Speaking at the Protection Review conference last week Michael Aldridge, sales director at broker London & Country, said discount websites could be the way to generating new protection business for advisers who are increasingly reliant on rebroking existing customers onto new policy deals.
Groupon negotiates discounts usually between 50% and 90% with popular businesses and then direct markets to its database of consumers. The business has seen huge growth in popularity with consumers this year.
Its website says: “We send the deals to thousands of subscribers in our free daily email, and we send the businesses a ton of new customers.”
Aldridge said: “How people purchase goods is changing. We should be looking at how we sell protection bearing that in mind. I believe Groupon could have a place in the financial services world and we ignore it at our peril.
"The protection industry has been accused of lacking innovation and embracing technology on many occasions in the past. But technology need not be a threat if we embrace it.
"It's very much an opportunity and it could ultimately help us reach out to new audiences which is exactly what we need to do to reduce the protection gap.
"We need to speak to the modern consumer in the way they understand and embrace new and innovative ways of purchasing products - community purchasing websites being the fastest growing.
"If within the industry we don't initiate this we could be caught napping and find an outsider who is more familiar with the modern consumer steal a march on us all."
He said the practicality of selling protection through a site like Groupon would take some careful thought but believes it possible.
He added: "How a protection product might be sold through a site like Groupon is of course very much in the detail but when you look at the group protection market and how risk is underwritten it certainly looks more possible.
"If the discrimination argument is taken to its extreme then it accelerates the likelihood of this happening further."
Aldridge also said he believed there was an opportunity for a website like Rightmove to aggregate distribution of protection.
“I know estate agency is a different market from protection, but I do think there is a gap in the protection market for this type of business,” he said.
"Pre-2000 the estate agency industry could have been accused of lacking innovation then came along a website by the name of Rightmove. Only 7 years later 90% of all agents were paying to list their products with them despite many agents at the time saying if would never work.
"Today I believe 85% of all new house searches start online, facilitated by clever use of technology like Rightmove's app. The question is are we about to see the emergence of our Rightmove, are we ready for it, or will we bury our heads in the sand?"
Kevin Carr, chief executive of the protection review, added: "I completely agree with this in theory. The question is what would be sold and how - ie which products, advised or otherwise and at what price. I've used Groupon myself and the point is that you get a significant discount for a short period of time, but in protection this could pose a selection risk. But the industry has to fundamentally change how it deals with customers of the future."
