Aggregators in UK General Insurance 2008: A Growing Force

Table of Contents

• Overview
  • Catalyst
  • Summary
• Table of Contents
• Table of figures
• Table of tables
• Market Focus
  • Introduction
  • Aggregators now play a crucial role in the value chain
    • Aggregators generated over a fifth of private motor new business sales in 2007
      • Aggregators generated an estimated 30 million private motor quotes in 2007
    • Aggregators generate a far lower number of quotes for other personal lines products
    • Conversion rates vary from 4% up to 15%
• The Aggregator Business Model
  • Introduction
  • Most aggregators operate a "cost per click" or "cost per sale" model
    • Aggregators connect consumers to insurance providers, allowing them to compare prices and offerings
    • Aggregators earn their revenue in two main ways, depending on their business model
      • Only Moneysupermarket.com currently uses the cost per click model
      • The other aggregators currently use mainly a cost per sale model
      • More aggregators will be tempted to introduce new pricing models in future
  • Actual and indicative prices have their own strengths and weaknesses
    • Some aggregators offer actual quotes while others provide indicative prices
    • Competitors also differ in the technology they use
• Customer Focus
  • Introduction
  • Internet consumers are more likely to change provider at renewal than other consumers
    • More than a third of consumers who purchased their motor insurance online switched provider at renewal
    • Consumers are more likely to switch if they purchase their household insurance online
    • Fear that use of aggregators would further drive down retention rates has not yet come true
  • Online consumers are more price-conscious than consumers buying via other platforms
    • Consumers purchasing a motor policy via the internet are more likely to be motivated by cheaper quotes
    • Online household insurance consumers show greater price sensitivity than consumers using other platforms
  • Aggregators are likely to attract mainly the young and the wealthy as online distribution peaks among these consumers
    • The internet is most popular among younger consumers as a platform for purchasing motor insurance
    • Affluent motor insurance consumers were the most likely to have purchased their insurance online in 2007
• Competitor Focus
  • Introduction
  • Confused.com has seen phenomenal growth doubling its profits in the year to June 2007
    • Confused.com doubled its profits in the year to June 2007
    • Confused.com offers comparisons of a range of general insurance products, comparing them on features and price
  • Moneysupermarket.com is also seeing fast growth with insurance revenues growing by 74% in the year to June 2007
    • Moneysupermarket.com' s insurance revenues grew by 74% in the year to June 2007
    • Moneysupermarket.com is a general comparison site for financial services
    • The insurance vertical compares a range of insurance quotes ranked by price
    • Insurancewide.com offers two different comparison services
      • Insurancewide.com is a general insurance aggregator
      • The Wizard matches consumers with insurance providers that fit their risk profile
      • The comparison site also offers a quotation service
  • A raft of new aggregators have entered the market attempting to capitalize on this new opportunity
    • Tesco Compare.com launched in September 2007 with exclusive access to some RBS Insurance brands
    • Onlyinsurance.com and Confidentcover.com entered the sector in 2007
    • Gocompare.com entered the market in 2006 with a unique "five-star" proposition
      • Gocompare.com ranks policies by both price and features based on a five star rating system
    • Comparethemarket.com also entered the market in 2006
      • Comparethemarket.com launched in 2006 and focuses exclusively on insurance comparisons
  • Advertising is heating up in the aggregator sector
    • Advertising spending by aggregators tripled in 2007 to £42m
    • Aggregators focused their advertisement on television campaigns in 2007
• Future Decoded
  • Introduction
  • Aggregators will increase their share of private motor new business sales in 2008
    • The number of aggregator-instigated private motor sales will increase in 2008
    • Aggregator-instigated sales will receive a boost by the general growth in online sales
    • Aggregators face a natural ceiling of 22% of all private motor insurance sales
    • Aggregators will grow their presence in household and travel insurance
  • Confused.com and Moneysupermarket.com have a first mover advantage while Tesco Compare is well positioned to compete
    • Confused.com and Moneysupermarket.com have a first mover advantage
    • Tesco is well positioned to challenge Confused.com and Moneysupermarket.com
    • Gocompare.com also looks set to challenge the dominant players
    • Increased competition could lead to pressure on margins
    • Some competitors will exit the market
• APPENDIX
  • Definitions
  • Methodology
    • Ipsos MORI methodology and contacts
    • Sample design
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Aggregator-instigated private motor sales, 2007
    • Table 2: Propensity to switch motor provider and likelihood of getting other quotes, by distribution platform, 2007
    • Table 3: Propensity to switch household provider and likelihood of getting other quotes, by distribution platform, 2007
    • Table 4: Retention rates among online private motor consumers, 2004-07
    • Table 5: Motivations for taking out a motor insurance policy, by distribution platform, 2007
    • Table 6: Motivations for taking out a new household insurance policy, by distribution platform, 2007
    • Table 7: Consumers buying motor and household insurance via the internet, by age group, 2005-07
    • Table 8: Consumers buying motor and household insurance via the internet, by income, 2005-07
    • Table 9: Revenue, profit and number of quotes for Confused.com, 2004-06 (£m)
    • Table 10: Revenue, profit and number of quotes for Confused.com, H1 2006 to H1 2007
    • Table 11: Moneysupermarket.com revenue and operating profit, 2004-06 (£m)
    • Table 12: Moneysupermarket.com key insurance vertical figures, H1 2006 to H1 2007
    • Table 13: Aggregators by advertising spend, 2006-07 (£)
    • Table 14: Top insurance aggregators' advertising spend by media, 2007 (£)
  • List of Figures
    • Figure 1: Aggregator-instigated private motor sales accounted for just under a quarter of all private motor new business in 2007
    • Figure 2: Consumers purchasing their motor insurance online were more likely to change their insurance provider in 2007
    • Figure 3: Consumers are most likely to switch from an insurance provider when they purchase their household insurance online in 2007
    • Figure 4: Retention rates among internet consumers varied between 2004 and 2007
    • Figure 5: Obtaining a cheaper quote was the most common reason for choosing a provider across all distribution platforms in 2007
    • Figure 6: There is a greater price awareness among consumers who purchase their household insurance online in 2007
    • Figure 7: Consumers buying motor and household insurance via the internet, by age group, 2005-7
    • Figure 8: Consumers buying motor and household insurance via the internet, by income, 2005-7
    • Figure 9: Confused.com' s revenue and profit more than doubled in the year to June 2007
    • Figure 10: Moneysupermarket.com' s insurance vertical revenue grew by over 70% in the year to June 2007
    • Figure 11: Advertising spend by aggregators tripled in 2007 to £42m
    • Figure 12: Aggregators favored television advertisement campaigns in 2007