A level playing field

The general insurance market has many commendable qualities but its tendency to whinge when the status quo is disturbed is not one of them. Remember the mass shroud waving around the emergence of the Direct Line red telephone? Yet fast forward to the present and telephone buying is a way of life.

The advent of price comparison websites also rocked distribution models. The market whinged again, even though the development was entirely predictable.

Price comparison sites have created a new way of buying insurance and must be embraced. Recent consumer research had three aggregator brands in the top 10 for private car insurers. The public believes they are the providers rather than the facilitators - a wake-up call for our industry. Some insurers have been wrong-footed by allowing their offline products to appear on price comparison sites. Adapting to the dynamics of online selling is critical. Broker-insurers without access to ancillary income from add-on products and claims will have difficulty making an intermediated model work. As private car rates begin to harden, personal lines brokers may also find the numbers fail to stack up. So will we see casualties?

Probably not, yet radical reinvention by personal lines distributors and broker insurers is necessary. New models will emerge but we are undoubtedly seeing a fundamental shift in distribution. One issue that insurers and intermediaries are justified in asking to be resolved is the establishment of a level regulatory playing field. This requires the Financial Services Authority to regulate sites in the same manner as intermediaries.

It is not all one-sided: most price comparison websites are having to juggle high-risk business models and are benefiting from the cheapest media advertising for years. Meanwhile, I see an increasingly confident smile on the faces of local independent commercial lines brokers, which will be firmly on the front foot when aggregator trading inevitably accelerates in micro small and medium enterprise lines.