 Brokers vs Comparison Sites: Do Either Really Constitute "Shopping Around"? [Press Release]: Car dealers may encourage one to "shop around" for a good buy -- as long as it is among the (limited) cars on their premises. But few would recommend looking further afield. It simply wouldn't be in their own interest.
Insurance or financial brokers, like car dealers, have a limited number of products to sell. Their range includes a small selection of companies or products, on which they carry current information. This being the case, it is easy to see why they are reluctant to encourage customers to actually "shop around".
A recent press release from the Association of British Insurers (ABI) invited buyers to access a wider range of insurance products through "authorized" financial advisors, and to review all products in the market. Both the release and the ABI website imply that if shoppers are looking around, they should do so among the brokers.
Brokers have probably been the most severely hit by the IT revolution sweeping through the finance and insurance sector. Insurance buyers can now go directly to the insurer's website to make a purchase - or they can compare several insurers more conveniently at an insurance comparison website. The specialized knowledge that brokers claim to have may not be that much more valuable than what's available online, through sites like Which?, Fool and dooyoo. While saying that it is fighting on behalf of customers and protecting their interests, the ABI seems to have conveniently forgotten the fact that it essentially represents a body of salespeople.
In order to make a mark, brokers need to excel at offering financial advice in person. This could be a valuable service for thousands of customers who are uncomfortable buying financial products over the Web and prefer to do so in the time-honored way.
The technological revolution is against brokers. Younger insurance buyers tend to be technically – savvy and associate "shopping around" with checking out all the major and minor insurers on the Internet. Brokers can't or don't help customers shop for options in this way, since they receive commissions only if a customer purchases from the companies they are associated with.
In short, many brokers may fear that the IT revolution will eventually drive them out of business. However, brokers will undoubtedly continue to have their place in the industry. This is because many buyers still look for the human touch in financial transactions.
About www.noclaimsdiscount.co.uk: NCD covers insurance related news aimed at both the industry and consumers, providing a balanced look at developments that could affect it's readership.
Contact: Michael Beverley
press@noclaimsdiscount.co.uk
www.noclaimsdiscount.co.uk
+44177947478 †
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NCD News: What does "Shopping Around" for Insurance Mean? - 24.11.08
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