Aggregators huge operating profit margins rising every year as insurers barely keep head above water
Price comparison sites are making huge profit margins on home insurance products, especially compared to insurers, the FCA report on pricing shows today.
Aggregators made a 53% operating profit margin on home last year, compared to a wafer thin 2% made by insurers.
Price comparison sites also made more than twice as much on motor at 39%, compared to 16% from insurers.
| Operating profit margin 2018 | Home | Motor |
|---|---|---|
| Aggregators | 53% | 39% |
| Brokers | 20% | 40% |
| Insurers | 2% | 16% |
The FCA report today also reveals how aggregators are making more and more each year from hard-pressed insurers, who in the last five years barely made double-digit operating profits and this has dwindled futher amid weather losses.
In 2013, operating profit margin was 45% rising to 53% last year.
In that same period, insurers operating profit margins fell from 13% to 2%.
The FCA report also shows the massive importance premium financing has to brokers.
More than half of revenue from brokers comes from non-core products and premium finance is by far the biggest margin earner.
The regulator said: ”Overall, both firms’ home and motor insurance business are profitable. The level of profitability varies depending on several factors, including the activity being carried out, the firm’s business model and the proportion of new and renewal business a firm has.”
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