Admiral chief says web-based comparisons enable small insurers to anchor premiums

The rise of insurance aggregators could hold back the private motor market's recovery, Admiral chief executive Henry Engelhardt has warned.

Engelhardt said aggregator sites, which compare quotes from a number of insurance providers, make rating changes more obvious to consumers.

This, he said, made it harder for large insurers like Royal Bank of Scotland (RBS) to influence the market by increasing rates, as smaller companies could "anchor" premiums at a lower level.

His comments came as the motor insurance group, which owns the largest aggregator,, reported record profits for 2006.

Engelhardt said: "In the days before aggregators, bigger companies like

RBS could raise rates because the vast majority of consumers never knew a better rate was available.

"But in the new, aggregator world, small companies that are listed on aggregators can, much more easily, anchor the market by not raising rates. Small companies have the same exposure to consumers as big companies."

Engelhardt said that despite Norwich Union increasing rates in 2006 and RBS's announcement that it would follow suit, there had been little upward movement in rates overall last year.

This he said would imply a "pure year" combined ratio, excluding reserve releases, for 2006 of over 110%.

The motor market has not made a profit since 1994, as fierce competition has kept average premiums from keeping pace with rising claims costs.

Engelhardt said: "The idea that the market as a whole is not moving much on rates may be a sign of a fundamental change in market dynamics. The power of RBS, despite its 35% market share, appears to have been diluted over time by the growth of aggregators."

Admiral Group reported a pre-tax profit of £143m in 2006, up 23% on 2005. Gross written premiums increased 11% to £708m, while the combined ratio deteriorated by two points to 87%.