Home / International / Comparators must innovate, go beyond price: GlobalData
7 June 2021
A change in UK regulation around so-called “loyalty penalties” will most impact price comparison websites and encourage them to pair with insurtechs to innovate benefits beyond price, GlobalData says.
The Financial Conduct Authority (FCA) is set to implement new regulation by the end of the year and this will decrease the incentive for customers to switch policies as insurers will no longer be able to charge more to existing customers than new ones.
Price comparison websites are “heavily reliant on consumers switching behaviours” and will need to rethink their business models, GlobalData analyst Jazmin Chong says, as the loyalty penalty encourages home and motor insurance customers to switch providers at renewal.
A new partnership between Comparethemarket.com and insurtech Getsafe is set to create “a shift” in the UK’s personal insurance market, the research says, with more customisable polices likely.
Getsafe customers can insure specific contents rather than paying a flat premium fee for a cover level that may not meet their needs.
“With the addition of Getsafe being listed on Comparethemarket.com, the site may look to partner with additional insurtechs,” Ms Chong said.
“This, combined with the FCA’s regulation change and price comparison websites embracing insurtechs on their sites, will make it clear to insurers that they will need to differentiate their products beyond the price point to reach new customers.”
Insurtechs have developed tailored policies for individuals using customers’ own data to personalise features, GlobalData notes, including usage-base-insurance or fitness trackers.
By partnering with an insurtech, Comparethemarket.com will expose a wider range of customers to personal insurance products that are more price competitive and more flexible, with the option to cancel or pause their premium at any time, as well as being fully digital.
“This means that insurers will need to differentiate their products beyond the price point to reach new customers,” GlobalData says.
GlobalData research reveals price comparison websites are heavily reliant on customers that switch insurance providers year-on-year as their customer base is are not attracting enough new customers through their reward offerings.
Its UK Insurance Aggregators 2021 report also found the three cheapest combined home and content insurance policies listed on Comparethemarket.com had “very little distinguishing features” and this was a “key element found in incumbent insurance offerings, which traditionally only compete on price”.