Latest research by EMB shows impact of price comparison sites on motor market.
The emergence of internet price comparison sites has hit motor insurers’ profit margins and is forcing them to rethink their pricing, distribution, marketing and brand strategies, according to research conducted by EMB, the actuarial and business consultants.
The use of aggregators has risen sharply, and they now account for around 40% of new sales of motor insurance in the UK. Direct sales via insurers’ websites bring the total new sales on the internet to an estimated 60%. Aggregators also have a small but increasing share of the household insurance market.
The report warns that the savings made by customers using aggregators are not necessarily paralleled by cost savings for insurers, and that pressure on profit margins will eventually drive prices up. “Insurance faces the biggest shake-up since direct insurers burst onto the scene,” said EMB partner Peter Lee. “Then, as now, the dynamics of the insurance industry changed dramatically.
“In this new world where price is king, it’s more difficult for insurers to persuade the public to put a value on factors such as reputation or service quality, let alone loyalty, and the expectation is for increased churn in the market.”
