Personal lines brokers are being hit on all sides
Nearly 30% of home policy buyers are put off using price comparison websites by the fear of follow-up phone-calls, and 11.6% don’t trust them.
Of those who switched supplier at renewal between June and August, 38% used an aggregator, 20% purchased direct online, 23% bought over the phone, and 3% used a broker.
The figures, from Consumer Intelligence’s Insurance Behaviour Tracker, suggest that while consumers are keenly price-sensitive, they dislike certain aspects of using an aggregator.
Still, the findings make tough reading for brokers, particularly as downward pressure on prices and a smaller overall market kicks in. Even retaining a level market share will mean less premium.
Motor prices are levelling after a period of rate rises aimed at offsetting inflation in PI claims costs. Last year, reported COR began to rise above the level of COR excluding prior-year reserve movements, according to analysis in Towers Watson’s Motor Insurance Industry Report 2011.
The cost of motor policies, plus the rising price of fuel and other consumer products (Consumer Price Index inflation was 5.2% in September), may mean fewer motorists. The value of car sales has been falling since the scrappage scheme ended in March last year.
Travel is also shrinking. The average quarterly number of foreign trips by UK residents fell from 17,363 in 2007 to 13,732 in 2010. So while insurance policy sales for foreign trips remains at 80%, the overall pie is smaller.
Extraordinary weather events over the past five years, including the severest winter for 100 years in 2010-11, have hardened rates in home insurance.