Purchasing insurance products via price comparison websites (PCW) has long been a popular choice among UK customers and COVID-19 is affecting it. Given that PCWs rely heavily on returning customers for sales, low switching behaviour among customers amid COVID-19 could have longer-term implications for price comparison.
The leading reason for consumers choosing to purchase insurance from a PCW is because they have used the site before, as cited by 37.0% of respondents taking part in GlobalData’s 2019 UK Insurance Consumer Survey. Thus, the purchase of other products such as utilities can eventually lead to sales of insurance products, particularly the more commoditized ones such as motor, home, and travel insurance. Equally, a fall in the number of individuals using PCWs will affect sales of insurance products through this channel and compromise its market share.
Certainly, the economic climate emerging from the COVID-19 pandemic has affected sales through PCWs. Moneysupermarket, one of the UK’s leading PCWs for insurance products, has seen revenues fall by 11% in the first nine months of the year. Several factors have contributed to this downturn, including fewer customers switching energy supplier and the sales of travel insurance policies being depressed. However, as disposable income falls as a result of the pandemic, consumers will search at renewal for cheaper products, which could mitigate some of the losses of PCWs if consumers end up switching.
Yet, travel insurance is most commonly purchased via PCWs. According to GlobalData’s 2019 UK Insurance Consumer Survey, more than a quarter (26.0%) of individuals buy travel insurance via this channel. Although travel restrictions eased in the summer, the sales of travel insurance policies continue to be compromised. Many holidaymakers are reluctant to travel abroad, while changing travel plans last minute or cancelling trips altogether have become common practice as countries enter and exit the safe travel list.
While the impact of COVID-19 on PCWs at present mirrors the economic climate, it could have longer-lasting implications for this channel. Given that PCWs rely to a great extent on repeat customers for growing their business, an extended downturn of sales across different lines could ultimately affect its market share for insurance products. As such, direct sales and other avenues of purchasing insurance could increase their share at the expense of the PCW channel.