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Press Release: S&PGR Reports On Motor Insurance In The U.K. And Europe

4 Oct 2016 8:11 am
 
 
The following is a press release from Standard & Poor's: 
 
OVERVIEW 
     -- Two-thirds of new motor insurance policies in the U.K. are now sold 
through price comparison websites (PCWs) that originated in the early 2000s. 
     -- The rise of PCWs has brought about a significant change in motor 
insurers' business models, with increased spending on IT and pricing, and less 
on marketing and call centers. 
     -- In contrast, the European motor insurance market has largely remained 
loyal to the broker or agent distribution model, which we believe is due to 
agents' and brokers' ability to remain relevant by updating their product 
offerings, for example, through digitalization. 
     -- We therefore expect PCWs to remain a small part of the overall 
European motor insurance market over the next two-to-three years, as brokers 
and agents maintain their dominance. 
 
LONDON (S&P Global Ratings) Oct. 4, 2016--The rise in the popularity of price 
comparison websites (PCWs) over the past 15 years has brought about a 
revolution in the U.K. motor insurance market, according to a report published 
today by S&P Global Ratings (see "European Motor Insurance Markets Are Not 
Swayed By The U.K. Price Comparison Revolution"). 
 
Approximately two-thirds of new motor insurance policies in the U.K. were sold 
through in PCWs in 2014. As PCWs are most popular among young consumers, we 
expect these websites' share of new business sales to continue to rise, albeit 
at a slower pace than previously. 
 
The most obvious result of this change has been a decline in the importance of 
brand, service, and product features, while price has become even more 
dominant. Insurers that do not find their quotes in the top five places on a 
PCW may struggle to gain new business, no matter the quality of their product 
offering and service. This has led many U.K. insurers to channel their 
spending into pricing and IT capabilities, and away from marketing and call 
center spending. 
 
In contrast, for most of continental Europe, the agent, broker, and 
bancassurance models of motor insurance distribution remain dominant. While 
direct distribution has taken hold in the Nordic market and is growing in the 
Spanish market, distribution via direct approaches or via PCWs remains a small 
part of the overall European market. Several U.K. insurers have attempted to 
take their distribution model to the continent, but have met with little 
success. 
 
In our view, traditional intermediaries remain dominant in the European 
insurance markets because they have been able to adapt to new customer 
preferences by, for example, digitalizing their offerings. As a result, we do 
not expect any significant changes to the market share of brokers and agents 
in continental Europe in the next two-to-three years. 
 
Longer term, although the continuing rise of the internet and the younger 
generation's purchasing preferences may not by themselves bring about the 
demise of the broker or agent, it will require these intermediaries to 
innovate or become obsolete. 
 
Only a rating committee may determine a rating action and this report does not 
constitute a rating action. 
 
The report is available to subscribers of RatingsDirect at 
www.globalcreditportal.com and at www.spcapitaliq.com.  If you are not a 
RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 
212-438-7280 or sending an e-mail to research_request@spglobal.com. Ratings 
information can also be found on the S&P Global Ratings' public website by 
using the Ratings search box located in the left column at 
www.standardandpoors.com.  Alternatively, call one of the following S&P Global 
Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office 
(44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; 
Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4009. 
 
Primary Credit Analyst: Robert J Greensted, London (44) 20-7176-7095; 
                        robert.greensted@spglobal.com 
Secondary Contacts: Taos D Fudji, Milan (39) 02-72111-276; 
                    taos.fudji@spglobal.com 
                    Marco Sindaco, Madrid (34) 91-788-7218; 
                    marco.sindaco@spglobal.com 
                    Ali Karakuyu, London (44) 20-7176-7301; 
                    ali.karakuyu@spglobal.com 
                    Alexander Altinisik, Stockholm (46) 8-440-5902; 
                    alexander.altinisik@spglobal.com 
                    Marc-Philippe Juilliard, Paris +(33) 1-4075-2510; 
                    m-philippe.juilliard@spglobal.com 
                    Volker Kudszus, Frankfurt (49) 69-33-999-192; 
                    volker.kudszus@spglobal.com 
Additional Contact: Insurance Ratings Europe; 
                    InsuranceInteractive_Europe@spglobal.com 
 
 
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(END) Dow Jones Newswires

October 04, 2016 04:11 ET (08:11 GMT)
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