This is likely a driving factor in the widespread use of price comparison websites to shop for, and purchase, motor insurance.
It’s fair to say that PCWs have been very successful in bringing choice to customers and they’ve reduced the cost of acquiring the customer, although it is not a zero cost with an estimated 20% paid in commission and listing fees, according to YouGov.
Past investigations from the regulator the FCA have looked into the way the PCWs help consumers to make a like-for-like comparison of insurance policies. It has investigated the degree to which the PCWs risk introducing “misconceptions” to the consumer and whether or not they continue to deliver “fair and consistent” outcomes, given the relationships between some insurers and PCWs.
Consumers struggling to compare policy details, excesses and other conditions, flitting between PCWs to compare different types of cover: all of this raises some important questions for the insurance industry about how to deal with information gaps and complexities in the quoting journey.
Do customers really understand all the filters on the PCWs, and the differences between, say a policy offering a £100 excess and another with £400 excess? Are they aware of the risks of manipulating their personal information such as address or named drivers?
Price isn’t everything
Our research found that 50% of motorists overall feel it is ‘completely acceptable’ to use price comparison sites to manipulate information for a lower price. Another 20% feel it is ‘somewhat acceptable’, making a total 70% of motorists.
Only 20% were neutral on quote manipulation, whilst 5% said it is ‘somewhat unacceptable’ and 5% said it is ‘completely unacceptable’.
When looking at motorists with a claim in the last five years 76% feel it is ‘completely or ‘somewhat’ acceptable to manipulate information, presumably more motivated by trying to achieve a cheaper price, and/or a previous negative claims experience.
About four-in-five motorists overall used a price comparison website during their most recent motor insurance shopping experience.
The research showed some pretty intense shopping behaviour, with 60% of motorists ‘comparing the comparisons’, using multiple PCWs to shop. There was also a large number of consumers visiting PCWs before going on to make the purchase online from a direct insurer. Some 82% of motorists who bought insurance online, but not from a PCW, had used a price comparison website to compare prices.
Use of price comparison websites extends beyond just those purchasing from them: other online price checkers, as well as shoppers who go on to purchase offline – typically by phone from a broker or direct – are using them.
Fewer motorists purchased their policy from a price comparison site compared to other online channels
- 29% of motorists purchase their policy online (not from a price comparison website), but used price comparison website during shopping
- 24% of motorists did not purchase online, but used price comparison website during shopping
- 19% of motorists purchase online (from a price comparison website), and used other price comparison websites during shopping
- 16% of motorists do not use a price comparison website at all
- 12% of motorists purchased their policy from a price comparison website, and did not use another price comparison website during shopping.
Seven in ten purchases online, compared to over eight in ten searches
Overall, 68% of motor insurance purchases in our sample were made online from a range of different websites, whilst 32% were made offline.
Cashback websites have grown to account for 15% of online insurance purchases, nearly a third of the volume of purchases seen by price comparison sites.
Split of off-line insurance purchases
- 81% of non-online motor insurance purchases are made direct from an insurer
- 18% of non-online motor insurance purchases are made direct through a broker
- 1% of non-online motor insurance purchases are made through another channel
Split of online insurance purchases
- 33% of online motor insurance purchases are made direct from an insurer website
- 3% of online motor insurance purchases are made direct through an online broker
- 48% of online motor insurance purchases are made direct through a price comparison website
- 15% of online motor insurance purchases are made direct through a cashback website
- 1% of online motor insurance purchases are made direct through another online channel.
Different behaviours for price shopping and buying
Our research showed that each of the three major price comparison websites Compare the Market, Go Compare and Money Supermarket are used about equally by motorists during their shopping process.
But shopping is not the same as buying, as shown by the fact that 48% of consumers purchase from a PCW, whereas 84% of consumers use them at some point in their decision process.
Price comparison sites are a fantastic innovation which has driven intense price competition in the motor insurance market.
The degree to which consumers now compare online-offline and different comparison sites shows they are searching around for what constitutes value, and this is different from the price. Our services Quote Intelligence, Policy Insights, Risk Insights and Attract™ for Motor all have elements that deal with some aspects of policy manipulation.
But we are left wondering if there could also be a third way, a world where data is used to show more in the way of value indicators, and more information on measures like quality or speed of claim settlement, and measures that will reassure the customer when the renewal letter comes around.
For more insights from these research results download the LexisNexis Risk Solutions white paper ‘Finding (and Building) Loyalty in the Motor Insurance Market’.
*LexisNexis Risk Solutions carried out an anonymous survey, the Policy Renewal and Insurance Shopping Study, 23 January to 5 February 2018. Data collection: web survey using managed online panel as a sample. The sample was 1,500 consumers who have insurance on the vehicle they drive most often, who are equally or solely responsible for insurance decisions, and who purchased motor insurance within the past 18 months.
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