Glimp Determined to Shed Light on Insurance
New Zealand has one of the most concentrated general insurance markets in the world, and it doesn’t help that house and car insurance companies are keeping their prices in the dark. In 2010, electricity retailers were forced to make their prices transparent and easily accessible by the public. Now, Michael Speight, the co-founder of comparison site Glimp, wants to introduce the same rules to insurance companies.
Speight believes that New Zealanders need to be able to shop around for the best insurance deals, and the availability of transparent price and service plans will mean cheaper insurance costs as insurers compete for customers. Through Glimp, people can compare electricity prices, broadband, loans and credit cards. Now, Speight and business partner Denis Tyurkov have set their sights on the insurance industry.
However, it won’t be easy. Speight recalls how hard it was trying to convince electricity retailers to give them information about their pricing. "The electricity retailers were very resistant to us. We were one of the first ones to ask for the pricing, and we had to go to the Electricity Authority to make them give it to us." He believes it will be much the same with insurance companies.
Dr Michael Taylor from Massey University’s School of Business said, “The market for personal house and contents insurance is already highly concentrated and uncompetitive. The current market structure can be characterised as a duopoly. My figures show that IAG has 50 per cent, Suncorp has 28 per cent, Tower 7 per cent, and FMG 4 per cent.” With four companies controlling the entire insurance industry in New Zealand, prices remain consistently high.
Peter Harris from small insurance company CBL said, “New Zealand has a history of allowing duopolies to flourish with naïve beliefs that the two will work in competition with each other to drive down prices and improve service for end customers. This has not been the case. Instead suppliers and customers are manipulated to ensure profitability is maintained.”
Despite the growing support for pushing insurers to lay their prices in the open, people like Tim Grafton from the Insurance Council is against the idea. He says that electricity is a pure commodity, which is why it makes sense for electricity retailers to be transparent, whereas insurance is a contract between an insurance company and a policyholder.
“There's a significant risk that people will purchase on price alone without informing themselves of the policies that lie beneath," Grafton says. Insurance policies are much more intricate than electricity services, and each contract contains different policies and each insurance company has different rules around accepting claims.
Grafton says people wanting to compare prices can call up insurance companies, but Naylor wants to see a comparison website that gives people not only prices, but other information such as quality ratings and online reviews. The duo at Glimp are determined to make this happen. “We're going to build it, and force it to happen," Speight said. Glimp already provides information regarding broadband packages and the lowest mortgage rates, so insurance companies may be coming soon.