Insurance comparison website iSelect says it will take a hit to its earnings following a new deal with lower commission rates from a car insurance supplier.
However, iSelect says it believes the cheaper rates ultimately will increase the number of people using its website that go on to purchase new car insurance policies.
The company on Monday announced it had signed a two-year agreement with Auto & General, providers of car insurance products, extending a five-year deal.
The new rates would hit revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half of 2013/14 by $1 million to $2 million, the company said.
Investors had sent the stock down by 6.0 cents, or 4.44 per cent, to $1.29 by noon (AEDT). The company first listed on the share market at $1.85 last June.
The company already had lowered revenue forecasts made in its prospectus for the first half of the fiscal year.
The net effect for iSelect would depend on sales volumes through the car business and what proportion of those involve Auto & General's products.
Interim chief executive David Chalmers said the company's strategy was to increase the number of providers and products it offered to about 700,000 visitors that compare car insurance on the website a year.
"We believe this will help us accelerate growth in the panel and better meet the needs of more price-conscious consumers by offering some of Auto & General's most competitive products," he said in a statement.
The new agreement also allows iSelect to refer consumers to home and contents insurance for the first time on top of existing products such as health insurance.
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