• A&G and Direct Line: 1984• Initial reaction from intermediaries negative• Considerable growth for direct players world-wide

since 1984• Direct limited to personal lines

Old Debate

• Most players today accepts it boils down to the preference of the end-user

• Some prefer the role of the trusted intermediary• Others prefer the direct way, whether telephonically

or over internet

Debate Matured

• General perception: direct is cheaper because no broker commission

• Our experience: intermediary often cheaper• If direct is not cheaper, why does a large component

of the market go direct?• Possible answer: direct insurers create perception of

being cheaper through massive marketing campaigns

Who is the cheapest?

• Direct insurers claim they rate and underwrite more scientifically

• Therefore cheaper when risk is lower, and vice versa• High underwriting margins of direct insurers lend

credibility to this claim• Is it a case of convenience rather than premium?• Some prefer dealing direct, others through

intermediaries

Who is the cheapest?

• Generation X and Y: not loyal to existing brands• Want instant gratification• Internet, mobile and telephone more conducive to

instant gratification• Technological advancement enables direct marketing

to young and old

Marketing Trends

Direct Growth in Market Share

Direct Growth in Market Share

• Both parties claim they do• Intermediary: scan the market, structure best

package, look after customer’s interest at claims stage

• Direct: offers speed and convenience and sometimes price

• Are there objective indicators?

Who delivers the best service?

Ask Afrika Orange Index Awards

Hellopeter.com League Tables

• Ask Afrika – excludes large intermediaries• Hellopeter.com – direct insurers can “direct”

customers to the website

Inconclusive

• Room for both• The more complex the portfolio, the more room for

advice from intermediary• Less complex – one home and two cars – more room

for direct insurers• Finally: personal preference of end-user• The winner is: the end-user!

My View

• Room for both• The more complex the portfolio, the more room for

advice from intermediary• Less complex – one home and two cars – more room

for direct insurers• Finally: personal preference of end-user• The winner is: the end-user!

My View

Thank you