New Online Broker Aims to Cut Home Insurance Cost

Dublin, Thursday, 15th May, 2008:

A new study has found that Irish consumers can save over 25% on house insurance by shopping around. The report was commissioned by Chill.ie, a new Irish owned web based insurance broker, that aims to take the hassle out of obtaining or changing home insurance. However, the Chill.ie report, which was carried out by the Finlay Consultancy, also warns that consumers should beware of going for the cheapest price.

Orlagh Nevin, who was one of the early senior management team in O2, heads up Chill.ie. "Today people are busy. They don't have time to ring 14 different suppliers to get their insurance needs addressed whether it's a quote or some guidance. Chill.ie will shake up a sleepy insurance sector and change that because in less than five minutes we can present you with a quote that has searched 14 plus underwriters. Plus if you have a query on any of our policies we have a fully staffed call centre who can help."

Chill.ie is backed by corporate insurance brokers, Power Lynch & Associates whose directors have over 40 years' experience in the insurance industry.

Other investors and board members include Seamus Lynch who was CEO for the launch of Digicel into the Caribbean and software entrepreneur John Power who sold his first company Software Computing Power to Software AG.

The Chill.ie report, conducted by the Finlay Consultancy, stresses that when buying home insurance, consumers should not only consider price but product and service features.

Tom Finlay , of the Finlay Consultancy commented, "Insurance is a complex purchase. Getting the best price is of little value if important risks are excluded or the claims process is intimidating."

Orlagh Nevin agrees. "While the Chill.ie service will be accessed online for convenience, we are different from other online insurance services in that we are not linked to one provider but are independent and also operate a personal broker support service by telephone to advise on the best insurance cover. We manage the processing of the policy and are also there to assist when claims are made."

The Finlay study highlights the potential for the growth of online insurance in Ireland . It states, "While there has been significant growth in the level of online shopping for services and goods in Ireland the big exception to this has been in the area of financial services".

The report estimates that currently in Ireland only 1-2% of all general insurance is purchased online. It said that this contrasts dramatically with recent developments in the US and the UK which suggests that between

15% -20% of general insurance is purchased online.

The study highlights a number of pitfalls that consumers can run into with their home insurance cover. For example, accidental damage is not part of all standard home policy offerings. Accidental damage includes drilling through a pipe, hammering a nail through an electrical wire, putting a foot through an attic ceiling or spilling paint on a carpet.

"Most people automatically assume that they are covered for accidental damage but this is not the case," points out Tom Finlay .

The report says that another common mistake made by consumers is to insure their homes for the market value rather than the rebuild cost value. Even if a home was burnt to the ground the site remains a significant part of the overall cost. The study points out that examples of rebuilding costs are available from the Society of Chartered Surveyors (SCS) for key regional centres. The Chill.ie study adds that while building insurance tends to be overestimated, contents insurance tends to be underestimated.

Another pitfall is the failure to understand the implications of an 'average' clause in the policy. The objective of this clause is to prevent those who under insure their buildings or contents from benefiting fully from the insurance. Thus if the contents in a particular situation are valued at €100K but are only insured for €50K the insurance company will follow this formula:-

Sum Insured X Loss Claimed divided by The Value at Risk

€50K X €50K divided by €100K = €25K

Another way of looking at this simple example is that because only one half of the true value of the contents was insured the effect of averaging is that only one half of the sum claimed is paid out.

Chill.ie has invested some €1m in the new company. Orlagh Nevin added, "We are bringing a totally new concept to Ireland . We are providing the ease and cost savings of dealing online with the direct contact a traditional broker can offer. For the first time we are making it easy for consumers to switch providers, save money and get the best cover."