Price Comparison competition heats up as consumer interest cools

• Tuesday, 04 December 2007

There’s been an enormous increase in motor insurance price comparison services in recent years, starting with confused.com and then MoneySupermarket But according to research experts Consumer Intelligence (CI) the trend might be reversing. Which could mean stormy times ahead.

CI surveyed nearly 4,000 consumers who had renewed their insurance during August-October. The results show, unexpectedly, that the number of insurance buyers using an online price comparison service has stalled at around 67%.

So is the price comparison bubble about to burst? Ian Hughes of Consumer Intelligence comments, “During August the number of people using price comparison services hit a peak of around 69% of those renewing. But since then volumes have dropped back down to pre-August levels. We’re witnessing an unmistakeable trend, and certainly growth has stopped.”

If the downward spiral continues, the future is likely to be challenging for price comparison sites. Many owners achieved massive initial valuations on their businesses, based on the prediction that the market would keep growing. Hughes adds, “It’s quickly becoming clear that companies’ key strategy must involve hanging on to existing customers and reducing churn.”

CI’s research shows that biggest player in the price comparison market is still confused.com, leading the pack by a wide margin. MoneySupermarket.com lags some way behind. But the big growth comes from TescoCompare, which only launched in September but by October accounted for nearly 20% of all UK price comparison shopping; their average over the three month period is 12.7%, already bigger than Uswitch. And so far, this rapid growth shows no sign of slowing.

Hughes delivers the details: “At this rate TescoCompare will overtake CompareTheMarket and GoCompare within a matter of weeks. Not only that, we expect them to be snapping at the heels of MoneySuperMarket by the second quarter of 2008.”

Top Aggregators by Market Share
(consumers using an Aggregator between August and October ’07)

Confused 71.1%
MSM 48.8%
GoCompare 15.6%
Compare the market 13.5%
TescoCompare 12.7%
MoneySavingExpert 12.5%
Uswitch 10.3%
Other 3.8%
InsuranceWide 1.3%
InsureWith 0.9%
Quotezone 0.9%
Confidentcover 0.3%

CI’s research is part of a rolling tracking study examining consumer habits and choices within the Motor Insurance Market. The results regularly bring big picture patterns into focus, and this Survey is no exception. “Things are due to come to a head during the annual February and March push for motor insurance. It’ll be a critical time. A number of big name price comparison services are set to launch during 2008. We predict the weakest aggregators might find it a struggle to survive.” concludes Hughes.

Notes to editors:

Consumer Intelligence benchmarks the price and service performance of financial services providers. The company has been tracking motor insurance prices since 2004.

Every month, Consumer Intelligence interviews over 2,000 buyers of Motor insurance to find out what they believe are the key issues in the insurance market. This is the most comprehensive survey of UK motor insurance trends.

As an independent company, Consumer Intelligence data and results are not biased to serve the interests of any single insurer or group of insurers.

Clients receive independent, actionable data that enables them to flex their offering to gain competitive advantage and market share. For more information about Consumer Intelligence, please email ianh@consumerintel.com or cal him on 0117 3178181

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