Price Comparison Sites in Financial Services: Inc Impact of COVID-19 - UK - September 2020

OVERVIEW
Key issues covered in this Report
COVID-19: Market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on price comparison sites
Figure 1: Short, medium and long-term impact of COVID-19 on price comparison sites, 2 September 2020
The market
Product research fell as lockdown reduced demand for switching…
…and rising unemployment will threaten discretionary business
Companies and brands
Comparethemarket.com is the most popular comparison site…
Figure 2: Price comparison sites used to research financial services products in the last 12 months, July 2020
…assisted by heavy spend on above-the-line advertising
Figure 3: Total above-the-line, online display and direct mail advertising expenditure by price comparison sites in financial services, 2015/16-2019/20
Automated switching picks up pace
The consumer
Two thirds of consumers used a PCW in the last year
Figure 4: Financial services products researched using a price comparison site in the last 12 months, July 2020
Three quarters of people researching car insurance go on to purchase
Figure 5: Products purchased after researching using a price comparison site in the last 12 months, July 2020
Consumers want better coverage of T&Cs
Figure 6: Consumer attitudes towards transparency in price comparison sites, July 2020
COVID-19 has provided opportunity to review existing products
Figure 7: The impact of COVID-19 on consumers’ approach to researching financial services products, July 2020
PCWs are challenged by perceptions of cheaper direct sales
Figure 8: Consumer attitudes towards price comparison sites in financial services, July 2020
COVID-19 AND PRICE COMPARISON WEBSITES
Impact on the market
Lockdown removed key prompts to research home and motor insurance
Travel and credit demand was almost non-existent during lockdown
Impact on consumers
Financial pressures will boost demand for comparison…
…and dampen interest in discretionary products
Time to review existing products
Impact on companies and brands
Insurance terms and conditions are under the microscope
Switching strategies to match changing consumer needs
ISSUES AND INSIGHTS
COVID-19 has given time to assess finances, but removed sales points
Consumers want greater transparency but no compromise on price
Credit comparison is primed for innovation
THE MARKET – KEY TAKEAWAYS
Product research fell as lockdown reduced demand for switching…
…and rising unemployment is a threat to discretionary business…
…but price comparison will be highly valued during the recovery
MARKET ENVIRONMENT
Unemployment is projected to hit almost 12% at the end of 2020
Figure 9: Average annual unemployment rate, 2015-24 (forecast)
Regulatory interventions slowed by COVID-19
Lockdown reduced prompts to switch
Consumers face prolonged travel confusion
COMPANIES AND BRANDS – KEY TAKEAWAYS
Heavy spend on advertising leaves little room for challengers
Automated switching picks up pace
Aggregators as consumer advocates
Promoting price comparison as a wellness product
MARKET SHARE
Comparethemarket.com leads a condensed market
Figure 10: Price comparison sites used to research financial services products in the last 12 months, July 2020
Three of the big four increased revenue in 2019
Figure 11: Revenue of leading price comparison sites, 2018 and 2019
Using only one site is the most common option
Figure 12: Number of price comparison sites used to research financial services products in the last 12 months, July 2020
COMPETITIVE STRATEGIES
Automated switching picks up pace
Gocompare.com proposes five-point plan to improve insurance renewals…
…while Comparethemarket.com advocates tax cut for young drivers
Renewable energy filter could be a sign of things to come
Moneysupermarket.com turned to guidance during lockdown
Confused.com Rewards offer choice of free gift
ADVERTISING AND MARKETING ACTIVITY
PCWs spent £136 million on ATL advertising in the year to August 2020…
Figure 13: Total above-the-line, online display and direct mail advertising expenditure by price comparison sites in financial services, 2015/16-2019/20
…split between marketing general insurance and comparison services
Figure 14: Total above-the-line, online display and direct mail advertising expenditure by price comparison sites in financial services, by product category, 2015/16-2019/20
Comparethemarket.com remained by far the biggest advertiser
Figure 15: Total above-the-line, online display and direct mail advertising expenditure by price comparison sites in financial services, by advertiser, 2017/18-2019/20
Nielsen Ad Intel coverage
THE CONSUMER – KEY TAKEAWAYS
Opportunities to expand credit comparison
Consumers want better coverage of T&amp;Cs
COVID-19 has provided opportunity to increase engagement
PCWs are challenged by perceptions of cheaper direct sales
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
Financial wellbeing rose during lockdown…
Figure 16: The financial wellbeing index, January 2015-August 2020
…but 27% are worse off since the COVID-19 outbreak began
Figure 17: Impact of COVID-19 on financial situation, 30 July-7 August 2020
Confidence took a hit during lockdown but has improved since
Figure 18: Financial confidence index, January 2015-August 2020
COVID-19 concerns are holding back the return of travel
Figure 19: How comfortable consumers feel doing travel activities, 3-11 September 2020
PRODUCT RESEARCH
PCWs are still primarily used to compare general insurance
Figure 20: Financial services products researched using a price comparison site in the last 12 months, July 2020
Home ownership is a key driver of general insurance…
Figure 21: Insurance products researched using a price comparison site in the last 12 months, by living situation, July 2020
…while credit comparison most appeals to parents of young children
Figure 22: Consumer credit products researched using a price comparison site in the last 12 months, by parental status, July 2020
Most PCW users looked for one or two products in the last year
Figure 23: Number of financial services products researched using a price comparison site in the last 12 months, July 2020
PRODUCT PURCHASING
Three quarters who researched car insurance went on to buy it
Figure 24: Products purchased after researching using a price comparison site in the last 12 months, July 2020
Retail banking comparison is more often a scope of the market
PRICE COMPARISON SITES AND TRANSPARENCY
Strong demand for better comparison of T&amp;Cs…
Figure 25: Consumer attitudes towards transparency in price comparison sites, July 2020
…but aggregators are generally trusted
Credit comparison offers the greatest scope for innovation
Figure 26: Agreement with selected attitudes towards transparency in price comparison sites, by type of financial services products researched using a price comparison site in the last 12 months, July 2020
THE IMPACT OF COVID-19 ON PRODUCT RESEARCH
COVID-19 has provided opportunity to review existing products
Figure 27: The impact of COVID-19 on consumers’ approach to researching financial services products, July 2020
Getting the best price is the priority…
Figure 28: Agreement with the statement “I am more interested in getting the lowest price” since the COVID-19 outbreak, by current financial situation, July 2020
…ahead of concerns about product terms
ATTITUDES TOWARDS PRICE COMPARISON SITES
PCWs have achieved broad appeal across financial services…
Figure 29: Consumer attitudes towards price comparison sites in financial services, July 2020
…but face strong competition from guidance websites
Specialists face being squeezed out
Consumers are split on the benefits of going direct to providers
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology