Following November’s increase in Insurance Premium Tax (IPT) it now seems that price is the most important factor when people are choosing their insurance policy. Does this mean the end of the brand?
Over the last few years the way we shop for insurance has changed. Rather than speaking to companies by telephone and trying to thrash out a good deal, we now shop online and use price comparison websites as a way of distinguishing between different insurers and what their policies offer. Whilst for some, price has always been the most important factor, others value the level of protection and the quality of the customer service, and are prepared to pay a bit more for these.
In 2016, 58% of people chose their new policy based ultimately on price, up from 52% in 2015. This figure is at a 3 year high, which suggests that the price comparison websites are winning. Ian Hughes, CEO of website Consumer Intelligence, concurs, calling this “the death of the insurance brand and the rise of the price comparison brand”. Customers no longer feel that they know their brands, and therefore have a far lower sense of loyalty. “Brand doesn’t mean what it used to before price comparison sites became the norm” Hughes continues, “This shows just how disenfranchised the consumer has come with insurance”.
The rise of these sorts of sites has meant that now, come renewal time, 80% of customers will shop around no matter what, as there is now a genuine belief that by doing so you will find the best deal available. It is as though they no longer trust their insurance company, or don’t believe it has their best interests at heart. Increasing distrust is having a detrimental effect on this industry, which can be further heightened if you or someone you know has had a bad experience with an insurer or faced difficulties when trying to claim on a policy.
What does this mean for the motorhome broker?
Motorhome insurance is a niche part of the industry, offering specialist cover to take into account the unique nature of the motorhome. It is harder for smaller brokers and niche insurers to compete on price. As it is not a huge market, it has not been as affected by price comparison sites as other areas such as car or home insurance, where industry heavyweights are slugging it out in a bid to undercut one another. Motorhome owners place far more importance on the quality of the cover and the level of customer service their insurer provides, and for some of the older customers a smaller company means greater familiarity, to the point where you and your broker may end up on first name terms. This knowledge, care and attention to detail is what helps build the most important thing of all: trust.
It seems that the bigger insurance companies are suffering more from the rise of price comparison sites than smaller, niche insurers. However, there is a limit to how cheap you can make an insurance policy, and when they are unable to compete on price any more these companies will have to start focusing on the other factors impacting the decision making process instead such as better quality cover and a high level of customer service. After all, brand loyalty is based on so much more than just price.