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12th February 2012

UK insurers need to place more emphasis on product features says report

According to independent financial research company Defaqto, growing competition in the UK home insurance market and increasing consumer confidence in buying cover online means providers need to place more focus on differentiatiating and promoting their products based on features and quality if they are to catch the attention of consumers.
The latest edition of Defaqto’s "Development opportunities in the home insurance market" reveals a trend of significant growth in the number of products available across the home insurance market. The number of policies within the standard market has grown by 10.7% since 2009, while policies available in the mid net worth (MNW) sector of the market has increased by 25% in the same period.
In addition to the rise in the number of policies available, Defaqto research has found that 85% of consumers are confident about researching and purchasing home insurance online without advice. While this appears to show that more people than ever before are comparing cover before they buy, it is also adding to the competitive nature of the home insurance sector. As a result, it is increasingly important for providers to focus on product differentiation to make their offerings stand out to customers.
Mike Powell, Defaqto’s Insight Analyst for General Insurance, said “Providers and their products are faced with an increasingly crowded and competitive marketplace. In addition, there are a vast number of consumers searching for home insurance policies each year and many will choose the internet as a way of comparing products. Attitudes to insurance in an online world have changed. Our research shows that consumers are more comfortable with comparing cover online before they buy to ensure they select a policy that is right for them.
As a consequence, providers need to be distinctive in order to stand out and catch the consumer’s eye. Product differentiation is the key in attracting consumers and combating the "price versus cover" challenge. Providers not only need to look at the features they offer within their product range, but also how proactive they are in marketing these to potential customers.”