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Old Debate. A&G and Direct Line: 1984 Initial reaction from intermediaries negative Considerable growth for direct players world-wide since 1984 Direct limited to personal lines. Debate Matured. Most players today accepts it boils down to the preference of the end-user
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Old Debate • A&G and Direct Line: 1984 • Initial reaction from intermediaries negative • Considerable growth for direct players world-wide since 1984 • Direct limited to personal lines
Debate Matured • Most players today accepts it boils down to the preference of the end-user • Some prefer the role of the trusted intermediary • Others prefer the direct way, whether telephonically or over internet
Who is the cheapest? • General perception: direct is cheaper because no broker commission • Our experience: intermediary often cheaper • If direct is not cheaper, why does a large component of the market go direct? • Possible answer: direct insurers create perception of being cheaper through massive marketing campaigns
Who is the cheapest? • Direct insurers claim they rate and underwrite more scientifically • Therefore cheaper when risk is lower, and vice versa • High underwriting margins of direct insurers lend credibility to this claim • Is it a case of convenience rather than premium? • Some prefer dealing direct, others through intermediaries
Marketing Trends • Generation X and Y: not loyal to existing brands • Want instant gratification • Internet, mobile and telephone more conducive to instant gratification • Technological advancement enables direct marketing to young and old
Who delivers the best service? • Both parties claim they do • Intermediary: scan the market, structure best package, look after customer’s interest at claims stage • Direct: offers speed and convenience and sometimes price • Are there objective indicators?
Inconclusive • Ask Afrika – excludes large intermediaries • Hellopeter.com – direct insurers can “direct” customers to the website
My View • Room for both • The more complex the portfolio, the more room for advice from intermediary • Less complex – one home and two cars – more room for direct insurers • Finally: personal preference of end-user • The winner is: the end-user!
My View • Room for both • The more complex the portfolio, the more room for advice from intermediary • Less complex – one home and two cars – more room for direct insurers • Finally: personal preference of end-user • The winner is: the end-user!
