Abstract
Overview
Introduction
This report provides unique insight into the rapidly growing aggregator market. It examines the importance of aggregators in generating private motor new business sales, the business models currently employed in the sector, the competitive environment and provides some thoughts on the future development of the sector.
Scope
- Information on the number of private motor insurance aggregator-instigated quotations and conversion rates
- Insight into the business models employed including the varying methods of deriving revenue and technologies employed to generate quotations
Highlights
The implication that insurance companies must utilize aggregators as part of their personal lines distribution strategy is clear: any insurer targeting the mass market private motor insurance sector will not maximize its new business volumes if it ignores these companies.
Reasons to Purchase
- Help in planning your personal lines insurance distribution strategy.
- Assist in planning your entry into the aggregator market.
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%
- Aggregators generated over a fifth of private motor new business sales
in 2007
- 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
