The insurance industry is no stranger to new kids pledging to undercut prices – and the insurance cycle dictates that they will continue to resurface.
Of late, the market has been looking rosier for larger insurance companies, with a hardening of rates, rapid consolidation and less competition.
But now that a return to profit is in sight, the founder of revolutionary insurer Direct Line, Peter Wood, has come back with his latest incarnation Esure, backed by Halifax.
The company currently only offers motor insurance over the phone, but it will launch online at the end of the year with a number of other products, including buildings and contents insurance.
The motor market has seen enormous price hikes of late, with some insurers increasing premiums by up to 100%.
Wood claims Esure will tempt customers by offering 30% off its competitors' prices, though much will depend on whether the customer fits the company's criteria for “safe” drivers.
Most companies have a maximum no-claims discount of 65%, but Esure offers 70% for those who have not made a claim in five years, increasing by 1% a year up to a maximum of 75%.
Esure chief executive Peter Graham said: “We have found that, on average, our customers will save 20% to 30%. We are targeting those customers we believe have been overcharged – those who have been driving safely for many years.”
Another new entrant to the market, Bluesure, claims to be revolutionising the way in which people buy insurance, providing home, travel and health insurance all in one package. There is no need to renew the policy, as it keeps running until the policyholder cancels it. The company is also tempting customers with the claim that they can save up to £200 a year.
But despite the new kids' claims, Fitch analyst Gregson Carter believes a price war is a long way off.
“There is still a fundamental need for rates to rise, due to the increasingly high cost of personal injury claims,” he said. “All new companies claim to cut prices, but this is just a marketing ploy.”
He adds that Bluesure's concept of offering all insurance policies in one package could backfire.
“This may not work as, after the collapse of Independent, people may well be wary of putting all their eggs in one basket.”
The Association of British Insurers (ABI) agrees that, at the moment, there is no threat to the large, established insurers. A spokeswoman said: “It's a different market they're coming into.”