Price comparison sites are presenting challenges for insurers
Aggregators have now become a mainstream way for consumers to purchase general insurance products, according to analysis by Deloitte.
Research conducted online by YouGov for Deloitte found that 40% of consumers with a non-life insurance policy have purchased insurance through an aggregator over the past 12 months and 32% have said they are more likely to use price comparison websites than 12 months ago.
Stephen Ross, insurance partner at Deloitte, said: “Aggregators have become an established fixture in the insurance landscape and continue to transform distribution in the personal lines insurance market. While they are great news for consumers, helping them find the cheapest insurance, they continue to present many challenges for insurers.
"At a time where insurers are suffering in a soft market with low investment returns and increased bodily injury claims costs, the ongoing challenge for insurers is generating the premium increases to achieve acceptable returns. Aggregators focus on price transparency, which means that insurers must look to differentiate themselves on issues other than price.”
Seventy-two per cent (72%) of those who purchased insurance through an aggregator in the last 12 months bought motor insurance, compared with 44% who purchased contents and 34% buildings insurance.
Ross continued: “Motor insurance is dominating the online market. I expect aggregators will look for future growth to come from the household market. Despite the fact that the advertising focus of price comparison websites has to-date been on the motor market, a significant percentage of consumers have still purchased building and contents insurance online.
"It is likely that we will see aggregators shift their insurance spend to concentrate more on these ‘emerging’ markets. Consumers and insurers alike should expect to see far greater competition in the household market over the next 12 months.”
Converting the number of enquiries into sales remains a key challenge for aggregators, Deloitte said.
When questioned about their preferred method for purchasing insurance, more consumers indicated that they use price comparison sites as a starting point to search for the best deal, compared with the number who use them to purchase their insurance.
David Rush, head of general insurance at Deloitte, said: “There are still a significant number of consumers who are using price comparison websites to do just that, compare prices.
"If aggregators want to increase their ‘conversion rate’ and encourage more consumers to actually purchase through their sites they will need to ensure they are offering the most competitive price and continue their aggressive advertising strategies.”
- 40% of consumers surveyed with a non-life insurance policy have purchased insurance via a comparison website over the past 12 months;
- 32% of consumers with a non-life insurance policy are more likely to use price comparison websites than 12 months ago;
- Motor insurance is the most popular form of insurance to buy through a price comparison website however opportunities exist for aggregators to target household insurance.