Price comparison Websites started in the UK around 20 years back. It began as a great way to compare insurance and bring down prices for consumers.
Things started to change after a while. Insurers on the top of the list (lowest priced) lost the most money over time. So they started charging a higher renewal premium. The most vulnerable customers end up getting charged more, the other customers switch insurers. As the companies lead the race to the bottom, the motor insurance coverage has become bare bones. Customers end up getting under-insured.
There is a ton of money spent on online ads to drive traffic (Google / Facebook). A McKinsey report says that "P&C insurers can spend around 3x multiple in distribution costs as their products generate in profit". Claims get skimped, and service eventually sucks! For a tiny and crowded insurance market like the UAE with multiple price comparison websites such as, Souqalmal, Insurancemarket, and Yallacompare, is that a likely future scenario? Could be.
At the moment, some large insurers do not list their motor product on these websites. As more purchase shifts to these price comparison websites, insurers will find it challenging to resist the gravitational pull.
On the other hand, this scenario creates the space for incumbents or startups to create insuretech concepts that take the side of the customer to ensure a full cover at the right price and a guaranteed renewal price (subject to no claims, of course). Thoughts?
