Author Archives: Lewis Miller

Aggregator Analysis

Tom CooperFor the fifth consecutive quarter, the iGO4 price index for the best motor quote across 1000 separate risks has fallen – by a further 3.25% says Tom Cooper, Executive Director, iGO4

This quarter we counted a total of 192 ‘proper’ brands live across the eight sites monitored, and more than 50 of these were top at least once across the basket. Direct players still hold sway on motor, with Admiral again to the fore, alongside Esure, Sheilas’ Wheels, Swiftcover and Octagon, though the brokers held their own with strong performances from the Budget brand, Hastings, Express, Thames City, Autonet, One Call and iGO4 Essentials.

Rising instalment cost While the underlying cost of the core insurance product has fallen again, the total price paid by the customer may well have not. Our first analysis in September 2008 noted an average credit charge of 13% at a time when the base rate was 5%. The Bank of England soon lowered its rate to 0.5% in March 2009, where it has remained ever since. In this time, brands on price comparison sites have increased direct debit charges to an average of 17%. On a typical £500 funded premium, this will have added more than £40 to the provider’s income stream in the past four years and, therefore, the ‘soft’ market would have to be viewed with scepticism by consumers wishing to pay by instalments, with more than half likely to do so given the difficult financial climate.

The average instalment charge has risen by 3.5% in the past two years alone. While writing business on instalments is lucrative at point of sale, brands have to contend with a different kind of risk profile than that of someone prepared to pay in full. Instalment customers are three times more likely to cancel or fail to send in proof of no claims bonus, and providers obviously need to ensure they maintain their payments. As illustrated by the graph (see p14), brands have now started to increase deposits in order to mitigate any likelihood of bad debt arising. They appear to be quite prepared to push their luck on the instalment charge, as they must be able to continue to increase rates while also ensuring they do not suffering commercially. This is a risky strategy and, while a brand’s instalment penetration may well be maintained following an increase, what would be less clear is whether it is losing absolute sales as a result.

Brands are also beginning to introduce a wider range of ancillary products into their portfolios, with the cost of motor legal expenses flattening at around the £26 mark. Once again there are interesting developments to report in the price comparison arena, with Google making its first noteworthy move since the acquisition of Beat That Quote. Users searching for ‘car insurance’ on the search engine will now see Google’s own listing in the central column between the sponsored and natural search results. This is an interesting move, though not a game-changer, and the two sites most likely to be impacted – Go Compare and Money Supermarket – are unlikely to be overly concerned.

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

*Taken from the Post Magazine October 2012

iGO4 Boosts Management Team

iGO4 Boosts Management Team with Appointment of Karen Hogg to Commercial Director Role

iGO4 Limited has appointed Karen Hogg as Commercial Director, effective 1st May 2014. Karen will report into Chief Operating Officer, James deRose. Her experience and credentials speak for themselves, with almost nine years at Kwik Fit Financial Services as head of insurer development and for the last seven years at AXA, in roles including director of panel partnerships and managing director of personal lines intermediary.

Matt Munro, Chief Executive of iGO4 Limited said: “We have built a fantastic team at iGO4 and having the best people in the right roles is crucial. We are delighted to welcome Karen to our senior team and look forward to her key contribution in supporting our aggressive growth plans for our direct business and further establishing ourselves as the partner of choice in our target markets”.

Karen Hogg, new Commercial Director, iGO4 Limited commented: “iGO4’s track record is impressive. They have grown quickly, underpinned by a culture of innovation and profitable growth for insurers and other trading partners, which is appealing to me. They do business in the right way. I can see the opportunities that lie ahead and I am looking forward to being a part of this dynamic team.”

A big growth area for iGO4 in the last twelve months has been in telematics. In addition to its direct proposition – WiseDriving – the comprehensive infrastructure and platform it has built enables it to support insurers and other motor insurance providers with a flexible and direct route into this market. iGO4 has also supported investors NMG Holdings with the acquisition of Equity Direct Brokers. The business is on track to transfer onto the iGO4 administration platform from June this year.

Matt added: “iGO4 is now working with some big brands. We can support a diverse range of insurance products including telematics. Due to acquisition and consolidation in the partnership market we offer a compelling proposition supported by insurers and the skill set required to deliver value to affinity partners.

The Return of Motor Madness

The push for volume in motor has started again, with a fall in rates for a fourth consecutive quarter, while home is proving more resilient says Tom Cooper, Executive Director, iGO4

For the fourth consecutive quarter, the iGO4 price index, detailing the best motor quote across 750 separate risks has fallen, this time by 4.2%, and the market is now soft rather than flat. In the
last quarter’s review, consideration was given to whether this was a mere correction of overcooking previous increases, but it is now clear there is a huge push for volume once again, with the direct writers leading the way. Reasons for this are varied and fly in the face of 2011’s collective underwriting performance, which produced a loss-making combined ratio of 106%, despite the rate increases that had flowed through 2010 and the first half of 2011.

The major protagonists will all have their own reasons for such an approach; there are the stated IPO intentions of Direct Line Group, Esure and Hastings for a start; and, for some, the need to support large operating cost bases, with the money given away at point of sale potentially underpinned by renewal income from large back books. Direct writers are dominant despite the continued retraction of competition and, as with the Spring 2012 watch observation, there has been as a 20% reduction in the number of prices returned on some risks, compared to the previous quarter. iGO4 recently experimented withdrawing from a particular segment on one site and witnessed up to a 50% increase in sales through other sites for the same business, providing further evidence that consumers visit more than one site when shopping around.

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

*Taken from the Post Magazine July 2012

Tipping Point

With signs pointing to a soft market, questions
abound about what will now drive a customer to use an aggregator to switch insurer. As the price comparison evolution continues apace, does maturity mean uncertainty? And what is the perfect market scenario for a price comparison site? asks Tom Cooper, Executive Director, iGO4

In a hard market, consumers see their premiums increase, and are drawn to aggregators to try to secure a better deal at renewal. In a soft market, consumers will use them to search for bargains. But somewhere flat in the middle does not drive traffic or business. With renewal prices similar to last year’s premium, or last month’s for instalment payers, consumers have no real appetite or incentive to put their details through their aggregator again – even though this is now a straightforward process.

Are consumers likely to change if the price they are presented with is 1p cheaper than their current provider? Assuming not, here’s another question: where is the tipping point? How much does brand and the past year’s experience count, particularly when the consumer has been through the claims process? In addition, people are changing their vehicles less frequently and not necessarily looking to buy new. Between 2008 and 2011, half a million fewer new vehicles were being bought each year, with no sign of a reversal. The average age of used cars being sold has gone up to just over seven years old from 6.5.

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

*Taken from the Post Magazine April 2012

No Compare – Price comparison sites have plateaued on motor

It became clear from the price analysis carried out during the course of 2012 that the impact of gender on pricing declined since the change in legislation was first announced earlier in the year. Many insurers immediately started to narrow the gap between the sexes –particularly older drivers – despite the legislation only coming into effect on 21 December.

The iGO4 price comparison watch compares prices for the same risk details across 1000 quotes so, for the latest quarterly analysis, the effective quote date was set past the gender ruling cut-off date in order to capture and monitor its immediate impact. The results were quite startling – on motor, males have seen almost double-digit falls in some cases from September to December, while the female rate has gone up by 3.4% over the same period. These headline figures do not tell the whole story, however, as females aged under 20 have seen rises of 13% while those over 30 have barely seen prices move upwards at all. Males of all ages – but especially younger drivers – have enjoyed huge reductions in the fourth and final quarter.

So the fear that insurers would use this as an opportunity to merely increase rates across the board has not materialised in what continues to be a soft market. The motor quote basket has also seen shifts for some brands in terms of competitive pricing. Admiral reasserted its position in the final quarter, particularly through its Diamond brand and we also saw Privilege coming to the fore alongside a couple of usual suspects on the direct front in LV and Octagon. Significantly, the ever-rising dominance of price comparison sites in the private car market finally matured and flattened out in 2012.

That said, in the space of just 10 years since their inception, aggregators now generate 10 to 11 million quotes every month and 60% of every new car insurance policy sold. Leading the way and cementing its position in 2012 was Compare the Market with a 32% market share of quotes, followed by Money Supermarket with 27% and Confused and Go Compare jointly in third spot with 18% each. The other 5% is made up of a number of smaller players with Quotezone and Tesco Compare vying for places five and six.

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

*Taken from the Post Magazine January 2013