SME sales not a natural fit for aggregators

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The managing director of Premierline Direct has questioned whether online SME sales is a natural mar...

The managing director of Premierline Direct has questioned whether online SME sales is a natural market for aggregators to diversify into, after admitting they have shown limited interest.

Chris Little suggested prohibitive costs, market standards and fragmented market dynamics have restricted the pace of SME sales on comparison sites, after admitting that Premierline Direct's online SME traffic through aggregator referrals has been limited.

"We keep the flow of traffic low in order to manage and control costs; it is a balancing act in terms of profitability," he said. "It is interesting that none of the top-five aggregators have built an integrated SME capacity on their platform, but they are all developing or have developed click-through models. In addition, X-bridge is already in this space and leveraging distribution routes through established aggregators like Money Supermarket."

Mr Little said he did not anticipate the same level of penetration in online SME sales as in other markets, but admitted the marketplace was in its embryonic stages.

Internal research from Premierline Direct in February comparing the number of exact matches for 'car insurance' in Google's search engine to the term 'business insurance', found 1.5 million matches and 22,200 respectively. "There is already huge competition for that 22,200," commented Mr Little. "Currently not one business model has dominated and it is unclear who will be successful - although brokers will naturally fight to retain market share and have made progress to reduce costs and margins within the sector."

Mr Little suggested that although the aggregator market is less compelling from a supply side due to its fragmentation, increased costs of entry and data standards, it retained appeal from a demand perspective. "If the aggregator market develops it will be in direct competition with brokers and may offer less attractive returns for underwriters," he concluded.

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