Shop for cheaper car insurance

HOME loan aggregators have helped bring down the cost of mortgages. In the same way, insurance aggregrators hope the approach to insurance will bring similar benefits.

Infochoice last week launched its car insurance aggregator business with a suite of eight brands -- BudgetDirect, Real Pay As You Drive, Virgin Money, ibuyeco, cashback, 1st for Women, Ozicare and Retirease.

InfoChoice is the second participant in the car insurance aggregator space in Australia. Financial comparison website RateCity launched its business last year, with five live brands.

"We think it will shake up the market and see people getting a better deal on their car insurance," InfoChoice chief executive Shaun Cornelius says.

"We identified what we believe to be the most competitively priced, value for money car insurance products." And that is just the start, as InfoChoice hopes to add more products over time.

Infochoice has a direct link to the insurer's computer system, so a quote from an insurer through the aggregator should be exactly the same figure as the quote you would receive if you rang the insurer direct.

If you are with one of the bigger insurers, such as NRMA, Cornelius says, the premiums consumers will see by using the range of car insurance products on its website "will most likely be significantly lower than their current premiums".

On InfoChoice puts potential average savings at roughly $300 a year.

Until now, the car insurance aggregator model has had limited success in Australia. But its potential can be seen in Britain, where it is popular.

RateCity chief executive Damian Smith says the limited success in Australia is largely due to the dominance of the two big players, Insurance Australia Group and Suncorp, who have a combined share of about 70 per cent.

According to a recent study by research firm RateCity, consumers are still paying too much for their car insurance. There are also significant cost variations in different states and suburbs.

In Sydney, the study shows some drivers are paying more than $1200 too much for comprehensive car insurance, while in Perth the cost of insurance for the same driver and car can vary by more than $600.
In Melbourne, the difference between quotes was $975 for the same driver.

According to RateCity, 26 car insurance providers in the Melbourne suburbs of Doncaster, Caulfield, Seddon, and Meadow Heights charged an average $960.28 for car insurance.

However the big surprise in the study was that while there were, as expected, big differences between suburbs, "the differences between providers for the same driver-car-suburb profile were startling", says RateCity chief executive Damian Smith.

For example, Meadow Heights was the most expensive suburb out of the four suburbs in the study with an average premium cost of $ 1082.72.

"It also included the biggest gap of almost $1500, or 71 per cent difference between the lowest and highest cost of cover," the study shows.

Smith says: "It is hard to understand how the difference in price for the identical driver profile with the same address can have such varying degrees of car insurance quotes.

"But what this means is that there is a lot of money to be saved by most drivers, and the easiest way to get the best deals is by shopping around online."

In Sydney, insuring a car in Parramatta was more expensive than in the suburbs of Bondi, Killara and Marrickville.

The cheapest car insurance providers in Melbourne were all online-based businesses including Bingle, Youi, The Buzz and Budget Direct, says RateCity.

The most expensive quotes were from some of the biggest companies on the market including AON, CGU, St George Bank and Suncorp.

Smith says WA drivers should not pay more than $700 for comprehensive car insurance.

Cornelius says it's easy and inexpensive to shift car insurance providers.

"For the sake of an hour or two's work (comparing premiums) to save around $300 a year is pretty significant, he says.

To get comparison quotes, all you need to do is fill out a simple form and provide details about the car, the driver and the driver's history.

"By and large, the quotes that we show are essentially what a user could then go and purchase right there and then," says Smith.

Excluded from the quotes are brands such as IAG and Suncorp, which are not participants of both comparison websites.

"Our frustration and I think motorists' frustration is that the claims about lower prices from some of the bigger insurers, they may or may not be true, says Smith. "It's just very hard to verify." He says IAG and Suncorp do not allow the use of any of their data in online comparisons.

Despite the absence of those dominant players, Smith says search data shows the number of people typing in words such as "car insurance comparison" on search engines has grown at about 25 per cent per annum over the past two years.

"So there is a lot demand out there from users to compare across businesses, he says. "We think the market is going to grow (and) we think InfoChoice entering it, will help it grow."

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