Putting the home market though some DNA testing

In the first of a new monthly series, The Research Department rates new products using its Data Numerical Analysis (DNA) tool. This month, the focus is on domestic insurance.

Sure fire winners?
Two new insurance operations have recently launched into the home insurance market, backed by significant capital and with large advertising and PR budgets.

Esure is a new operation funded by Halifax and headed up by former Direct Line boss Peter Wood. Key to its offering is "the best no claim discount (NCD) package for contents insurance in the market". A 45% NCD is available, although customers will need to be claim-free for ten years to benefit from this saving. Esure claims customers can save an average of 35% on their existing premiums by switching.

Bluesure is a joint venture between Benfield Group, GE Frankona Re, and Brit Insurance Holdings. The company will only insure customers willing to place two or more risks with them, from a core range of buildings, contents, motor and health insurance. Premiums are paid monthly at no extra charge, with one common payment. Bluesure claims up to half of the UK's insurance buying population could make savings averaging £200 a year.

Surprisingly for two new insurers, neither product can be bought on the web at present. Customers have to telephone for quotes.

It is clear that both the esure and Bluesure products compare well (top graph)with the established brands in the broker market. Bluesure in particular offers good levels of cover, however it remains to be seen how many customers will be willing to spend the time on the phone required to place two or more insurances with the company.

Rebranding
In June of this year, Royal & SunAlliance (R&SA) rebranded its entire direct operation under the MoreTh>n banner and has promoted it with a significant advertising campaign. The contents product was revamped as part of the rebranding.

So how does it compare with some of the other new entrants?

MoreTh>n contents cover compares well (right) against most of the other leading direct writers. It lags behind Eagle Star Direct in a few areas, notably more restrictive inner limits and lack of fatal accident benefit.

Broker vs direct
Many brokers have been concerned about over the issue of "dual pricing" between broker and direct distribution arms. However, a quick comparison of the different products serves to highlight why the direct arm may be able to offer lower premiums:

Compare the lead products from Norwich Union and R&SA in the broker and direct channels (left). It is clear that, in both cases, the direct products, overall, offer lower levels of cover and benefits than the broker products. Brokers seeking to defend against dual pricing problems should point out to their customers the significant differences in levels of cover between the two channels. N