Article: Insurance website causes stir in sector

Seth Brundle

from www.sbpost.ie/post/pages/p/story.aspx-qqqid=10010-qqqx=1.asp
Insurance website causes stir in sector

27 November 2005 By Kathleen Barrington
The managing director of a company that is promising businesses cheaper insurance has complained about the allegedly anti-competitive reaction of some insurance companies to his new website.

Michael McLaughlin of Galway insurance brokerage McLaughlin and Greaney said he had written to the Competition Authority after some of his suppliers asked him to remove their names from Cheaperinsurance.ie.

McLaughlin invested about €200,000 in the website, which he launched earlier this month. Cheaperinsurance.ie is billed as a low-cost, online broking service for business customers.

McLaughlin claims that most businesses can reduce insurance costs by between 6 and 10 per cent by using his website. Users can select their current insurer and policy from a menu which lists all the suppliers in the market.

The website then tells them how much they can save by buying the same product through Cheaperinsurance.ie.

Savings can be substantial.

For instance, McLaughlin said that, on a liability insurance premium of €22,500, customers could expect to pay their broker commission ranging from €1,350 to €2,250. Cheaperinsurance.ie charges a fixed annual fee of €299 plus Vat.

Suppliers who have objected to their names appearing on the website are understood to be companies that act both as brokers and as wholesalers of insurance products to other brokers. Some of these brokerages could see their commissions slashed if McLaughlin wins new customers.

McLaughlin claims his website is introducing real competition and transparency in the previously murky area of brokers' remuneration. He said the website would dramatically lower transaction costs.

The Competition Authority earlier this year published a report highlighting the need for greater competition in brokers' commissions.