With a population of 328 million people, and a forecast of 300 million online shoppers by 2020, the US presents one of the most exciting opportunities in global ecommerce. There is no question that the US holds the keys to some of the world’s biggest markets, but when it comes to aggregators in personal finance, they have found themselves lagging behind the UK.
According to the UK Competition and Markets Authority, 85% of all UK internet users have used a price comparison website (PCW) at some point in time. To put that into perspective, that’s just over 56.6million people. This clearly shows that comparison sites are rooted in the DNA of the UK consumer, which was largely catalysed by the rise of PCWs in the early 2000s.
Price comparison pioneers
Launched in 2002, Confused.com became one of the largest UK aggregators in motor insurance and is seen as one of the trailblazers in the UK price comparison space. The three keys to their success can be accredited to:
- Greater price transparency and choice through access to insurers’ best available rates.
- Optimised front-end and back-end to improve the customer’s experience.
- Highly efficient online and offline advertising to turn Confused.com into a branded storefront and to increase traffic.
Barriers to entry
Technological developments within this space catered to a UK consumer that was increasingly looking for better deals online. However, in the US, there were three factors which caused a lot of friction for potential aggregators:
- Regulation: State specific coverage options and rating plans made comparing the thousands of different insurer and coverage combinations difficult.
- Limited online capabilities: Simply put, a large number of insurers lacked capabilities needed to quote and fulfill personal insurance policies online, thus limiting PCWs ability to provide market wide price comparisons.
- Brand equity: In an ideal world, insurers would prefer PCWs to have a limited presence, allowing customers to build a stronger connection with their brands, thus increasing revenues in the long-term. It should come as no surprise that insurers have invested heavily in their own online channels to distribute their products.
As a result, personal insurance PCWs in the US have failed to gain significant traction, which is in direct contrast to the UK market, where in the early 2000s, the industry experienced a dramatic transformation.
US vs. UK
In the US, there were 263 million online shoppers in 2019, which clearly shows the potential in this space. However, whilst the US is lagging behind the UK, motor insurance aggregators such as US-based Zebra.com are pioneering in the same vein as Confused. They compare motor insurance policies across 50 states, covering 1,700+ products among over 200 insurers. At just over 1 million site visitors a month, they haven’t had the same impact as Confused, but having cracked some of the main issues slowing the growth of aggregators in personal insurance, the US is now on the same trajectory as the UK, albeit a few years behind.
This new generation of US-aggregators, including Zebra.com and Insurify, have overcome regulatory barriers to entry and have enhanced their offering with sophisticated technology to provide users with a full-service experience.
The future for personal finance aggregators
As technological advancements have allowed aggregators to surmount any significant challenges, we are now seeing more players enter this space.
At UBIO, we automate direct checkout for price comparison sites so that users can purchase their products at the point of discovery. We are helping to bridge this gap in innovation, by aggregating the landscape of PCWs, for things like broadband deals through a single API.
This means, with UBIO, all you US-based price comparison sites can catch up and augment your online capabilities by increasing your overall coverage of the marketplace. This will mean driving more conversions by providing users with an end-to-end experience, whilst retaining the brand equity between the insurers and you, the aggregator.