An increase in searches, aggregators and price comparison tools online is affecting premiums in the UK, according to a new report from Celent.
“The Customer, Google and UK Car Insurance: Lessons from Evolving Customer Search Behavior” reveals that price comparison tools increase the premium across all insurers. “They make the insurance product about price rather than best fit for the client’s needs,” said report co-author and Celent Analyst Craig Beattie. “They take a cut of the profits, which forces the insurer to offer the same price on their direct websites.”
The study mentioned a 32-percent increase in the number of searches for auto insurance on Google between 2010 and 2011.
“The emergence of pricing aggregators, social media, Google and other search engines is making the risk/pricing matching game more symmetrical,” Celent Analyst Donald Light told Insurance Networking News. “They give the auto insurance buyer more insight into how a lot of insurers view that equation.”
The 32-page report examines the swift changes in the UK auto insurance market, which while benefiting customers has created pitfalls for insurers. The changes include moving from a broker distribution model to direct sales over the phone and more recently self-service models via the Internet.
“Previously loyal customers are now shopping around, looking to alternative schemes such as not owning a car,” Beattie said. “On top of this, small and organized fraud are both on the increase as well as an increasing cost associated with ‘regular’ claims.”
As insurers seek the best drivers and best risks, a new class of customers who cannot get insurance at a reasonable cost is emerging, according to the study.
“Some young drivers report being offered insurance premiums at five or six times the value of the car they own, which is a premium that reflects the insurers concern over their risk to other drivers and road users,” said Beattie.
The upside is insurers can more easily tap into their customer base as well as potential clients.
“The trick now is to deploy the right tools and people to allow the insurers to listen to their customers and partners to realize this potential,” said Beattie.
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