Price comparison websites dominate the consumer insurance market but artificial intelligence (AI) services are becoming increasingly influential, according to the British Insurance Brokers Association (BIBA).
The trade body also noted how this dominance was causing insurers to ‘strip out cover’ to reduce the price of their products for this approach.
However, it added that brokers were not an endangered species.
BIBA CEO Graeme Trudgill (pictured) was speaking at a House of Lords Financial Services Regulation Committee hearing on regulation of the consumer insurance market this week.
Asked by peers about the market, Trudgill told the committee that about one third of consumers used a broker for their general insurance purchases.
However, he highlighted price comparison websites controlled much of the market but they were being challenged by AI services.
“Price comparison websites are dominant, but AI is climbing up the charts,” he said.
“We believe up to 14% of consumer questions when they are looking for quotes begin with AI.”
However, despite this newer challenge, Trudgill argued comparison sites bore much power and had greatly affected the market.
“There’s too much focus on price, they are called price comparison websites,” he continued.
“Insurers often strip out cover to reduce price,” he added.
This echoed sentiment from consumer group Fairer Finance, whose managing director James Daley had previously told the committee that the power of these sites had led to insurers “hollowing-out” their products.
Brokers not an ‘endangered species’
Despite the technology driven challenges, Trudgill did not believe brokers were in a vulnerable position.
When asked if brokers were an “endangered species” he answered: “No, I would say we’re in a very healthy place.
“We’re writing more [business] than ever before; on commercial insurance I believe around 90% goes through brokers.
“But I believe it’s never been as important as it is to use a broker.
“We’re in a very complicated and dangerous world there are lots of risks and what insurance brokers bring is advice, support and professionalism to transfer those risks and help clients grow and take risks.”
He noted that many brands on price comparison websites were from brokers too.
“Yes the younger generations like to go on their phone, click and buy and get something quickly and cheaply, but there’s a good opportunity that could be an insurance broker,” he added.
