An examination of the profitability of customers acquired through price comparison sites: Implications for the UK insurance industry — Gary Robertshaw, Journal of Direct, Data and Digital Marketing Practice Vol. 12 No. 3

The widespread adoption and entrenchment of online price comparison sites as a customer acquisition route by insurance companies, coupled with rapidly increasing use of such sites by consumers has had a profound effect on the profitability dynamics of the UK general insurance market. This paper discusses the emergence of price comparison sites and examines their effectiveness in acquiring and retaining customers. Drawing on case study figures and using a hypothetical model, the longer-term implications for company profitability and that of the wider industry are considered.(14 pages, £19.50)

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1. At 17:54:53 on 16 February 2011, Dennis Haggerty, i:protectinsurance.co.uk wrote:

Price comparison websites are only useful to sell simple price led products. If this is all the customer wants then they serve a purpose. The concern is obviously that if the customer looking for more, such as a more flexible product to meet their changing needs or what insures like to call 'quality cover' will find they have bought the insurance equivalent to a KIA and not a BMW. In short you get what you pay for and buying on price usually means the purchasers ends up with the most basic product.

Having worked with several comparison sites my main concern is they offer the consumer a narrow selection and very little advice. I suspect the Regulator will cast a harsh eye on these sites at some point and they will find their model constrained to the extent their customers feel they are more trouble than they are worth. Direct Line won't deal with them and ultimately they may be proven right.

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