PICKING UP SPEED

Tom CooperAs the IGO4 Price Comparison Watch comes to the end of its sixth year, it’s interesting to take a look back at previous articles to see how the market has evolved. As early as 2010 we questioned if aggregator sites had reached their peak and whether they could hang onto their dominant position in motor distribution. The answer, of course, has been an emphatic yes – although that might not tell the whole story, and success has not been universal.

Market overview

In the past six months we have seen the demise of Tesco Compare. Many in the market welcomed its introduction in September 2007 as a potential fifth player but, in truth, it never really got going and only ever managed to reach around 10% of the quote volumes enjoyed by the ‘big four’ ‑ Go Compare, Compare the Market, Money Supermarket and Confused. It looked good visually, had a decent – if not extensive – range of brands and was backed by a business accustomed to reaching number one in its chosen markets. You may conclude that if Tesco could not make a serious inroad into the aggregator market then no new player is likely to now. Google has seen decent growth since buying into Beat That Quote, but similarly remains a long way off the big four. The major players are all rightly focused on making their sites as customer‑friendly as possible and have made great strides forward with their customer interface. In terms of the prominent brands appearing on these sites, they remain largely unchanged.

Impact of telematics

The aggregator market has continued to evolve, with each of the big four having its own strategy. In addition to their huge marketing budgets, growth is coming from additional product lines and through European expansion, against the backdrop of heightened focus from the regulator and the Competition and Markets Authority. However, aggregators have taken something of a watching brief on telematics, while the rest of the market has increased its focus – albeit with a wide range of views on the impact of the technology. There is a growing demand to get a foothold in the sector, as insurers and brokers take their stance on how increased data will support their underwriting strategy and consider the important question of how and when consumers will adopt these products. Certainly insurers have now recognised that, as early adopters, the incremental data will support results. They can gain competitive advantage from that data by collecting critical mass that can be analysed, providing driver behaviour information that can be used for greater precision in underwriting and pricing.*

If you wish to read more please view the Post Magazine Article

*Taken from the Post Magazine April 2014

Spring Summary

Tom CooperIn his spring analysis, IGO4’s Tom Cooper examines the potential outcomes of the investigation into MFN clauses and highlights the difficult relationship between aggregators and brands.

 

Since the last IGO4 report in autumn 2013, the motor market has remained soft, with rates falling every quarter for almost three years. This is partly because many insurers had banked their upsides from the Legal Aid, Sentencing and Punishment of Offenders Act before the ink was dry on the much‑heralded claims process changes. However, a soft market does not necessarily equate to bad news for aggregators, which capture 60% of new business in motor. Defining the perfect conditions for aggregators to flourish has always generated a good debate – a hard market is more likely to lead to consumer propensity to shop around, and might explain why quote volumes have flattened out despite the continued marketing spend of the major players.

On the other hand, a soft market can lead consumers to hunt around for bargains, which will likely see them looking to aggregators. But if the mass media is constantly reminding people they have the most expensive cover in Europe and that rates are rising, they are less likely to look around when their renewal price does not appear to have risen as much as they feared. It is a market in which perception equals reality.

MFN clauses

The big story in this space has been the Competition Commission’s entrance into the most‑favoured‑nation clause debate. This debate can also be divided in two, with one part a pretty straightforward call – the ‘wide’ clause – and the other, the ‘narrow’ clause, being less simple and potentially a real game changer. Aggregators that impose a global or wide MFN clause say they ensure customers have access to the best rates available in the market. This is a credible stance, but could it be considered anti‑competitive – and therefore face a ban?

If you wish to read more please view the Post Magazine Article

*Taken from the Post Magazine April 2014