French giant to rival ‘big four’, with Swinton and Provident likely to feature on site

Covea plans to splash out a predicted £20m on establishing an aggregator to break the stronghold of the ‘big four’ price comparison sites.

The French mutual giant is planning an expensive advertising and marketing blitz early next year, as it aims to take market share from rivals Confused, Gocompare, Comparethemarket, and Moneysupermarket.

Covea spent £70m on motor insurer Provident in April, which was a key partner of its Manchester-based subsidiary Swinton.

A company source said Covea believes an aggregator will complete its UK strategy. Swinton and Provident are likely to launch on the aggregator, and possibly Reading-based subsidiary MMA, which would be a strategic departure from its broker-only insurer status.

An MMA spokesman refused to comment on the wider activities of the group, but he stressed that the insurer was “100% committed” to the broker channel.

Gocompare spent £27.8m on advertising last year. Confused spent £20.5m, Moneysupermarket paid £19.4m and BGL, which owns Comparethemarket, invested £17.4m.

Chief executive Tom Cooper of iGO4, a personal lines broker on aggregators, said: “I think £20m is the bare minimum that they will need to spend, but they have very deep pockets.”

Cooper said Covea should consider a direct-response marketing campaign, which tells customers exactly what a price comparison site offers, rather than a brand campaign.

“You’ve got the meerkat and you’ve got GioCompario, and the others are tying to break into the brand space rather than a direct response.

“Maybe somebody going back to that more basic message could get through to the general public,” he said.

Cooper believes it is a good time to launch a price comparison site, but added: “The big aggregators have struggled in the past three months to convert the number of quotes they have into business.

“People are going on and realising that they can’t necessarily get a cheaper price than the one they have been quoted by their existing insurer because rates are going up across the market. There are other minor influences such as cashback sites.”

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Elsewhere in the price comparison space, BGL has undergone a restructure and appointed a new managing director at subsidiary Comparethemarket. Paul Galligan, previously director for Bennetts, is replacing Kal Atwal.

Atwal has been promoted to group director for brand-led businesses and has board responsibility for bike insurer Bennetts and Courtanet, the recently acquired French aggregator business.

Martin Overton becomes group director for legal services. This operating group includes ACM, the claims management division, and board responsibility for BGL’s relationship with Minster Law.

All three new appointments will report to BGL’s group chief operating officer, Matthew Donaldson, from September 2011.

A group director for intermediated businesses will be appointed in the coming months, the company said.

BGL chief executive Peter Winslow said: “I am delighted to announce these board appointments and to see Kal and Martin join my board room colleagues at this very important time in the next phase of our development of BGL.

“We have enjoyed significant growth in recent years and will be reporting profit growth once again for the year ended 30 June.”

“We are keen to maintain and increase that momentum to take the company to the next level, each of our divisions has experienced significant successes in their own right and the growth of our board now reflects this.”

Pass notes: Aggregators

Why is Covea launching a price comparison site now?
Covea is launching into an expanding market. Price comparison sites are set to grow their share of the market from 42% to around 49% in 2014, industry management told Ernst & Young in a 2010 motor report.

What can Covea offer on the aggregators?
Covea can launch its own products on the aggregators, as well as those of subsidiaries Swinton, Provident and MMA. Provident was snapped up earlier this year for around £70m. Covea can easily fund a huge advertising campaign, which could attract a great deal of volume to the site.

Do the big four face any other competition? How big a threat is it?
The big four, Comparethemarket, Gocompare, Moneysupermarket
and Confused, also face competition from two of the biggest companies in the world. Tesco and Google have their own sites in Tesco Compare and BeatThatQuote, but it seems that both are reluctant to splash out on advertising for these offerings. Therefore, it is questionable whether they will ever achieve the scale of the incumbent big four. Google is understood to be experimenting with BeatThatQuote, which it bought for £37.1m in March this year.