consumer loans and credit cards, as well must also remain cognizant of new competitive
as online wealth management advice threats, not only from carriers, but from retailers,
related to budgeting, expense management technology vendors and online giants.
and other everyday financial concerns.
BGL Group has added online life insurance
quotes through its Beagle Street subsidiary.
Moneysupermarket, another UK aggregator,
has acquired Money Saving Expert to offer
financial sector advice and product comparisons.

Aggregators and insurance carriers:
Mixed results
When it comes to the impact of aggregators on These insurers often have large quantities of
insurance carriers, some insurers have ridden the direct sales and large investments in brand
aggregator wave more successfully than others. building that they feel they need to protect,
In the UK, the big players in direct insurance have and may believe that competing on brand
probably lost the most to aggregators, as they attributes and price can enable them to
have not always been able to leverage their scale continue selling at profitable volume levels.
and brand.
2. Cooperation
Aggregators can force insurers to accept wafer-
thin margins, hoping to make up in volume An increasing number of carriers worldwide
what they lose in quality; the alternative is to have accepted aggregators as an additional
lose sales. Aggregators can also take advantage distribution channel and have made their
of carriers whose unattractive or cumbersome products available through them. Leading
websites cause consumers to explore new options price comparison sites in North America and
on the Internet. Europe have as many as 50 brands on display
including products designed specifically for
The carriers suffering the least from the the online/aggregator channel and distinct
aggregators presence are those with highly online brands. In cooperating with aggregators,
segmented and/or highly differentiated offerings, carriers may be taking another course of action
a low cost base, and leadership ability in terms of to support and protect their own direct sales,
price setting. They write high-value business and and may also have confidence that their ability
also tend to have a strong, integrated customer- to compete on price can generate profitable
centric presence on the web. Due to the low volume from the aggregator channel.
barriers to entry that aggregators facilitate, new
market entrants, as well as companies with well- 3. Crowding out
known brands, may also find it easier to co-exist Another course of action by carriers involves
(or compete) with aggregators. Aggregators give crowding out competitors, either by offering
smaller insurers with less well-known brands multiple brands, or by offering multiple quotes
an advantage that they may not enjoy when on a single brand, to achieve a dominant
they compete in the open market against more position on the aggregators all-important
powerful brands. first page.
Insurers have tended to respond to aggregators in 4. Participation
one of four ways:
Some insurance carriers have chosen to pursue
1. Rejection a dual-path strategy, either by setting up
Aggregators offer large carriers no additional an aggregator, forming a close alliance with
sales; instead, they simply interpose an existing aggregator or making strategic
themselves in the sales process and take a investments in already established aggregators.
share of carriers revenue. Therefore, some For example MAPFRE USA has taken an
insurers have refused outright to work with 11 percent interest in Comparenow in the US.
aggregators, even making their lack of
presence on aggregators sites a selling point.
Dealing with aggregators:
Strategies for insurers
In our view, insurers should view aggregators integration of the carrier and aggregator sites,
as an additional distribution channelwith so that the customer experience is comparable
its own unique characteristicsand then in both locations, or providing a richer user
consider strategies for maximizing the value experience for aggregator customers. Carriers
of the channel. For new aggregator markets, could also employ multi-variant testing of the
the key lesson from the UK is that carriers and aggregator site to maximize both the rate of
aggregators that work in concert can create a conversion and the attractiveness of customers
mutually beneficial value proposition that enables obtained this way.
the customer with both transparency and high
quality products. Insurers that choose to engage 2. Develop a tailored aggregator value
with aggregators may do so primarily in one proposition
of two ways: Insurers can also choose to play to win in
1. Integrate and optimize the aggregator channel by competing in areas
outside pricing. They can make exclusive offers, or
Insurers can pursue a digital optimization provide new niche products involving telematics
strategy designed to make the most of both or rewards for green behavior. They can take
their own online presence and their presence on alternative marketing approaches by using
the aggregators sites. This may involve closer vouchers, cash rebates, or promotional gifts.

The foundation for growth
To grow profitably in a crowded, competitive, personalize the insurers value proposition,
price-sensitive environment, insurers will need customize the user experience, and provide
specific capabilities. These are essential for immediate feedback on what does and does
participating in the aggregator channel but not appeal to the customer. In conjunction
are also needed to meet the demands of an with digital optimization, better digital
increasingly digital customer base. marketing can enhance the insurers
brand value and maximize the return
The four key building blocks are, in our view: on marketing investment.
1. A differentiated customer proposition 4. Lean and agile operations
Insurers need to make it immediately clear A low-cost, configurable technology platform
what they are offering customers; this means makes it possible for insurers to change course
a value proposition that is simple, modular and rapidly and to introduce new products and
packaged in a way that is readily accessible modifications as needs are identified. Process
and understandable. The offering should be management, automation of previously manual
configured to work in a multi-channel world; processes, and an iterative, collaborative
it should be customer-centric (meaning that it approach to change management are
is primarily something the customer wants to prerequisites for digital success.
buy, rather than something the insurer wants
to sell) and it should focus on long-term value. The insurance industry has entered a period
of rapid change and we anticipate even more
2. Tight market segmentation supported accelerated evolution in the short- to mid-term
by sophisticated analytics future. The moving force behind this change is
Insurers should focus on clearly defined the demand of savvy online consumers who, to
market segmentswith a view of the customer put it simply, want to receive more value for
that supports profitable pricing right down less money. Aggregators have grown rapidly
to the level of the individual policyholder in this environment. Insurers, by joining forces
rather than one-size-fits-all offerings. With with them (or adding their own aggregator-type
a good understanding of customer needs channels), can protect their own business while
in chosen segmentsand the products that adding new customers.
such customers wantinsurers can engage No matter how successful aggregators are in
in aggressive lead generation, branding and disrupting insurers distribution models, the
pricing to win market share in those segments. future of personal lines insurance is digital.
Sophisticated risk selection and dynamic Insurers with integrated, multi-channel
pricing capabilities can optimize conversion distribution models, a clearly differentiated
rates in the market sectors selected. value proposition, and the ability to conduct
3. A compelling digital offering personalized campaigns aimed at specific market
segmentseven individual customerswill be
Whether working through aggregators or in the best position for profitable growth in the
through other channels, insurers should be years ahead.
using digital optimization tools to fine-tune
their real-time performance. Such tools

Join the conversation Footnotes
@AccentureCapMkt 1. Admiral Group 2013 Full Year
Results - presentation
@AccentureIns 2. AM Best statutory data
3. In 2013, the top four UK aggregators had
About Accenture total revenue of 423 million
Accenture is a leading global professional (US$663.7 million), in a 18 billion
services company, providing a broad range of ($28.2 billion) personal auto market.
services and solutions in strategy, consulting,
digital, technology and operations. Combining 4. Accenture research and analysis
unmatched experience and specialized skills 5. Accenture Distribution & Agency
across more than 40 industries and all business Management Survey, 2015
functionsunderpinned by the worlds largest 6. Google Trends
delivery networkAccenture works at the
intersection of business and technology to help 7. London-based CP Consulting
clients improve their performance and create 8. CelentThe evolution of aggregators
sustainable value for their stakeholders. With in Japan
more than 358,000 people serving clients in more
than 120 countries, Accenture drives innovation 9. US carrier marketing spend: Statista; UK
to improve the way the world works and lives. aggregator marketing spend: Datamonitor,
Visit us at Data Plus Insight, and Accenture analysis
10. AM Best and Statista

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