What’s The Buzz? Yet another niche cheapie
With increasingly sophisticated research and actuarial measurements available to them, Australian insurers are following a global trend and splitting their direct businesses into niches.
Latest to join the trend is IAG’s The Buzz, joining a host of competitors like Bingle, Youi, Just Car, Shannons and Insure My Ride.
Youi’s advertisements – eerily similar in style to computer company Apple’s popular “Mac versus PC” campaign – is a good illustration of the trend.
The company has extensively researched a target market, and it won’t go outside it. Going by the advertisements, marketing specialists say Youi is aimed at youngish (but not too young) technologically savvy middle-class individuals who enjoy dealing online – hence the “Apple” model – and have the confidence to cut the best possible deal for themselves. Haggling has arrived online. For that you need friendly and very efficient technology.
Using Youi – which offers direct car and household insurance – as a typical example of the trend, let’s dig a little deeper. It’s owned by a South African company named Outsurance, which is one of the largest direct insurers in South Africa.
As Youi explains in its very comprehensive website – no point in beating about the bush with its internet-agile and insurance-cynical target market – its owners set up business in Australia a couple of years ago “as part of a philosophy to export their expertise internationally”. Lucky us.
Interestingly, Youi is based in the Sunshine Coast centre of Maroochydore, as is fellow South African-owned niche insurer Budget Direct. While “advisers” are available to speak to customers, Youi’s major focus is on working through its sophisticated “online policy manager”, thereby avoiding “the extra hassle of waiting in long call centre queues and talking endlessly to insurance staff”…
Youi will be joined by many more direct competitors over the next few years, and many of them will be owned by the major insurers.
Budget Direct Associate Director Jonathan Kerr says new competition isn’t necessarily a bad thing, making more people shop around at renewal time.
“The result is that more people are actually turning to the web to get a better deal,” he told insuranceNEWS.com.au. “One thing for sure is that we expect a lot more competition and expect great online work from our competitors.”
The interesting thing about IAG’s The Buzz is that at first sight it appears to be competing directly with its other car insurance brands NRMA Insurance and its joint venture with Victoria’s RACV.
That’s probably not the case, however. It’s all in the marketing. The Buzz is aimed at the sort of niche buyer who wouldn’t be too interested in dealing with the “establishment” brands. They want to choose their own product, whether it’s cheaper with less cover or a comprehensive product with a lower excess.
The Buzz CEO Jacki Johnson told insuranceNEWS.com.au the new site’s help team chat function was requested by internet-savvy consumers who helped “co-create” the brand through focus groups and an online site, myinsuranceideas.com.au.
Ms Johnson says a third of the customers who “co-created” the brand were actually 40 to 50-year-olds. Unlike Bingle, which is more of a low-cost product, The Buzz is more “tailored to the consumer”.
“Internet users tend to be more in the medium to high socio-economic group,” she said. “They’re financially literate and they understand that if it’s too cheap they’re probably going to pay too high an excess or they’re not covered for something. They’re nervous about that.
“What they want is transparency and control. Not all customers want a personalised experience, but there are particular niches who do.”
Ms Johnson says it’s unlikely The Buzz will compete with its other brands.
“These particular customers are looking for a whole different experience and so they are typically not the customers that would be with our brands,” she said. “It’s more likely these customers are with our competitors.”
Suncorp has already found its niche operators Bingle, Shannons and Just Car aren’t damaging its major direct car insurance brand AAMI – now part of the establishment but long ago launched as an “alternative” insurer.
Bingle Executive Manager Andrew O’Hara told insuranceNEWS.com.au results have been extremely promising. He says that as the car insurance market evolved and insurers added features to their products to entice customers, costs inevitably became inflated and premiums rose.
“A gap for a simple, low-cost insurance product was identified that did not offer the extras that some did not require and the concept of Bingle was born,” he said.
“Since Bingle was launched there have been new competitors entering the low-cost insurance space, which is validation that this segment of the market is growing and people are demanding what Bingle has to offer.”
But are the major insurers shooting themselves in the foot by taking away premiums from their more expensive brands?
Suncorp believes Bingle customers will eventually switch to AAMI once they start a family or buy a more expensive car.
Subsidiaries like Bingle are thus keeping their owners in the game and bringing in a new generation of customers – young drivers, low-income earners or those who drive very little – who may have otherwise foregone comprehensive insurance.
Budget Direct’s Jonathan Kerr says it has taken a long time for the major players to get serious about doing business online.
“The major insurers are now all working hard to develop online insurance platforms and there is some good work being done across the board – but you can clearly see that only some understand the online environment,” he told insuranceNEWS.com.au.
“Being online – and most importantly being good at it – is not about a marketing angle or a gimmick. It’s about substance and service, which needs to run through everything the company does.”
He says the choice of phone as well as the internet allows customers to research, quote and buy online, but also have the reassurance of a phone call to pay for a policy or make a claim.
The push into niches and even super-niches poses problems and opportunities for major insurers. It’s up to them how they exploit the advances in knowledge and marketing that technology offers. The landscape is changing quickly.
The only real question is how much other market segments – including commercial insurance – will change in the future as technology provides increasingly sophisticated avenues to create and exploit new niches.
Latest to join the trend is IAG’s The Buzz, joining a host of competitors like Bingle, Youi, Just Car, Shannons and Insure My Ride.
Youi’s advertisements – eerily similar in style to computer company Apple’s popular “Mac versus PC” campaign – is a good illustration of the trend.
The company has extensively researched a target market, and it won’t go outside it. Going by the advertisements, marketing specialists say Youi is aimed at youngish (but not too young) technologically savvy middle-class individuals who enjoy dealing online – hence the “Apple” model – and have the confidence to cut the best possible deal for themselves. Haggling has arrived online. For that you need friendly and very efficient technology.
Using Youi – which offers direct car and household insurance – as a typical example of the trend, let’s dig a little deeper. It’s owned by a South African company named Outsurance, which is one of the largest direct insurers in South Africa.
As Youi explains in its very comprehensive website – no point in beating about the bush with its internet-agile and insurance-cynical target market – its owners set up business in Australia a couple of years ago “as part of a philosophy to export their expertise internationally”. Lucky us.
Interestingly, Youi is based in the Sunshine Coast centre of Maroochydore, as is fellow South African-owned niche insurer Budget Direct. While “advisers” are available to speak to customers, Youi’s major focus is on working through its sophisticated “online policy manager”, thereby avoiding “the extra hassle of waiting in long call centre queues and talking endlessly to insurance staff”…
Youi will be joined by many more direct competitors over the next few years, and many of them will be owned by the major insurers.
Budget Direct Associate Director Jonathan Kerr says new competition isn’t necessarily a bad thing, making more people shop around at renewal time.
“The result is that more people are actually turning to the web to get a better deal,” he told insuranceNEWS.com.au. “One thing for sure is that we expect a lot more competition and expect great online work from our competitors.”
The interesting thing about IAG’s The Buzz is that at first sight it appears to be competing directly with its other car insurance brands NRMA Insurance and its joint venture with Victoria’s RACV.
That’s probably not the case, however. It’s all in the marketing. The Buzz is aimed at the sort of niche buyer who wouldn’t be too interested in dealing with the “establishment” brands. They want to choose their own product, whether it’s cheaper with less cover or a comprehensive product with a lower excess.
The Buzz CEO Jacki Johnson told insuranceNEWS.com.au the new site’s help team chat function was requested by internet-savvy consumers who helped “co-create” the brand through focus groups and an online site, myinsuranceideas.com.au.
Ms Johnson says a third of the customers who “co-created” the brand were actually 40 to 50-year-olds. Unlike Bingle, which is more of a low-cost product, The Buzz is more “tailored to the consumer”.
“Internet users tend to be more in the medium to high socio-economic group,” she said. “They’re financially literate and they understand that if it’s too cheap they’re probably going to pay too high an excess or they’re not covered for something. They’re nervous about that.
“What they want is transparency and control. Not all customers want a personalised experience, but there are particular niches who do.”
Ms Johnson says it’s unlikely The Buzz will compete with its other brands.
“These particular customers are looking for a whole different experience and so they are typically not the customers that would be with our brands,” she said. “It’s more likely these customers are with our competitors.”
Suncorp has already found its niche operators Bingle, Shannons and Just Car aren’t damaging its major direct car insurance brand AAMI – now part of the establishment but long ago launched as an “alternative” insurer.
Bingle Executive Manager Andrew O’Hara told insuranceNEWS.com.au results have been extremely promising. He says that as the car insurance market evolved and insurers added features to their products to entice customers, costs inevitably became inflated and premiums rose.
“A gap for a simple, low-cost insurance product was identified that did not offer the extras that some did not require and the concept of Bingle was born,” he said.
“Since Bingle was launched there have been new competitors entering the low-cost insurance space, which is validation that this segment of the market is growing and people are demanding what Bingle has to offer.”
But are the major insurers shooting themselves in the foot by taking away premiums from their more expensive brands?
Suncorp believes Bingle customers will eventually switch to AAMI once they start a family or buy a more expensive car.
Subsidiaries like Bingle are thus keeping their owners in the game and bringing in a new generation of customers – young drivers, low-income earners or those who drive very little – who may have otherwise foregone comprehensive insurance.
Budget Direct’s Jonathan Kerr says it has taken a long time for the major players to get serious about doing business online.
“The major insurers are now all working hard to develop online insurance platforms and there is some good work being done across the board – but you can clearly see that only some understand the online environment,” he told insuranceNEWS.com.au.
“Being online – and most importantly being good at it – is not about a marketing angle or a gimmick. It’s about substance and service, which needs to run through everything the company does.”
He says the choice of phone as well as the internet allows customers to research, quote and buy online, but also have the reassurance of a phone call to pay for a policy or make a claim.
The push into niches and even super-niches poses problems and opportunities for major insurers. It’s up to them how they exploit the advances in knowledge and marketing that technology offers. The landscape is changing quickly.
The only real question is how much other market segments – including commercial insurance – will change in the future as technology provides increasingly sophisticated avenues to create and exploit new niches.