We’ve all heard the phrase “shop around” perhaps one too many times. On the consumer front the benefits are obvious, but what does this mean for auto insurers? New research by LexisNexis Risk Solutions sheds light.
According to the firm’s study on motor insurance buying behaviour, 68% of 1,500 motorists shop around whenever their policy comes up for renewal. With 59% thinking insurers “consistently charge too much,” it’s no surprise then that at their last renewal nearly 40% of policyholders switched providers.
Here’s what’s bothersome though: the same survey found that 70% of consumers believe it is acceptable to manipulate the information they provide when scouring price comparison websites for better quotes. A good percentage (84%) use the sites as part of their policy selection process.
“Widespread frustration at the cost of motor insurance, the rise of online price comparison sites, and the requirement for insurance providers to publish last year’s premium with this year’s renewal quote have all encouraged consumers to shop around for the best possible deal,” noted Andrew Lowe, director of motor insurance at LexisNexis Risk Solutions, UK and Ireland.
“This has also created a real problem for the sector in quote manipulation on price comparison sites, particularly in relation to fronting, with the risk of policies being invalidated.”
Fronting is the practice of enlisting a higher risk motorist as a named driver, instead of the main driver. You can read more about fronting here.
“These findings reveal both the scale of the challenge for any provider seeking to retain its customers and the size of the opportunity for insurance providers able to poach customers from competitors,” said Lowe. “Intelligent use of data is essential in helping insurance providers deliver quotes that offer the best chance of conversion, based on individual risk, and enhance the customer journey to create and retain strong customer relationships.
“Failure to do this will mean loss of market share to competitors that are beginning to harness technology and data to improve their products.”
