The South African Car Insurance Battle
by JEFF SUMMERS
More often than not South African consumers pay a hefty price for the lack of competition amongst ��Big Business�� in South Africa. Monopolies are commonplace and price fixing by banks and food manufacturers regularly make the headlines in national newspapers.
The insurance industry has been relatively competitive for the past few decades, but due to advances in technology and changes in consumer behavior the traditional broker-based insurance companies have been left behind leaving two insurance companies, Outsurance and DialDirect, to compete in the new car insurance market.
Unlike their competitors Outsurance and DialDirect are direct suppliers of car insurance. The consumer can pick up the phone, call one of these companies, complete a telephonic questionnaire/policy and by the time they hang up, be covered by the insurer. These companies are quick to point out that by cutting out brokers they are able to provide cheaper policies. Whether this is actually the case is debatable as traditional insurers claim that the expertise that brokers offer help consumers tailor their policies to their own needs, thereby saving money.
Where DialDirect and Outsurance do stand out from their competitors is in their utilization of ��New Media�� particularly the Internet. A quick glance at some of the most popular South African websites like Ananzi and MWeb will reveal a plethora of banners and links all pointing to these companies�� websites.
Both companies have engaged in online affiliate marketing using networks like TrafficSynergy and OfferForge to recruit affiliates who further increase these companies�� online presence by placing banners and links on their websites in order to generate referral commissions.
Most significant of all is Outsurance and DialDirect��s virtual monopoly of Google��s search results, both paid and natural, for car insurance related search phrases like ��car insurance��. In the US and UK owning a website that ranks naturally in the top 10 for insurance terms on Google is almost as good as being allowed to print your own money. On Google.co.za a search for ��car insurance�� returns 10 websites, all of which market either Outsurance or DialDirect (including sister companies) policies. DialDirect dominates the top 10, with 8 out of the 10 websites either selling DialDirect policies or those of other Budget Insurance group��s companies like 1st for Woman and Auto & General. The absence of traditional motor insurance companies like Hollard is unmistakable. Outsurance is represented by their own website and by the website of an internet marketing agency acting as an affiliate. This gives DialDirect/ Budget Insurance a score of 8 out of 10, Outsurance 2 out of 10 and the others 0. This situation can only be attributed to the lack of understanding by traditional insurance companies of the importance of the Internet. However, what may change the picture altogether is the advent of insurance aggregators.
Insurance aggregator websites are wildly popular in the UK and US. They allow consumers to comparison shop for insurance products like car insurance, motorcycle insurance and van insurance. A person looking for insurance fills in a form on the aggregator��s website and is either immediately presented with quotes from a number of insurance companies online or is contacted by the insurance companies individually and presented with a quote telephonically.
South Africa has two such websites; hippo .co.za and cheapcarinsurance .co.za. Hippo has entered the market with a bang. The site is quick and easy to use and provides users with instant online quotes. However the absence of quotes from Outsurance and hippo .co.za��s close ties to DialDirect leaves one feeling that this is just yet another DialDirect outlet. Cheapcarinsurance .co.za combines DialDirect and Outsurance��s affiliate marketing options and provides advice on how to comparison shop between these two insurers in order to get cheap car insurance. Users have to complete 2 forms though and are contacted via telephone almost instantly by the 2 insurance companies once the forms are submitted. This is not necessarily a drawback as users are able to discuss the policies more thoroughly with the representative, thereby identifying and cutting out costly unnecessary cover. Both of these websites are climbing up the Google rankings and should soon make their appearance in the top 10, hopefully giving the South African consumer a little more choice.
However, what South African consumers really need is for traditional short-term insurance companies to embrace the Internet as the way of the future and begin competing with Outsurance and DialDirect!
Jeff Summers is the marketing manager at CheapCarInsurance.co.za. He has had international experience in Internet marketing especially with regard to PPC, SEO and affiliate marketing in the UK and South Africa. Jeff specialises in analysing online
