The term ‘aggregator’ is well known within Insurance circles, but one that you may never have come across, so I thought I would help explain the term and how these ‘aggregators’ affect you, the Insurance buying public.
In simple terms, an aggregator is a comparison website, used primarily for selling insurance products. Mentioning no names, but cuddly animals and opera singers are 2 of the most popular aggregators.
An insurer, or agent, provides their rates to these ‘aggregators’ that in turn hope to tempt you to their sites to buy products listed there.
The insurer or agent pays a commission to the site (usually a flat fee) for each policy sold via this method and the aggregator’s job is done for another year.
All good, you may say! A website giving me a host of policies to choose from in one place! Maybe, but the startling truth is that many advertisers on these sites do not earn a penny from the sale of the policy.
Agents that advertise for business here, do so at non existant margins, often discounting all of any earnings to place their policies high/top on the list of competitive quotes. But agents do need to make a crust, one way or the other, and the original temptation of a cheap policy is only the starting point of them trying to relieve you of your hard earned money.
Once signed, the agent will promote themselves very heavily, offering countless additional products and services over and over again which will earn them commission. Very often these products are sold with extremely high margins to compensate for the loss of initial earnings. Be prepared to be bombarded with Emails, text messages and phone calls with the latest offers. Even be prepared for some of these additions to automatically be applied, unless you ‘opt out’
Other methods of generating earnings are in the fine print after you take a policy out.
Want to pay by Direct Debit? Interest charges on these aggregator sites are very often scandalous with rates quoting sometimes totalling over 40%, just to give the broker some extra source of income!
Need to change your car, or amend something on the policy? I came across one of these web insurers quoting an administration fee of £100.
Now this fee is over and above any charge made by the insurer for the change. A simple change on your policy, which you thought would be free, could cost a fortune!
However, the biggest threat to your finances could be in the event of a cancellation, with a well-known advertiser to this type of website quoting a massive £150.00 fee to cancel the policy, again this is over and above the charge made by the insurer!
What do you do now? You signed for the policy, and agreed the small print without reading it, you go back to the opera singer, but as his work is done, he is too busy making another commercial to help you and you no longer have a broker to give you any back up or support.
Unfortunately, by striving to find the best deal, you have now become your own broker but without the support a local broker can provide.
So next time you see an opera singer advertising insurance, think to yourself and the following expressions certainly comes to mind.
‘If a deal seems too good to be true, it usually is!’
I will save the drawbacks of buying your policy online when it's time to claim for another day...
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