E-commerce has failed to reduce costs in line with forecasts originally made by UK insurers, according to research from Cap Gemini Ernst & Young.

It found that expectations of cost savings had fallen from 8% last year to 4% this year.

Half of respondents blamed this on a failure to migrate customers, while all respondents said customer usage was lower than expected. Intermediaries and brokers were said to have been put off e-commerce by bad online experiences.

Head of insurance at Cap Gemini Ernst & Young, Shaun Crawford, warned this could lead to insurers losing out if they were not careful.

“Insurers must focus on delivering a superior customer experience to encourage online usage,” he said. “Without substantial changes to their business models, insurers may ultimately lose out to new, more flexible low-cost providers.”

Insurers surveyed saw industry portals and financial supermarkets, along with aggregators, as their key competition.