Aggregators will not be a long-term distribution model for life insurance, according to NMG Consulting Executive Director Mark Prichard.

“The challenge for aggregators is getting people to agree to sign for a policy,” he told insuranceNEWS.com.au.

“This isn’t a problem for general insurance, but life insurance is still a sold product. There’s a big difference.”

Mr Prichard says Australian aggregators also face the problem of trying to get their message out, mainly using TV, in a crowded marketplace.

“The UK aggregators use TV to promote their services, but in Australia insurance has saturated this space,” he said.

“Australian TV is dominated by two or three major players, so it is hard for aggregators to gain traction using this medium.”

To counter the aggregator model, some insurers have launched direct companies and tackled them head-on.

MetLife Insurance Head of Direct Distribution Peter Smith says the company sells 19% direct and 6% through independent advisers.

“We are spending most of our time on the direct insurance space, but it is still underperforming in Australia,” he told the Financial Services Council’s recent life insurance conference.

“When the Future of Financial Advice reforms come in and people are told what they are being charged, they will grow the direct market.”

Mr Smith says price is the driver in the direct space, with customers looking for tailored products.

“Insurers have a cut-and-paste approach to products. Every time somebody does something different, the rest just copy it,” he said.

“Direct is different, because the products have to match what the customer needs.”

Mr Smith says as products become less complicated, customers will find it easier and that will drive growth in the direct segment.

How to handle customers after they respond to advertising also requires a different approach, he says.

“Direct call centres are very different from those dealing with traditional markets. The culture is different. Selling life insurance over the phone is the hardest job in the financial services industry.”

He says non-financial services companies will eventually join the direct life space.

“I can see the day when Google is the biggest life insurance distributor in the market,” Mr Smith said.

Mr Prichard says businesses that have access to large amounts of customer data will be tempted to step into the life insurance market. Such companies include “Woolworths, health insurers and those that have customer loyalty programs”.

“But it is still someway off at present.”