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Financial Services|Market Opportunities and Innovation|United Kingdom|English

Why are British consumers no longer banking on home insurance?


Price comparison sites (PCS) have long been used extensively across motor insurance. The combination of a highly price sensitive market with the ease and convenience offered by sites has made motor insurance a highly fertile ground for them. However, home insurance has traditionally been a much tougher nut to crack for PCS given the high levels of loyalty to bank providers and the level of inertia within the sector. However, there are now definite signs that this is changing.

According to the latest findings from our Financial Research Survey, a large continuous consumer survey of retail financial holdings across Britain, arrangement via PCS for new business now accounts for 35% of the market. Although numbers are considerably lower if those who renew with their existing provider are included, almost half (49%) of all those taking out quotes are now getting at least one estimate via PCS. In tandem with this upturn in use, greater numbers are also stating a preference for using PCS which suggests there is still room for PCS growth.

Middle-aged spread

The uptake of PCS has been seen across all age groups. Although 18-24 year olds still prefer to go into a branch - possibly due to loyalty to their mortgage or current account provider - whilst the over 65s still rely on the phone, PCS arrangement for new business has grown even across these age groups. However, it is across the middle-aged (35-64) where most growth is occurring with arrangement via PCS for new business in this age group now accounting for over 40%.

The phone and branch channels have been directly impacted by the growth of PCS, while arrangement via direct provider websites has held-up at just over 20%. Attitudes to PCS amongst home premium payers have also improved, especially regarding trust, which has increased considerably over the last six months.

Out with the old in with the new

Increased use of PCS may also be partly behind why people are prepared to consider more providers in general, and specifically insurers not traditionally linked with home insurance. Once mainly the domain of banks and long established names such Direct Line and Aviva, providers that make heavy use of PCS are now increasingly being considered.

Having established themselves across motor insurance, providers such Admiral, Esure and Hastings Direct are now making waves in home insurance. Although they are attracting a high proportion of switchers, which suggests customer churn will be an issue, the fact that they have a large general customer base, thanks to their prominent position in motor insurance, means that they can cross-selling home insurance relatively easily.

Safe as houses no more

In contrast, the link between banking and home insurance appears to be weakening especially around mortgage arrangement. Consequently, the opportunity for banks to cross-sell home insurance is shrinking, both from mortgage and current account. The majority of banks are therefore not gaining as many new customers as they once did with market share steadily declining.

It is perhaps too soon to write-off the banks; they do still after all have big customer bases and high levels of retention and satisfaction. It may be that if the banks can fully embrace PCS they will be able to stem the tide. However, in an evolving market what is clear is that banks can no longer to afford to take their advantages for granted.

Jamie Talmage, Associate Director, GfK

The Financial Research Survey (FRS) is an independent survey run by GfK and purchased by nearly all major financial services providers in the UK. The survey covers all the main retail financial markets and provides detailed information on (but not limited to):

  • Product holding, acquisition and usage
  • Brand awareness and consideration
  • Channel usage and preference
  • Satisfaction and recommendation