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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 Aggregators are compensated by the carriers in attracting customersmay have brought
online presence comparing insurance quotes that choose to participate on the site. The the UK aggregators to a saturation point,
and coverage, supported by extensive aggregator is strictly in the middle with the especially as they jostle for position in costly
advertising to build visibility and drive carrier taking all responsibility for account broadcast advertising.
trafficattracted customers on the basis of servicing and claims processing.
convenience and cost. In the US, meanwhile, aggregators have
In the United Kingdom, consumers were quick found it difficult to penetrate a market
The aggregator model has not changed to embrace the use of the aggregator channel in which large P&C carriers allocate huge
much. Customers seeking automobile or to buy insurance, particularly automobile amounts of capital to marketing to establish
homeowners coverage click on a site and insurance. By 2009, aggregator purchases brands and direct customer flow, posing
provide basic information. For an automobile accounted for more than half of total private a significant barrier to entry. US carriers
owner, that might be year and make of car, auto insurance sales in the UK, and for 36 leverage programmatic marketing to target
as well as the drivers age and pertinent percent of home insurance sales.1 customers directly and direct customer
information about his or her driving record. flow to the carrier sites. Another barrier to
Based on levels of coverage sought, the Today, UK aggregators have attained an entry for aggregators in the US is state level
aggregator site displays a range of carriers even larger share of the private automobile regulation; each state has its own rules
and prices; if the customer is interested in insurance market, accounting for an requiring aggregators to attain licenses,
more information, the site allows click estimated 60 to 70 percent of new business making it hard for aggregators to participate
through to the carriers own site for premiums.2 There are signs, however, that at a national level.
further processing. their growth has leveled off. New entrants in
the fieldas well as the incumbents success

About the Authors

Roy Jubraj leads the digital/innovation Erik J. Sandquist is a managing director, Talbert Thomas is a senior manager in
agenda for Accentures Insurance practice in and leads Accentures global Insurance Accentures Insurance Strategy practice.
the United Kingdom and Ireland, including Distribution and Marketing Services. His experience has been mainly in the
its Digital Insurance Solution Centre. He He helps insurers reinvent their distribution areas of growth, operations and marketing
has extensive experience leading business models through strategic transformational strategy as well as distribution and
and technology transformation programs change programs. Contact him at underwriting. Contact him at
for a diversity of clients. Contact him at
Pricing is always important, but so are In key markets aggregators have proven
Aggregators will continue to grow, but brands. We have seen that strong brands that they can change the way people
they will face more competitionfrom can grow even in a market with a large think about buying insurance, and in the
retailers, technology vendors, and online aggregator presence. process change the economics
giants such as Googleas well as from of insurance distribution.
insurance carriers.

Some major US carriers have refused to work Aggregators have also helped commoditize New research from Accenture also indicates
with aggregators, leaving the intermediaries insurance, with more and more carriers selling that insurers are responding to perceived
with only lesser-known brand names. customers on an inexpensive, bare-bones pressure from aggregators. Our global
Other carriers have agreed to work with productalbeit one from a trusted company survey of more than 400 senior insurance
aggregators, but have been unwilling to to gain primary position on aggregator sites distribution executives found that they
integrate their systems. This can be a major and then pushing to up-sell the customers by are adopting a targeted approach to using
obstacle, because if the customer going onto offering needed features. aggregatorstailoring their products and
an aggregator site cannot get an immediate, using aggregators mainly under the heading
accurate quote and complete the purchase, In addition, aggregators have changed the of sub-brands. The percentage of insurers
the aggregator becomes nothing more than way people think about buying insurance, using aggregators under a sub-brand is set
a lead generator. with a significant impact on the economics to jump from 43 to 53 percent over the next
of insurance distribution in general and on three years, with an additional 21 percent
While aggregators have not generated vast the broker channel in particular. In the UK, for answering Perhaps/Dont Know. Just more
amounts of revenue,3 their impact on the example, the broker commission for private than half of the insurers surveyed (51 percent)
insurance distribution model in the UK and auto insurance can range from 10 percent to are defining a set of low-cost products
other markets has been much larger than 20 percent of annual premiums. Brokers can for use specifically by aggregators, and 57
these revenues would indicate. obtain additional fees and revenues percent said they are thinking about setting
from add-ons, negotiating credit packages, up their own aggregators. The aggregators
In a relatively short period of time, and handling claims, although recent focus on price drew skeptical comments
aggregators have: regulation has brought these revenue from some insurers interviewed, who saw
streams under pressure. commoditization as a dead-end street
Levelled the playing field by injecting
simplicity of service and transparency for insurers and, ultimately, for the
Nevertheless, brokers do turn to aggregators
into the range of offerings and product aggregators themselves.5
to obtain quotes. But, with an average
coverage provided by insurers; private annual automobile premium of 530
(US$828) in the UK, the aggregator fee of 50
Pushed the entire direct channel to ($78) would erode 50 to 85 percent of broker
change its pricing structures, frequency of revenue.4 This places pressure on brokers to
customer contact, volume of quotes and retain existing customers and to cross- or
many other features, with insurers forced up-sell them rather than risk losing them to
to adapt their systems to integrate with an aggregator, or risk using an aggregator to
aggregators, generate high volumes of place the business.
quotes on a near real-time basis, and
slash prices to be included in the top While competitive pricing remains critical to
tier of cheapest quotes; the prospective insurance customer, it is not
the only consideration in a purchase. Brand
Changed customer expectations and attributesand the perception of value for
purchasing behaviors; and moneyplay a vital role, and strong brands
Increased the incidence of insurance can continue to grow, even in a market with
fraud, as some customers intentionally a large aggregator presence.
provide inaccurate information, and see
the prices quoted online come down
immediately as a result.

Growing around the world

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

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 P&C insurers are facing high distribution

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

The future of insurance
While past performance will not guarantee Producers such as exclusive, captive and Aggregators are also in a position to
future results, the recent past does provide independent agents find themselves offer simple term-life insurance policies
strong indications of how aggregators providing at least the same value and and some basic financial products such
business strategies will evolve. We anticipate personalized services for a lower level of as consumer loans and credit cards,
that three major trends will characterize commissions after paying the aggregator. as well as online wealth management
aggregators future: They subsidize the payments made to advice related to budgeting, expense
aggregators, putting more pressure on management and other everyday
1. Continued growth their own profitability and accelerating financial concerns. BGL Group has
the transition to more centralized added online life insurance quotes
We believe that aggregators will continue
operating models from branch-based models. through its Beagle Street subsidiary.
to grow at a rapid pace, both through
Moneysupermarket, another UK
expansion into new markets and offering new Customers find it easier to choose aggregator, has acquired Money Saving
productssuch as travel insurance or basic insurance products based exclusively Expert to offer financial sector advice
life insurance coveragein existing markets. on price. This erodes customer loyalty, and product comparisons.
This is driven in part by consumers growing decreasing retention rates and making
trust in online advice and their comfort with switching more prevalent. It also makes Larger share of the value chain
making increasingly complex purchases customers selecting cheaper options more
online. Where aggregators are achieving vulnerable to being under-insuredas After diversifying into new products
success they are concentrating on share of evidenced in the aftermath of the record- and markets, we expect aggregators to
wallet and extracting more value from the breaking floods in the UK in 2014, when increasingly carve out a larger share of
customer relationship; they are also making many customers who purchased their the insurance value chain, expanding
use of their distribution power to obtain insurance through aggregators discovered their value proposition beyond price
better terms of trade from carriers, whether they did not have the breadth of comparisons. This includes services
in the form of new pricing models or other coverage they needed. more associated with producers
concessions. In addition, aggregators are including evaluations of product
using new platforms, including social media 3. Evolution of the business model features and education, needs analysis,
and mobile, to find and attract people like you comparisons and even
new customers. As aggregators move into their next some policy servicing processes.
evolutionary phase, we expect to see new
2. Disruption of insurance areas of focus. These might include: Expanded services
industry economics
New geographies Finally, aggregators are expanding
Aggregators are disruptive by nature and into other business-to-consumer and
will continue to demonstrate their ability to Successful aggregators are taking business-to-business services. These
significantly change distribution economics their show on the road to markets include white label products, the
for carriers, producers and customers. where they believe the environment resale of data and analytics, product
is receptive to their proven value endorsements, and experiments with
Carriers dealing with (or competing proposition, with a particular non-risk goods and services such as
against) aggregators tend to suffer from interest in consumer comfort with energy and other utilities. Areas under
the winners curse; that is, they sell online transactions and low digital study encompass renewal shopper
more lower-priced policies, limit the sophistication among carriers. subscription services, financial advice,
number of product features that they price auctions and name your price
offer or otherwise diminish the quality of New lines of business
the product, develop low-cost brands, or
Some aggregators have begun to
reduce their marketing expenditures in an And, while aggregators seek to expand,
expand into commodity-type insurance
effort to maintain margins. For carriers they must also remain cognizant of new
products such as pet and travel
with established brands, this represents a competitive threats, not only from carriers,
insurance; adding ancillary products
competitive dilemma as, in selling through but from retailers, technology vendors, and
such as legal expense coverage or
aggregators, they may cannibalize their online giants such as Google
response to home emergencies; or
higher-profit lines. They also run the risk (see sidebar, page 8).
moving into small commercial lines,
of diluting their hard-won brand value.
such as for non-fleet commercial vehicles.

Keeping an eye
on Google

Aggregators and carriers alike have watched Google has some inherent
nervously as Google has explored the advantages including:
personal lines insurance market. Google
acquired UK aggregator Beat That Quote Instant brand recognitionGoogle
for 37.7 million (US$59 million) in March can position itself as an aggregator
2011, then consolidated and re-launched in the US with instant brand
comparison services under the Google recognition and ideal placement for
brand in September 2012 with comparisons key search inquiries.
of automobile insurance and credit cards.
Local searchGoogle can provide
However, in the face of EU regulatory issues,
local search capabilities in a cost-
Google removed all other former Beat That
effective manner for both independent
Quote services in early 2013. The company
and captive agents, and has stated its
has stated its intent to launch comparison
intention to do so.
services in Italy and Germany, as well.11
Monetization of customer insights
As might be expected, Googles comparison
Google can offer robust customer
sites are user-friendly, clear and simple, with
insights to monetize its data to
the transparent interfaces to which customers
carriers, subsidizing the cost of
have become accustomed and which enable
customer acquisition. It could
customers to complete the purchase journey
substantially enhance leads by
online. While Google is clearly well-positioned
supplementing them with additional
to establish strong customer relationships in
data insights, which would be
the insurance sector, insurers and aggregators
extremely valuable to carriers.
are major buyers of advertising on Google.
Worldwide, the insurance industry spends Broad ecosystemGoogle has the
an estimated $7 billion on advertising potential to create a broad ecosystem
and Google receives a significant piece with Android operating models in
of that expenditure.12 vehicles, Nest homes and phones that
could provide dataincluding usage-
Google has not yet revealed its overall
based datafor accurate and timely
insurance strategyalthough Google
quotes that are pushed out or offered
Compare Auto Insurance Services has
upon request.
obtained licenses to sell insurance in 48
states with an initial focus on California. In media interviews, Google Compares US
USAA, a major US auto insurer, has made rate executives have stressed the importance
quotes and coverage information available to of agents and have noted that, even with
California drivers through Google Compare. price comparisons, more than half of all
Google has also created partnerships with auto insurance sales in the UK still take
other established US aggregators and online place through a live person, whether in
independent agencies (such as, a call center or via an agent. They have
CoverHound, and Bolt Solutions) to augment also emphasized the importance of speed,
its value proposition. particularly in not making the customer
wait more than 30 seconds for an accurate
quote.13 The insurance industry can be
expected to monitor developments on this
front very closely indeed.

Aggregators and insurance
carriers: Mixed results

When it comes to the impact of aggregators Insurers have tended to respond to 3. Crowding out
on insurance carriers, some insurers have aggregators in one of four ways:
ridden the aggregator wave more successfully Another course of action by carriers
than others. In the UK, the big players in 1. Rejection involves crowding out competitors,
direct insurance have probably lost the most either by offering multiple brands, or by
Aggregators offer large carriers no offering multiple quotes on a single brand,
to aggregators, as they have not always been
additional sales; instead, they simply to achieve a dominant position on the
able to leverage their scale and brand.
interpose themselves in the sales process aggregators all-important first page.
Aggregators can force insurers to accept and take a share of carriers revenue.
wafer-thin margins, hoping to make up Therefore, some insurers have refused 4. Participation
in volume what they lose in quality; the outright to work with aggregators,
even making their lack of presence on Some insurance carriers have chosen to
alternative is to lose sales. Aggregators
aggregators sites a selling point. These pursue a dual-path strategy, either by
can also take advantage of carriers whose
insurers often have large quantities of setting up an aggregator, forming a close
unattractive or cumbersome websites
direct sales and large investments in alliance with an existing aggregator or
cause consumers to explore new options
brand building that they feel they need to making strategic investments in already
on the Internet.
protect, and may believe that competing established aggregators. For example
The carriers suffering the least from the on brand attributes and price can enable MAPFRE USA has taken an 11 percent
aggregators presence are those with highly them to continue selling at profitable interest in Comparenow in the US.
segmented and/or highly differentiated volume levels.
offerings, a low cost base, and leadership
ability in terms of price setting. They write 2. Cooperation
high-value business and also tend to have
An increasing number of carriers
a strong, integrated customer-centric
worldwide have accepted aggregators
presence on the web. Due to the low barriers
as an additional distribution channel
to entry that aggregators facilitate, new
and have made their products available
market entrants, as well as companies with
through them. Leading price comparison
well-known brands, may also find it easier
sites in North America and Europe
to co-exist (or compete) with aggregators.
have as many as 50 brands on display
Aggregators give smaller insurers with less
including products designed specifically
well-known brands an advantage that they
for the online/aggregator channel and
may not enjoy when they compete in the
distinct online brands. In cooperating
open market against more powerful brands.
with aggregators, carriers may be taking
another course of action to support and
protect their own direct sales, and may
also have confidence that their ability to
compete on price can generate profitable
volume from the aggregator channel.

Dealing with
for insurers
In our view, insurers should view aggregators
as an additional distribution channelwith
its own unique characteristicsand then
consider strategies for maximizing the
value of the channel. For new aggregator
markets, the key lesson from the UK is
that carriers and aggregators that work in
concert can create a mutually beneficial
value proposition that enables the customer
with both transparency and high quality
products. Insurers that choose to engage with
aggregators may do so primarily in one
of two ways:

1. Integrate and optimize

Insurers can pursue a digital optimization

strategy designed to make the most of
both their own online presence and their
presence on the aggregators sites. This
may involve closer integration of the carrier
and aggregator sites, so that the customer
experience is comparable in both locations,
or providing a richer user experience for
aggregator customers. Carriers could
also employ multi-variant testing of the
aggregator site to maximize both the rate
of conversion and the attractiveness of
customers obtained this way.

2. Develop a tailored aggregator value


Insurers can also choose to play to win in

the aggregator channel by competing in areas
outside pricing. They can make exclusive
offers, or provide new niche products
involving telematics or rewards for green
behavior. They can take alternative marketing
approaches by using vouchers, cash rebates,
or promotional gifts.

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

No matter how successful aggregators

are in disrupting insurers distribution
models, the future of personal lines
insurance is digital.

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

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