Affinity and Partnership Marketing in UK Motor and Breakdown Recovery Insurance

Table of Contents

0.0 EXECUTIVE SUMMARY

• Research background and structure
• Over a half of organisations surveyed in eight sub-categories offer motor insurance
• … with the vast majority of programs identified now utilising a brokerage operating model
• … albeit the leading providers in the affinity marketplace include underwriters as well as brokers
• Most schemes for breakdown recovery insurance are placed directly with the ultimate provider
• … with a number of smaller assistance firms challenging the dominance of the AA and the RAC
• A variety of competitors are well-placed to profit from the likely future trends in affinity marketing
• … and there is scope for comparing developments in the UK with those in cont. Europe

1.0 INTRODUCTION

• Finaccord
• UK affinity and partnership marketing publications
• Other UK consumer research publications
• PartnerBASE™
• Definitions
• Rationale
• The channels used to distribute financial products and services in the UK continue to proliferate
• … with on-line affinity and partnership marketing having growing rapidly in importance of late
• Methodology

2.0 MARKET OVERVIEW

• Affinities and partnerships in UK motor and breakdown recovery insurance
• Finaccord' s research identifies 339 current affinity schemes for promoting motor insurance
• … of which a majority are now based around brokerage or ‘open architecture’ solutions
• Breakdown recovery insurance is sold by at least a proportion of 24 types of affinity partner
• … with the AA and RAC combined accounting directly for over 40% of the programs traced

3.0 NOT-FOR-PROFIT AFFINITY GROUPS

• 3.1 Charities
  • Introduction
  • Analysis of partnerships
  • Motor insurance sold through charities works most effectively when there is a clear rationale
  • … although pure revenue generation can be an objective in its own right
  • Just two charities maintain stand-alone agreements for road assistance
  • … and the company is interested in working with suppliers that fulfil a variety of criteria
  • intune is employing a multi-channel distribution strategy including the charity' s high street outlets
  • … as it seeks to reach an operating profit of £15 million per annum by 2012
• 3.2 Professional associations
  • Introduction
  • Over 50 professional associations possess in excess of 5,000 individual members
  • Analysis of partnerships
  • The vast majority of professional associations offering motor insurance do so through a broker
  • … with Parliament Hill having expanded its roster of member benefits clients to 11 associations
  • A further four brokers each claim to more than one deal in the professional association segment
  • The RAC maintains direct, exclusive relationships with a quartet of professional associations
• 3.3 Sports organisations
  • Introduction
  • Analysis of partnerships
  • Several affinity deals are in place for one or both of motor and breakdown recovery insurance
• 3.4 Trade associations
  • Introduction
  • Analysis of partnerships
  • Personal lines are sometimes offered as a ‘carry over’ from commercial insurance schemes
  • … which signifies that this is a field in which relationships are dominated by insurance brokers
  • For breakdown recovery insurance, RAC is affiliated to several associations through LogBuy
• 3.5 Trade unions
  • Introduction
  • Analysis of partnerships
  • LV=, Norwich Union and UIA are the foremost providers of motor insurance to trade unions
  • … although a number of unions prefer to collaborate with companies outside of the leading trio
  • Britannia Rescue lays claim to the highest number of exclusive deals for road assistance
• 3.6 Other not-for-profit affinity groups
  • Introduction
  • Lifestyle organisations
  • A number of schemes for motor-related policies are in evidence among lifestyle organisaitons
  • Political parties
  • Both the Greens and the Liberal Democrats tie with the Environmental Transport Association

4.0 FINANCIAL PARTNERS

• 4.1 Banks
  • Introduction
  • Analysis of partnerships
  • A number of significant retail banking brands do not currently promote motor insurance
  • Through a brace of deals with banks, Equity Insurance Brokers entered this sector in 2006
  • Stand-alone provision of breakdown recovery insurance by banks has declined
• 4.2 Building societies
  • Introduction
  • Analysis of partnerships
  • Building society involvement in motor insurance distribution has increased in recent years
  • … largely driven by brokers such as Endsleigh, Equity Insurance Brokers and Insure & Go
• 4.3 Credit cards and premium accounts
  • Introduction
  • Analysis of partnerships
  • A majority of premium accounts offered by banks in the UK include free road assistance
• 4.4 Credit unions
  • Introduction
  • Analysis of partnerships
  • Heath Lambert accesses the credit union market as the approved supplier of CUNA Mutual
• 4.5 Friendly societies
  • Introduction
  • Analysis of partnerships
  • Only a handful of friendly societies offer motor insurance to their customers
• 4.6 Insurers
  • Introduction
  • Analysis of partnerships
  • Six insurance companies are identifiable as offering white-labelled motor insurance policies
  • RAC and Green Flag are the assistance providers most commonly used by motor insurers
  • … although both Europ Assistance and Inter Partner Assistance have picked up external deals
• 4.7 On-line aggregators and brokers
  • Introduction
  • Analysis of partnerships
  • BISL / comparethemarket.com and Insurancewide.com are the foremost protagonists
  • … although a clutch of other entities are also active as quotation system providers in this sector
  • Europ Assistance is linked directly to each of MRL Insurance Direct, Quoteline Direct and RIAS
• 4.8 Specialised lenders
  • Introduction
  • Analysis of partnerships
  • Motor insurance is distributed only four of the specialised lenders surveyed

5.0 COMMERCIAL ENTITIES

• 5.1 Automotive associations
  • Introduction
  • Analysis of partnerships
  • The partnership between the csma and LV= has been in place for over 80 years
  • … and has helped to facilitate the transfer of ownership of Britannia Rescue from csma to LV=
• 5.2 Automotive dealers, repair shops and supermarkets
  • Introduction
  • Analysis of partnerships
  • Many automotive dealerships owe their survival to revenues derived from financial services
  • … and a number of firms in this category have created group-wide insurance distribution deals
  • The AA and the RAC possess the most group-wide deals albeit Kwik-Fit works with Call Assist
• 5.3 Automotive manufacturers
  • Introduction
  • Analysis of partnerships
  • The vast majority of automotive brands operate approved schemes for motor insurance
  • … with a number of important affinity mandates having changed in recent months
  • Three providers dominate the market for manufacturer-branded road assistance
• 5.4 Cricket and rugby clubs
  • Introduction
  • Analysis of partnerships
  • Cricket and rugby clubs are completely absent from affinity marketing of motor insurance
  • … albeit both cricket and rugby attract sponsors from the financial services sector
• 5.5 Football clubs
  • Introduction
  • Analysis of partnerships
  • Affinity propositions in motor insurance continue to be limited to a fairly small number of clubs
  • … with Endsleigh having emerged as the main protagonist by means of its links with four clubs
• 5.6 Internet, media and telecoms entities
  • Introduction
  • Analysis of partnerships
  • Insurancewide.com and Moneysupermarket.com account for a majority of media affinities
  • … although Confused.com is one of a number of players that is also exploring this arena
  • For breakdown recovery insurance, Auto Trader retains a traditional affinity link with the RAC
• 5.7 On-line price comparison providers
  • Introduction
  • Analysis of partnerships
  • A number of on-line price comparison providers offer own-brand insurance searching facilities
• 5.8 Retailers
  • Introduction
  • Analysis of partnerships
  • Many of the UK' s major retailing brands are being leveraged to promote motor insurance
  • … with Tesco having acknowledged the changing landscape by launching Tesco Compare
  • Greenbee will allow the John Lewis Partnership to expand its share of total client expenditure
  • Fit with the values of the John Lewis Partnership has been key to selection of affinity partners
  • Several retailers also promote breakdown recovery insurance on a stand-alone basis
• 5.9 Other commercial entities
  • Introduction
  • Branded conglomerates
  • Saga and Virgin leverage their brands across the full consumer financial services spectrum
  • … with Saga having rolled out a price comparison site for motor insurance in August 2007
  • Loyalty schemes
  • The loyalty schemes category extends to a range of diverse travel and other reward programs
  • … with several offering members the chance points through purchase of motor insurance
  • AIRMILES reconfigures its affinity strategy by forging a new link with Lloyds TSB
  • Delivering memorable experiences continues to be key to the AIRMILES proposition
  • Lloyds TSB hopes to leverage the relationship across a range of financial services
  • AIRMILES has bolstered its range of family-oriented redemption options
  • … and is also in the process of rolling out a policy asserting its ‘green’ credentials
  • The Post Office
  • The Post Office is seeking to grow its total portfolio of insurance policies to two million by 2010

6.0 EUROPEAN INNOVATIONS

• Introduction
• Events in affinity and partnership marketing in Europe, 2006 and 2007
• Winter 2006
• AEGON expands bancassurance reach in Spain through link with local savings bank
• Fondiaria SAI firms up link with Banca Popolare di Milano for bancassurance venture
• Elvia reinforces position in travel insurance sector through new distribution deals
• Estonian bank diversifies into non-life bancassurance by establishing captive company
• AIB and Aviva finalise Irish bancassurance deal by combining life insurance firms
• AXA and Adeslas co-operate for health insurance distribution in Spain
• Cattolica and Banca Lombarda extend life insurance distribution tie to 2010
• French banking and insurance partners pilot Séréna personal assistance platform
• Spring 2006
• Spanish arm of CIGNA launches health insurance through Travel Club loyalty program
• Fortis and An Post confirm Irish financial services joint venture
• MACIF and MNRA create affinity programs for small businesses in France
• Mapfre and Caja de Madrid extend scope of co-operation to automotive finance
• Proteq ties with leading Dutch pharmacy chain for affinity insurance venture
• ESFG and Crédit Agricole strengthen Portuguese bancassurance ties
• Aon and Delta Lloyd join forces for affinity insurance venture in the Netherlands
• Summer 2006
• Fondiaria and Capitalia link for non-life bancassurance joint venture in Italy
• Mondial Assistance renews international assistance contract with Chrysler Jeep
• Cattolica strengthens strategic bancassurance tie with BPVN in Italy
• CNP launches new permanent disability and long-term care contract with ASAC-FAPES
• BBVA and Sanitas combine in Spanish health insurance distribution deal
• AXA seals affinity insurance tie with Bertelsmann media club in Germany
• CNP extends major bancassurance deals in France through to end 2015
• Winterthur and Sanitas agree tie for health insurance distribution in Switzerland
• Europäische expands card-related travel insurance deals in Germany
• Autumn 2006
• Aon Italia rolls out new propositions for professional affinity partner
• AXA buys major Greek bancassurance protagonist for €255 million
• French mutuals tie for retirement savings cross-selling initiative
• BBVA and Willis link for high net worth property insurance venture in Spain
• Uniqa commences bancassurance joint venture in Ukraine with Credo-Classic
• German catalogue retailer commences insurance marketing venture
• AXA replaces Talanx as SEB' s new bancassurance partner in Germany
• CNP' s life assistance arm forges tie with Chêque Domicile in France
• Santander Consumer Bank improves motor insurance offer for German car buyers
• Winter 2007
• Zurich seals new manufacturer motor insurance deal with Suzuki in Germany
• AEGON forges new bancassurance link with Banca Transilvania in Romania
• … a distribution strategy also pursued by Aviva in the same country with Finansbank
• CIGNA targets marine sports club members with health insurance proposition in Spain
• Innovative distribution deals assist Spanish insurer Mapfre at home and abroad
• French affinity broker launches new insurance policy through AOL link
• AEGON and ERGO tie for pensions cross-selling agreement in Poland
• Mapfre takes 50% stake in Spanish savings bank insurance unit
• Cattolica finalises bancassurance agreement with Banca Popolare di Vicenza
• Mondial Assistance establishes distribution agreement with Sanyres in Spain
• VIVAS Health secures distribution link with Hibernian Direct in Ireland
• Tie with statutory health insurer in Germany pays dividends for HUK Coburg
• Caisses d' Épargne and MACIF roll out individual health insurance contracts in France
• Generali acquires bancassurance companies in Austria from BAWAG PSK
• Spring 2007
• ADAC and Zurich disclose launch joint venture insurance company in Germany
• Mapfre seals major bancassurance deals with Bankinter and BBVA in Spain
• Folksam and Swedbank initiate new bancassurance collaboration in Sweden
• AXA acquires stakes in Monte dei Paschi di Siena bancassurance firms
• Allianz links with Ferrari for car insurance policies in Germany
• Groupe Caisse d' Épargne and HSBC assume control of French bancassurance firms
• AIB kicks off on-line motor insurance venture with Hibernian in Ireland
• Fondiaria SAI forges Italian bancassurance joint venture with Banca Italease
• Summer 2007
• Generali and leading fuel retailer link for affinity tie in German insurance
• Aviva rolls out a trio of new bancassurance deals in Italy, Poland and Spain
• AEGON and Mapfre finalise bancassurance agreements with Spanish savings banks
• Vienna Insurance Group links with OMV in ten countries in Central Europe
• La Caixa buys 50% stake held by Fortis in long-standing Spanish joint venture
• Deutsche Postbank and Talanx extend German bancassurance link for 15 years
• ACE European Group sets up life company for continental affinity insurance initiatives
• National Suisse and Coop Bank agree insurance co-marketing initiative
• Sogecap commences bancassurance operations in Bulgaria and Greece
• Groupama initiates link with integrated Internet and telecoms provider in France
• Intesa Sanpaolo rolls out new approach to bancassurance in domestic market
• Citroën entrusts own-brand road assistance service to Mondial Assistance
• ING takes control of Greek bancassurance joint venture as a part of ten year deal
• Royal & SunAlliance targets Eastern Europe and Russia through GDII joint venture
• Crédit Agricole buys 60% stake in non-life bancassurance entity from AGF
• Generali and PPF Group commence joint venture deal in Central and Eastern Europe
• Banco Popolare and Fondiaria SAI finalise new bancassurance joint venture in Italy
• Autumn 2007
• Zurich links with TomTom for Europe-wide motor insurance distribution venture
• Mondial Assistance secures international travel insurance ties with Eurostar and KLM
• Genertel signs affinity insurance agreement with low-cost airline in Italy
• Groupama forges joint venture with software house for co-marketing in France and abroad
• If P&C plans tie with Finnish retailer' s loyalty program from June 2008 onwards
• Allianz Suisse initiates manufacturer-branded insurance co-operation with Volkswagen
• Deutsche Postbank secures non-life bancassurance agreement with HUK-Coburg

GRAPHICS / TABLES

• The affinity and partnership marketing universe
• Entities contacted for the research, segmented by broad category
• Affinity and partnership marketing schemes for motor insurance in the UK: penetration by type of partner
• Affinity and partnership marketing schemes for motor ins. in the UK: segmentation by op. model and competitor
• Affinity and partnership marketing schemes for breakdown recovery ins. in the UK: pen. by type of partner
• Affinity / partner. Mktg. schemes for breakdown recovery ins. in the UK: segment. by op. model and competitor
• Charities offering motor insurance: penetration, operating models and partner market shares, 2007
• Charities offering breakdown recovery insurance through partnerships, 2007
• Ranking of professional associations in the UK by actual or approximate number of members
• Ranking of professional associations in the UK by actual or approximate number of members (continued)
• Professional associations offering motor insurance: penetration, operating models and partner market shares
• Professional associations offering breakdown recovery ins.: penetration, op. models and partner market shares
• Sports organisations offering motor and breakdown recovery insurance through partnerships
• Ranking of the top 50 trade associations in the UK by actual or approximate number of members
• Trade associations offering motor insurance: penetration, operating models and partner market shares
• Trade associations offering breakdown recovery ins.: penetration, operating models and partner market shares
• Ranking of trade unions in the UK by actual or approximate number of members
• Trade unions offering motor insurance: penetration, operating models and partner market shares
• Trade unions offering breakdown recovery insurance: penetration, operating models and partner market shares
• Lifestyle organisations offering motor and breakdown recovery insurance through partnerships
• Political parties offering motor and breakdown recovery insurance through partnerships
• Banks offering motor insurance: penetration, operating models and partner market shares
• Banks offering breakdown recovery insurance through partnerships
• Building societies offering motor insurance: penetration, operating models and partner market shares
• Building societies offering breakdown recovery insurance through partnerships
• Credit cards and premium accounts incorporating breakdown recovery insurance
• Credit unions offering motor insurance: penetration, operating models and partner market shares
• Friendly societies offering motor insurance and assistance through partnerships
• Insurance companies offering motor insurance: penetration, operating models and partner market shares
• Motor insurance companies offering breakdown recovery ins.: pen., op. models and partner market shares
• On-line aggregators and brokers offering motor ins.: penetration, operating models and partner market shares
• On-line aggregators and brokers offering breakdown recovery ins.: pen., op. models and partner market shares
• Specialised lenders offering motor insurance: penetration, operating models and partner market shares
• Automotive associations offering motor insurance through partnerships
• Automotive associations offering breakdown recovery insurance through partnerships
• Auto. dealers, repair shops and supermarkets offering motor ins.: pen., op. models and partner market shares
• Auto. dealers, repair shops / supermkts. Off. breakdown recovery ins.: pen., op.models and partner mkt. shares
• Automotive manufacturers offering motor insurance: penetration, operating models and partner market shares
• Automotive manufacturers offering breakdown recovery ins.: pen., op. models and partner market shares
• Football clubs offering motor insurance: penetration, operating models and partner market shares
• Internet, media and telecoms entities offering motor ins.: penetration, op. models and partner market shares
• Internet, media / telecoms entities off. breakdown recovery ins.: pen., op. models and partner market shares
• On-line price comparison providers offering motor ins.: penetration, op. models and partner market shares
• Retailers offering motor insurance: penetration, operating models and partner market shares
• Retailers offering breakdown recovery insurance: penetration, operating models and partner market shares
• Branded conglomerates offering motor and breakdown recovery insurance through partnerships
• Loyalty schemes offering motor and breakdown recovery insurance through partnerships