UK Insurance Aggregators 2009

Introduction

This comprehensive report provides insight into the market size of aggregator-instigated sales of private motor and home insurance and examines key competitor developments that have taken place in the market. It also analyses the impact of advertising on the sector and forecasts the future growth of the channel in the home and motor insurance sectors.

Scope

*Consumer behavior analysis based on Datamonitor's Financial Services Consumer Insight survey.

*Profiles of the leading aggregators including information on financials, sales figures, product coverage and company strategy.

*Market sizing data on the market share of aggregators in the home and motor insurance markets.

*Forecasts of aggregator-instigated sales in the home and motor insurance sectors.

Highlights

Aggregator-instigated new business has grown substantially in the home insurance market. In 2007, sales initiated by aggregators accounted for just 2% of new business in the home insurance market and Datamonitor estimates that this figure has now reached 10%.

Competitive pressures have continued to intensify in the market since 2006, when a number of new players such as Gocompare.com and Comparethemarket.com entered the space. Since their launch, these two brands along with TescoCompare.com have been quickly able to establish themselves as strong competitors in the market.

Reasons to Purchase

*Assist in planning your aggregator strategy.

*Understand the market potential for aggregators.

*Gain insight into the main trends affecting the aggregator market.


Report Highlights

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TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Aggregator-instigated sales have increased in the market 2
Awareness of price comparison sites is high among UK consumers; however, some have made a conscious decision not to use them 3
Direct insurers are well placed to compete on the aggregator channel, but must address their high combined ratios 5
Aggregators will continue to grow their presence in the home and motor insurance markets 6
Market Context 14
Introduction 14
Aggregator-instigated sales have increased in the market 14
A higher degree of consolidation is expected in 2010 17
Aggregators are back in the spotlight after fresh regulatory and media scrutiny 18
Customer Focus 21
Awareness of price comparison sites is high among UK consumers; however, some have made a conscious decision not to use them 21
Total advertising spend has increased substantially in the market since 2006 26
There are strengths and weaknesses to each aggregator’s results page 29
Competitive Dynamics 35
Introduction 35
Competitive pressures have continued to take their toll on players in the market 35
Direct insurers are well placed to compete on the aggregator channel, but must address their high combined ratios 36
Confused.com increased its turnover in H1 2009, although profits remained constrained 40
The success of Comparethemarket’s meerkat campaign has caused a stir in the price comparison space 46
Gocompare.com has launched a new advertising campaign in a bid to drive traffic back onto its site 50
Competitive pressures have led to a small contraction in Moneysupermarket’s insurance revenues in H1 2009 56
Future Decoded 63
Introduction 63
Hardening rates and ongoing advertising will push more consumers towards the aggregator channel 63
Aggregators will continue to grow their presence in the home and motor insurance markets 65
APPENDIX 68
Methodology 68
Further reading 69
Ask the analyst 69
Datamonitor consulting 69
Disclaimer 69


TABLE OF FIGURES
Figure 1: More than half of new private motor GWP was generated through an aggregator in 2009 2
Figure 2: Aggregator-instigated sales account for 10% of new business GWP in the home insurance market 3
Figure 3: More than half of consumers have used price comparison sites to either purchase or research their financial services products 4
Figure 4: Consumers that had consciously not used a price comparison site stated a strong preference to go direct to a financial services provider 5
Figure 5: Insurers that compete heavily in the aggregator channel have witnessed strong growth in policy volumes, but at the expense of higher motor combined ratios 6
Figure 6: Aggregator-instigated sales will account for 64% of new private motor business GWP in 2011 7
Figure 7: More than half of new private motor GWP was generated through an aggregator in 2009 15
Figure 8: Aggregator-instigated sales account for 10% of new business GWP in the home insurance market 16
Figure 9: More than half of consumers have used price comparison sites to either purchase or research their financial services products 21
Figure 10: Consumers that had consciously not used a price comparison site stated a strong preference to go direct to a financial services provider 22
Figure 11: Previous experience is valued by a large proportion of consumers visiting price comparison sites to purchase or research a motor insurance product 23
Figure 12: Previous experience and advertising are important factors that influence home insurance consumers’ choice of comparison sites 24
Figure 13: Price remains the number one driver behind a motor insurance consumer’s choice of financial services product on an aggregator 25
Figure 14: Consumers choosing to purchase a home insurance product on aggregators are heavily influenced by price and product features 26
Figure 15: Confused.com remained the largest spender on advertising in H1 2009 27
Figure 16: TV advertising accounted for the largest marketing spend of the leading five players in H1 2009 28
Figure 17: Moneysupermarket.com, along with two other players, shows a breakdown of voluntary and compulsory excess 30
Figure 18: Confused.com allows consumers to shortlist up to four products for a detailed comparison 31
Figure 19: Beathatquote.com was the only insurer to offer customers full policy documentation 32
Figure 20: Gocompare.com, Comparethemarket.com and Confused.com demonstrated more sophisticated customization tools 33
Figure 21: Aggregators are encouraging customers to return to them at the time of their renewal 34
Figure 22: Insurers that compete heavily in the aggregator channel have witnessed strong growth in policy volumes, but at the expense of higher motor combined ratios 38
Figure 23: Key performance indicators for a selection of UK private motor insurers, 2007–08 39
Figure 24: Confused.com has witnessed a decrease in its operating profit margin 40
Figure 25: Confused.com launched a new website at the end of 2008 42
Figure 26: Confused.com’s global daily reach jumped up significantly at the beginning of 2009 43
Figure 27: Confused.com increased its total advertising spend in H1 2009 44
Figure 28: Television advertising dominates Confused.com’s marketing campaign 45
Figure 29: Comparethemarket.com’s meerkat advertising campaign has been a successful tool in building brand awareness 47
Figure 30: Comparethemarket.com increased its marketing spend by 535% in 2008 48
Figure 31: TV accounted for 95.5% of Comparethemarket.com’s marketing budget 49
Figure 32: Comparethemarket.com saw a surge in visits after the launch of its meerkat advertising campaign 50
Figure 33: Internet traffic has been diverted from Gocompare.com’s website in recent months 51
Figure 34: Gocompare.com’s advertising spend contracted slightly in H1 2009 52
Figure 35: TV advertising dominates Gocompare.com’s marketing campaigns 53
Figure 36: Gocompare.com introduced a new marketing campaign featuring Gio Compario in August 2009 54
Figure 37: Gocompare.com launched a new pet price comparison service in October 2009 56
Figure 38: The proportion of revenue generated from services other than transactions has fallen 57
Figure 39: The number of visitors and transactions have fallen at Moneysupermarket.com 59
Figure 40: Moneysupermarket.com has witnessed a small contraction in its daily reach since 2008 60
Figure 41: Moneysupermarket.com increased its marketing spend by 26.1% in H1 2009 61
Figure 42: 76.4% of Moneysupermarket.com’s media spend was dedicated to TV advertising in H1 2009 62
Figure 43: Aggregator-instigated sales will account for 64% of new private motor business GWP in 2011 65
Figure 44: Aggregator-instigated sales will account for 18% of new home insurance sales in 2011 66


TABLE OF TABLES
Table 1: Forecast of aggregator-instigated private motor sales, 2007e to 2011f 7
Table 2: Estimated aggregator-instigated private motor sales, 2007e to 2009e 15
Table 3: Estimated aggregator-instigated home insurance sales, 2007e to 2009e 16
Table 4: Aggregators by advertising spend, 2006 to H1 2009 (£) 27
Table 5: Top insurance aggregators’ advertising spend by media, 2009 H1 (£) 29
Table 6: Partnerships between price comparison sites, November 2009 36
Table 7: Revenue and operating profit for Confused.com, H2 2005 to H1 2009 (£m) 41
Table 8: Confused.com’s advertising spend, 2007 to H1 2009 (£) 44
Table 9: Confused.com’s advertising spend by media, H1 2008 to H1 2009 46
Table 10: Comparethemarket.com’s advertising spend, 2007 to H1 2009 (£) 48
Table 11: Gocompare.com’s advertising spend, 2007 to H1 2009 (£) 52
Table 12: Gocompare.com’s advertising spend by media, H1 2008 to H1 2009 53
Table 13: Key revenue figures for Moneysupermarket.com, H1 2006 to H1 2009 (£m) 58
Table 14: Key performance indicators for Moneysupermarket.com, H1 2006 to H1 2009 59
Table 15: Moneysupermarket.com’s advertising spend, 2007 to H1 2009 61
Table 16: Moneysupermarket.com’s advertising spend by media, H1 2008 to H1 2009 (£) 62
Table 17: Key variables affecting the growth of the aggregator channel, 2009–11 64
Table 18: Forecast of aggregator-instigated private motor sales, 2007e to 2011f 66
Table 19: Forecast of aggregator-instigated home insurance sales, 2007e to 2011f 67



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TABLE OF TABLES
Table 1: Forecast of aggregator-instigated private motor sales, 2007e to 2011f 7
Table 2: Estimated aggregator-instigated private motor sales, 2007e to 2009e 15
Table 3: Estimated aggregator-instigated home insurance sales, 2007e to 2009e 16
Table 4: Aggregators by advertising spend, 2006 to H1 2009 (£) 27
Table 5: Top insurance aggregators’ advertising spend by media, 2009 H1 (£) 29
Table 6: Partnerships between price comparison sites, November 2009 36
Table 7: Revenue and operating profit for Confused.com, H2 2005 to H1 2009 (£m) 41
Table 8: Confused.com’s advertising spend, 2007 to H1 2009 (£) 44
Table 9: Confused.com’s advertising spend by media, H1 2008 to H1 2009 46
Table 10: Comparethemarket.com’s advertising spend, 2007 to H1 2009 (£) 48
Table 11: Gocompare.com’s advertising spend, 2007 to H1 2009 (£) 52
Table 12: Gocompare.com’s advertising spend by media, H1 2008 to H1 2009 53
Table 13: Key revenue figures for Moneysupermarket.com, H1 2006 to H1 2009 (£m) 58
Table 14: Key performance indicators for Moneysupermarket.com, H1 2006 to H1 2009 59
Table 15: Moneysupermarket.com’s advertising spend, 2007 to H1 2009 61
Table 16: Moneysupermarket.com’s advertising spend by media, H1 2008 to H1 2009 (£) 62
Table 17: Key variables affecting the growth of the aggregator channel, 2009–11 64
Table 18: Forecast of aggregator-instigated private motor sales, 2007e to 2011f 66
Table 19: Forecast of aggregator-instigated home insurance sales, 2007e to 2011f 67


TABLE OF FIGURES
Figure 1: More than half of new private motor GWP was generated through an aggregator in 2009 2
Figure 2: Aggregator-instigated sales account for 10% of new business GWP in the home insurance market 3
Figure 3: More than half of consumers have used price comparison sites to either purchase or research their financial services products 4
Figure 4: Consumers that had consciously not used a price comparison site stated a strong preference to go direct to a financial services provider 5
Figure 5: Insurers that compete heavily in the aggregator channel have witnessed strong growth in policy volumes, but at the expense of higher motor combined ratios 6
Figure 6: Aggregator-instigated sales will account for 64% of new private motor business GWP in 2011 7
Figure 7: More than half of new private motor GWP was generated through an aggregator in 2009 15
Figure 8: Aggregator-instigated sales account for 10% of new business GWP in the home insurance market 16
Figure 9: More than half of consumers have used price comparison sites to either purchase or research their financial services products 21
Figure 10: Consumers that had consciously not used a price comparison site stated a strong preference to go direct to a financial services provider 22
Figure 11: Previous experience is valued by a large proportion of consumers visiting price comparison sites to purchase or research a motor insurance product 23
Figure 12: Previous experience and advertising are important factors that influence home insurance consumers’ choice of comparison sites 24
Figure 13: Price remains the number one driver behind a motor insurance consumer’s choice of financial services product on an aggregator 25
Figure 14: Consumers choosing to purchase a home insurance product on aggregators are heavily influenced by price and product features 26
Figure 15: Confused.com remained the largest spender on advertising in H1 2009 27
Figure 16: TV advertising accounted for the largest marketing spend of the leading five players in H1 2009 28
Figure 17: Moneysupermarket.com, along with two other players, shows a breakdown of voluntary and compulsory excess 30
Figure 18: Confused.com allows consumers to shortlist up to four products for a detailed comparison 31
Figure 19: Beathatquote.com was the only insurer to offer customers full policy documentation 32
Figure 20: Gocompare.com, Comparethemarket.com and Confused.com demonstrated more sophisticated customization tools 33
Figure 21: Aggregators are encouraging customers to return to them at the time of their renewal 34
Figure 22: Insurers that compete heavily in the aggregator channel have witnessed strong growth in policy volumes, but at the expense of higher motor combined ratios 38
Figure 23: Key performance indicators for a selection of UK private motor insurers, 2007–08 39
Figure 24: Confused.com has witnessed a decrease in its operating profit margin 40
Figure 25: Confused.com launched a new website at the end of 2008 42
Figure 26: Confused.com’s global daily reach jumped up significantly at the beginning of 2009 43
Figure 27: Confused.com increased its total advertising spend in H1 2009 44
Figure 28: Television advertising dominates Confused.com’s marketing campaign 45
Figure 29: Comparethemarket.com’s meerkat advertising campaign has been a successful tool in building brand awareness 47
Figure 30: Comparethemarket.com increased its marketing spend by 535% in 2008 48
Figure 31: TV accounted for 95.5% of Comparethemarket.com’s marketing budget 49
Figure 32: Comparethemarket.com saw a surge in visits after the launch of its meerkat advertising campaign 50
Figure 33: Internet traffic has been diverted from Gocompare.com’s website in recent months 51
Figure 34: Gocompare.com’s advertising spend contracted slightly in H1 2009 52
Figure 35: TV advertising dominates Gocompare.com’s marketing campaigns 53
Figure 36: Gocompare.com introduced a new marketing campaign featuring Gio Compario in August 2009 54
Figure 37: Gocompare.com launched a new pet price comparison service in October 2009 56
Figure 38: The proportion of revenue generated from services other than transactions has fallen 57
Figure 39: The number of visitors and transactions have fallen at Moneysupermarket.com 59
Figure 40: Moneysupermarket.com has witnessed a small contraction in its daily reach since 2008 60
Figure 41: Moneysupermarket.com increased its marketing spend by 26.1% in H1 2009 61
Figure 42: 76.4% of Moneysupermarket.com’s media spend was dedicated to TV advertising in H1 2009 62
Figure 43: Aggregator-instigated sales will account for 64% of new private motor business GWP in 2011 65
Figure 44: Aggregator-instigated sales will account for 18% of new home insurance sales in 2011 66



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