Since the Financial Conduct Authority (FCA) announced a change in price walking regulations, GlobalData has predicted in its UK Insurance Aggregators 2021 report that price comparison websites (PCWs) would have to innovate their business models, delivering benefits to consumers that go beyond price. Compare the Market was the first PCW in the UK to move in this direction, having partnered with insurtech Getsafe. The partnership enables the PCW to offer customers a more personalised and digital contents insurance policy. Insurtech partnerships are looking to be the way forward.
PCWs are an important distribution channel for the UK personal insurance market. GlobalData’s 2020 UK Insurance Consumer Survey finds that 24.8% of customers purchased home contents insurance from a PCW. The survey also finds that 66.4% of consumers purchased contents insurance from a PCW because they had used the site before. While this flags PCWs’ ability to attract returning customers and maximise cross-selling opportunities, it also flags their heavy reliance on customers who switch insurance providers as their customer base.
Home and motor insurance customers are more incentivised to switch providers at renewal due to the insurance industry’s loyalty penalty – whereby insurers increase premiums to existing customers despite their risk not changing, while often offering better deals to prospective customers.
However, the FCA is set to implement new regulations by the end of 2021 that will decrease incentives for customers to switch, as insurers will no longer be able to charge more to existing customers than new ones.
Based on recent research conducted by GlobalData, the top three cheapest combined home and contents insurance policies listed on Compare the Market came from incumbent insurers Privilege, Halifax, and Churchill. While the home and contents coverage from this trio were differentiated by price, the coverage level had very few distinguishing features.
However, by integrating an insurtech such as Getsafe, Compare the Market has opened up the possibility for customers to get exposed to more customisable policies, with personalisation features that allow the policy to compete on price. For example, Getsafe customers can insure specific contents that are important to them, rather than having to pay a flat premium fee for a cover level that may not be applicable to their own needs.
Additionally, Getsafe is a fully digital platform that also gives customers the flexibility to cancel their policy at any time.
Following the addition of Getsafe on Compare the Market, the site may look to partnerships with additional insurtech. This could create a shift in the market, whereby consumers become exposed to and more aware of insurtech brand names, personalisation features, and flexible insurance offerings. Along with the FCA’s regulation change and PCWs embracing insurtechs on their sites, it should become clear to insurers that they will need to differentiate their products beyond the price point to reach new customers.