Vying for possession

Has the consumer ever had it better as the market continues to struggle with reducing margins? Tom Cooper discusses the latest developments in the aggregator market.

The fourth price comparison watch, undertaken last month by Igo4, has produced almost the same average best price premium for motor insurance when compared to last quarter — £384.87 versus £385.12 — but the underlying direction of rates is beginning to move upwards, with 58% of the basket of risks seeing an increase. So why has the overall figure remained flat? Competition between the aggregators and the brands that appear on them has intensified significantly and, as margins continue to come under pressure, there has been a push for higher premium business that brings with it higher non-risk income earning opportunities. For 44% of risks the aggregator showing the best price had changed, and on a huge 55% of cases the leading brand had changed within the aggregator — albeit sometimes to another brand within the same parent company.

It is becoming much more prevalent for aggregators and brands to develop exclusive offerings as both seek differentiation and, while there has been some innovation, price continues to dominate. One marketing strategy being increasingly adopted by large brands, such as Swinton and the AA, is the cashback offer. Aggregators have been somewhat wary of these in the past, but are now starting to show them extensively, with the cashback amount removed from the premium. This has a downward effect on the headline premiums, but the customer that uses aggregators for convenience has to go through a lengthy
manual process to receive the cashback.

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

*Taken from the Post Magazine October 2009