|Title:||United Kingdom top 10 personal-line automobile insurance companies by gross premiums in pounds sterling for 2010|
Start of full article - but without data
Top XX UK Personal Lines Motor Insurers 2010
Thousand [pounds sterling]
Company Name Gross Premiums
X Direct Line Insurance plc [pounds sterling] X,XXX,XXX X Aviva Insurance UK Ltd XXX,XXX X Royal & Sun Alliance Insurance plc XXX,XXX X Liverpool Victoria Insurance XXX,XXX Company Ltd X AXA Insurance plc XXX,XXX X Churchill Insurance Company Ltd XXX,XXX X Great Lakes Reinsurance (UK) XXX,XXX X UK Insurance Ltd XXX,XXX X Ageas Insurance Ltd XXX,XXX XX esure Insurance Ltd XXX,XXX
Source: A.M. Best Europe
The Internet could have been invented for the U.K. motor insurance market, and vice versa, as the instant transmission of data is well-suited to a highly competitive, price-driven environment in which success can be measured by the speed of a click.
This world has spawned the aggregator, the price comparison website that collates and presents choices to a restless buying public. As a result of determined promotion, names such as Confused.com and Moneysupermarket.com have become familiar both to midnight surfers and commuters on the London Underground.
"The aggregators have become an important phenomenon in the industry in the U.K.," said Smart Crawford-Browne, a U.K.-based director at J.D. Power and Associates.
Aggregators bring "transparency to the pricing process," added Craig Beattie, a London-based insurance analyst at research firm Celent.
By exerting downward pressure on prices, the aggregators are bringing further problems to a sector that has turned in consistent, sometimes dramatic, underwriting losses in recent years.
Aggregators remain largely outside the regulatory net of the U.K. Financial Services Authority, Beattie said. There is always the threat that the FSA could move in if it felt its attention was needed.
"And that's where aggregators are at the minute," he said. "They're treading a free line."
Crawford-Browne believes regulation will become more of an issue for aggregators as risk takes on a higher profile.
Volatility needs to be managed, "and regulation seems to be one way to do that." As a way of reassuring the FSA, the aggregators warn customers on their websites to make sure that a particular cover is right for them, Crawford-Browne added.
Current practices within the auto insurance market have tended to penalize customer loyalty. "If you're lazy enough not to bother getting another quote, you tend to get higher and higher insurance premiums year on year, which I don't think is a sustainable market," Beattie said.
While there will always be loyal customers whose good claims experiences will keep them with an insurer, Beattie said, "it's increasingly easy to push people toward pricing aggregators."
Crawford-Browne, who has lived in both the United Kingdom and the United States, believes the British have brought a certain skill to Internet marketing.
He noted the success of online grocery shopping in the United Kingdom and the desire for customers to be rewarded for their business.
The decision by Aviva pie to enter the U.K. online motor insurance market is further evidence of the Internet's appeal. In reporting on its performance for the first quarter of 2011, Aviva stressed the importance of auto insurance to the overall health of the group. Not only does Aviva have two million auto insurance customers in the United Kingdom, but it added XXX,XXX during the first quarter and a total of XXX,XXX since the beginning of 2010.
"We continue to explore new routes to market and plan to extend our distribution through aggregators in the summer with a new, separately branded Internet-only offering" Aviva said in a statement.
Confused.com is owned by U.K. auto insurer Admiral Group pie, which has been selling policies online for more than a decade. For the first six months of 2011, Admiral reported a pretax profit of XXX.X million [pounds sterling] (US$XXX.X million), a record and XX% higher than the total in the first haft of 2010. Turnover was up XX% to X.X billion [pounds sterling].
The results were "an incredible achievement,' said Henry Engelhardt, Admiral's chief executive. "As one of the lowest-cost providers in a commoditized market, we are well-placed for a future which is shaping up to be the survival of the fittest" he said in a statement.
In Crawford-Browne's view, the use of technology could be seen as a challenge to the established distribution channels. The online banking industry has driven movement and encouraged the entry of organizations that can offer a personalized approach.
"It's about playing that margin that they can create,' he said of the aggregators.
"But as that margin becomes more diminished, scale is more and more important. And that can perhaps compromise the actual support that they get from a specific insurer."
Crawford-Browne agrees that the activities of the aggregators have rewarded disloyalty in an environment that has become acutely aware of price.
The aggregation process itself is very competitive as disintermediation has reduced margins at each stage of the process, while demanding expensive investment in marketing.
"It's a challenge for the value chain to remain intact,' he said.
Moneysupermarket.com, which describes itself as the United Kingdom's "leading price comparison website" reported a XXX% increase in aftertax statutory profit to X.X million [pounds sterling] from X million [pounds sterling] in the first six months of 2011. While more than half of the company's book of insurance business is in auto insurance, Moneysupermarket.com also pointed to growth in its home and travel lines.
"More and more consumers are going online to find the best deals,' said CEO Peter Plumb in a statement.
For online customers, Crawford-Browne said, price is one of the main "drivers of satisfaction," itself highly dependent on whether a customer has had a claim.
Beattie sees parallels with the mobile phone industry, which changed its marketing approach after discovering that it was cheaper to hang onto customers than to be forever chasing new ones. Beattie, who believes the U.K. motor insurance sector is capable of making an underwriting profit, said success will depend on the ability to run a lean operation while choosing the right customers.
Price and brand loyalty will be key factors, he said.
U.K. auto underwriters have responded to rising claims costs by increasing their premiums, Beattie said. He cited announcements from major insurers of price rises of XX% to XX%. Meanwhile, increasing unemployment has created pressure on customers to seek out lower prices.
Beattie cited Axa's ownership of swiftcover.com, the U.K.-based online insurer it acquired in 2007. In addition to auto, swiftcover.com insures home, travel and pet risks. Located outside London, it has more than X,XXX employees. The company was founded in 2005 by a group of its executives.
Online operations offer the advantages of lower administrative costs and close control over the suppliers who support the claims process. "Managing the claims costs with a fine-tooth comb seems to be a model that works," Beattie said.
Such an approach has not established itself across the U.K. auto insurance market. The prevailing pattern in the United Kingdom, as in Germany, is for auto insurance to be sold as a loss leader, said Beattie.
Aggregators are active in other areas of the market, such as home, travel and pet insurance. They are responding to a demand that price comparisons be offered online.
Aggregation "is here to stay," Beattie said.
The focus of the multi-cover packages offered online remains on medium to high net worth individuals, Beattie said.
But the beginnings of mass appeal could bring the aggregators in.
Insurers are trying to engage with customers and foster brand loyalty. The goal is to keep them interested in the insurer rather than merely respond to the lowest price.