Price Comparison Sites in General Insurance  - UK - July 2015
Executive Summary
 
“Price comparison websites have cemented their role in the way that people buy financial products, particularly within the insurance sector. Market leaders are spending generously in order to stand-out from their rivals. Within such a competitive market environment building trust should not be overlooked in favour of creating a memorable image, as trust will be a longer-term determining future success. This, and rewarding loyalty, which market leader Comparethemarket has successfully made strides toward with its ‘Meerkat Movies’ promotion, will set the tone for the market over the next few years.”
-Sean Song, Financial Services Research Analyst

The market
Insurance is still the key product for comparison sites
The insurance industry is strongly product-led and consumers are by far and away more likely to use price comparison websites to research insurance products than is the case for other financial products, such as savings accounts, credit cards and mortgages. Mintel’s Financial Services: The Path to Purchase – UK, June 2015 report shows that 63% of people who have purchased car insurance did their initial research on a price comparison website (PCW) and 55% of home insurance purchasers followed the same research path.

FIGURE 1: First information sources used to research financial products before purchase, March 2015
 
“You mentioned that you consulted the following sources before arranging your newest financial product (including switching providers). Which source of information did you consult first?”

Base: 1,110 internet users aged 18+ who have arranged a financial product in the last three years and stated the information source(s) they consulted
 
Source: Lightspeed GMI/Mintel

Car and home insurance are the most widely researched and bought products on PCWs
Within the insurance product sector, car and home insurance purchase rates via PCWs are the runaway leaders, with some 32% and 25% of consumers having used a comparison website to arrange one in the past year. Renewal prompts are a key driver in this case, and data from Mintel’s Motor Insurance – UK, March 2015 report, confirms that 31% of consumers switch providers upon car insurance renewal time, highlighting the necessity for PCWs to be alert to consumer retention during these times.

FIGURE 2: Insurance products researched/purchased through price comparison sites, May 2015
 
Base: 1,944 internet users aged 18+
 
Source: Lightspeed GMI/ Mintel

Market factors
Regulatory involvement
The Financial Conduct Authority’s (FCA) 2014 thematic review aimed to understand whether consumers were being fairly served by price comparison websites when looking to purchase insurance products. The FCA analysed consumers’ path to purchase process. The FCA’s conclusions highlighted a need for better transparency, consistency, and price clarity from PCWs in the market. At the same time the FCA outlined the need for greater prominence for product features on PCWs, rather than placing most of the focus on price.

Transparency should be helped by the Competition and Markets Authority’s (CMA) ban on exclusive deals between PCWs and insurers, reflecting concerns that price parity clauses were stopping insurers from making their products available cheaply on other online platforms. This will go some way toward allowing insurers to make their product offerings more widely comparable and therefore more accessible by more potential consumers.

Online trends
Nearly a quarter of tablet owners have accessed a PCW from their device
Tablet ownership levels are increasing, having recently overtaken household ownership levels of desktops in late 2014. This is feeding through into tablet-based use of comparison sites. While for the time being laptop usage rates remain the highest, with 32% of computer owners having accessed a PCW in the past three months, Mintel expects this gap to narrow as tablet ownership levels increase toward that of laptop ownership levels.

FIGURE 3: Other online activities on device, April 2015
 
Base: 2,000 internet users aged 16+
 
* percentages show the proportion of device owners who have participated in each activity on that device

Source: Lightspeed GMI/ Mintel

Companies, brands and innovations
Comparethemarket leads a competitive market landscape
63% of consumers have accessed Comparethemarket.com to research or arrange an insurance product, the highest consumer usage rates of all the comparison websites. Comparethemarket.com marked the end of 2014 with the pioneering use of Facebook video ads as a way to connect to millions of people socially, while it also entered into a sponsorship agreement with Cinema First in March 2015 which offers customers 2-for-12-for-1 cinema tickets for a year.

Gocompare.com, Moneysupermarket.com, Confused.com have been used by 49%, 46%, and 44% of consumers respectively. Each company has spent generously on marketing drives, notably Gocompare’s sponsorship of the popular ITV game show, Family Fortunes, and Confused.com’s introduction of additional robot characters alongside BRIAN.

FIGURE 4: Price comparison site market share, 2015
 
Base: 1,318 internet users who have used a PCW to either research or purchase an insurance product
 
Source: Lightspeed GMI/Mintel

The majority of consumers use 3+ PCWs to research and or purchase insurance products
Market share only gives one part of the picture, however. 52% of consumers say they have used three or more price comparison websites to research and or purchase an insurance product, indicating that for the average consumer, comparison websites are just a part of their wider research process, rather than a one-stop shop. Users of PCWs are primarily on the lookout for the best deal on the market, and it is often this reason that consumers who initially go onto one price comparison site then go onto at least check out other comparison sites.

FIGURE 5: Repertoire of website usage, May 2015
 
Base: 1,318 users aged 18+ who have used a price comparison website in the past 12 months
 
Source: Lightspeed GMI/ Mintel

Brand analysis
On the surface, price comparison websites appear to be associated with similar personality traits, including accessibility, helpfulness and competence, perhaps suggesting that their overall concept impacts upon perceptions rather than individual brand activity. However, certain metrics such as trust, differentiation, and recommendation all differ, suggesting that marketing strategies and brand experience have an influence on the way that individual brands are seen.

Comparethemarket.com has the advantage in usage, trust and perceived differentiation, all of which is likely to have been influenced by advertising campaigns featuring the ever-popular group of meerkats. The giveaway of meerkat toys with purchases has created a sense of rewarding loyalty and fun, with the recent launch of Meerkat Movies likely to further boost these positive and differentiating associations.

FIGURE 6: Attitudes, by brand, May 2015
 
Base: internet users aged 18+ who have heard of the brand and expressed a view
 
This chart shows the level of association of each brand surveyed with a set of key performance attributes core to finance brands overall. The more significant an attribute is as part of a brand’s image relative to other attributes, the nearer it will be to that attribute. If a brand is between a number of attributes, it is reasonably closely associated with each of these.

Source: Lightspeed GMI/Mintel

Marketing efforts reach new levels with record £120+ million advertising spend in 2014/15
Price comparison websites are continuing to spend significant amounts of money to attract new customers and build on existing brand perception. Until year ending 15 April 2015, annual spend on above-the-line, direct mail and online display advertising increased by 11% across the whole industry, while brands also invested heavily in paid search. TV advertising dominated the channel of distribution, while radio comes in a distant second.

The fact that the top players in the industry spend generously on advertising, often involving celebrity endorsements or expensive sponsorships, is indicative of the importance of brand image in this market, and the need to ensure that an advertiser’s site is the site people turn to first.

FIGURE 7: Recorded above-the-line, direct mail and online display advertising expenditure in the price comparison websites market, 2010-15
  
Year ending 15 April

Source: NMR/ Mintel

The consumer
Three key consumer segments: The Purchasers, Just Checking, and Non-users
Mintel has outlined three mutually exclusive key consumer segments. The Purchasers are consumers who have used a PCW to research and purchase an insurance product within the last year. They account for 47% of consumers, the largest group of the three. Mintel data reveals that the majority of Purchasers (58%) have purchased two or more insurance products via PCWs, suggesting that repeat buys occur more often than not and reflects a positive customer experience.

The Just Checking group accounts for 21% of consumers and are people who have used a PCW to research insurance products but who have not actually bought from a site within the last year.

FIGURE 8: PCW usage consumer segments, May 2015
 
Base: 1,944 internet users aged 18+
 
Source: Lightspeed GMI/ Mintel

Purchasers: The majority purchase two or more insurance products
Among all consumers, 28% have used comparison sites to buy two or more insurance products within the last 12 months, while 13% have used PCWs to buy at least three insurance products.

The tendency for purchasers to take out more than just one insurance plan via PCWs reflects well on the industry, as it demonstrates that the customer is happy with the experience and is willing to buy again via PCWs. Power users, or those people who purchased four or more insurance products via a PCW, are significantly more likely to have an above average household income (£50,000 or more) and/or have a household size of four people. This comes back to the idea that PCWs are most frequented and used by people who are in a situation of comparative financial comfort and are also in a position of responsibility.

FIGURE 9: Number of products bought, May 2015
 
Base: 1,944 internet users aged 18+
 
Source: Lightspeed GMI/ Mintel

45% of the ‘solo purchasers’ buy car insurance via a PCW
Car insurance takes the top spot for the most popular insurance product taken out among single-purchase users. The greater difference in product purchase between the top three products is even starker among single-purchase users when compared to the average, which further reflects the popularity of this product among PCW users.

This partly reflects much lower ownership of Pet, Life, Health and Gadget Insurance. However it also hints at the role that motor cover plays as a ‘gateway product’, and the tendency that only consumers who have already used a PCW to initially purchase a more mainstream product will then go onto purchase another less-mainstream insurance product.

FIGURE 10: Number of products bought, by insurance product breakdown, May 2015
 
Base: 1,944 internet users aged 18+
 
^ sample size: 398 consumers who bought just one insurance product via a PCW

Source: Lightspeed GMI/ Mintel

The mainstream products boast superior conversion rates
The most researched products, car, home and travel insurance, display the highest conversion rates. More than half of consumers who used PCWs to research these products then went on to complete a purchase. The difference is stark. 60% of car insurance researchers then went on to purchase car insurance, compared with just 31% of life insurance researchers.

FIGURE 11: Conversion ratio, by product, March 2015
 
Base: 1,944 internet users aged 18+
 
* conversion rates are calculated from the percentage of users who complete purchases to those researched for each respective product

Source: Lightspeed GMI/ Mintel

Just Checking group: Over half go on to check out the providers’ websites for a better deal
The most common reason given by people among the ‘Just Checking’ group for not completing a purchase via a PCW was to check out whether or not a better deal was available directly from the provider. This popular drop-out reason feeds into the idea that PCWs are still viewed as part of the research process, rather than a one-stop shop for product purchase. Consumers enjoy being able to access a list of providers in the market which they can then go onto independently research.

FIGURE 12: Reasons for not purchasing, May 2015
 
Base: 401 internet users aged 18+ who have used a PCW to research but not purchase an insurance product
 
Source: Source: Lightspeed GMI/ Mintel

Laptop and desktop usage ahead, but tablets are up-and-coming
Laptops are the most popular way consumers are accessing PCWs, with 62% of PCWs users having done so, while desktop usage was not far behind with 47%. Tablet usage rate is currently modest, with only 17% of PCW users having used one as a means to compare prices, however, Mintel predicts that with the increasing levels of household ownership of tablets and their suitability for displaying large amounts of information on larger screens, tablets will see an increased usage rate going forward.

Furthermore, 35% of consumers would be interested in using a mobile app (Please see Interest in Product Development section), while among people who have actually bought a product through a comparison site, that figure rises to 46%, suggesting a bright future for this area of the market.

FIGURE 13: Device usage for accessing PCWs, May 2015
 
“On which of the following devices have you accessed a price comparison website for an insurance product in the last 12 months?”

Base: 1,318 internet users who have accessed a PCW in the past 12 months
 
Source: Lightspeed GMI/ Mintel

Transparency still needs to be improved
With respect to consumer attitudes toward PCWs, two features that received overwhelming agreement among consumers were related to the transparency of the product offering. Nearly four in five consumers would like to see PCWs make more effort to show how much of a particular market they cover, showing that consumers are not only interested in understanding the deals within the market coverage scope, but also the information which is not available to them as well.

There was a similar level of agreement when it comes to the need for comparison sites to disclose any agreements they have in place with certain product providers. The CMA has already acted to ban agreements that prevent insurers from selling products more cheaply on rival sites, but it is clear that consumers still have concerns about how just transparent comparison sites are.

FIGURE 14: Attitudes toward transparency and coverage, May 2015
 
“Still thinking about price comparison websites, do you agree or disagree with each of the following statements?”

Base: 1,944 internet users aged 18+
 
Source: Lightspeed GMI/Mintel