Bonfire of the car insurance price comparison sites

Saturday, 31 October 2009 07:14

The number of price comparison websites is to fall to just five in the next two years.

Research by Deloitte holds underwriting losses in the car insurance market as responsible for a crunch in the market leaving smaller players unable to compete.

The only expansion could come from a major player entering the market with a significant marketing budget.

Stephen Ross, insurance partner at Deloitte, said: "At present there are a small number of aggregators that dominate the market, and barriers to entry such as demanding advertising spend leave smaller players unable to compete unless they are focussed on particular niches."

He explained the big five price comparison sites have increased their combined TV advertising spend by 90 per cent in 2008 to £80 million - representing nearly 2.5 per cent of total TV advertising.

Having the ability to advertise and become a major name is key; Deloitte research found 66 per cent of consumers are unlikely to purchase insurance online from an unknown brand.

"In this day and age of aggregators, brand awareness has never been so important," Mr Ross said.

However, price comparison sites are here to stay.

"Aggregators have been successful as they offer price transparency to consumers at a time when price is a major criterion for people buying on the internet.

"They are also easy to access and are user-friendly for consumers to navigate."

He added innovative advertising campaigns have helped sites "gain ownership of the customers".

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