Channel Metrics: Consumer Distribution Trends in UK Insurance

Finaccord Channel Metrics: Consumer Distribution Trends in UK Insurance

© Finaccord Ltd., 2014

Expertise in financial services Web: www.finaccord.com. E-mail: [email protected] 1

Channels Metrics: Consumer Distribution Trends in UK Insurance

Series Prospectus

February 2014

http://www.finaccord.com/

mailto:[email protected]




Prospectus contents

What is the research?

Which insurance products and services are covered?

What is the difference between distribution interfaces and distribution channels?

Which specific distribution channels are covered for each insurance product or service?

What is the rationale?

How are the briefings structured?

What are the key features of the research?

How can the research be used?

Who can use the research?

What are some of the key findings?

What methodology has been used?

How does the consumer sample break down?

What is the cost and format?

How can the research be purchased?

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What is the research?

The Channel Metrics series is the most detailed and up-to-date guide to insurance distribution

trends in the UK that is available on a published basis. It covers ten separate insurance product

and service categories, endowing it with a unique level of detail and information about a number of

policy types that are otherwise ignored or under-researched.

It analyses:

• how consumers acquire or take out these products and services - e.g. online, telephone, post or

in person;

• from whom they acquire them or take them out - e.g. direct from the provider, through brokers or

affinity schemes;

• how often they acquire them or take them out - i.e. how many consumers acquired a product in

the last year, either for the first time or by switching provider instead of renewing or carrying on with

an existing product.

Findings from this survey, which depicts trends in 2013, are compared for most products with those

from 2007, 2009 and 2011 to show trends over time. Each of the ten insurance product categories

is covered by its own briefing accompanied by an Excel MetricsBASE™ dataset.






Which insurance products

and services are covered?

Accident and health insurance *

Annual travel insurance

Breakdown recovery insurance

Financial advice

Home emergency insurance

Household insurance

Life insurance

Motor insurance

Pet insurance

Single-trip travel insurance

Note – the briefing for accident and health insurance incorporates results for four insurance policy types: dental

insurance, health / hospital cash plans, personal accident insurance and private medical insurance. These are presented

both in an aggregated format and also separately for each policy type in the appendix.

Note – Finaccord also produces separate research about distribution interfaces and channels used in the UK for card

protection insurance (see Card Protection Metrics), extended warranties for white, brown and grey goods (see Warranty

Metrics) and mobile gadget and phone insurance (see Mobile Metrics).



http://www.finaccord.com/uk/report_card-protection-metrics_consumer-approaches-to-card-protection-insurance-in-the-uk.htm





http://www.finaccord.com/uk/report_warranty_metrics:_caew_white_brown_grey_goods_uk.htm



http://www.finaccord.com/uk/report_mm_camti_uk.htm






What is the difference between distribution

interfaces and distribution channels?

Channel Metrics analyses how consumers acquire insurance products and services by distribution

interface and distribution channel. Customers buy through an interface and from a channel, and

each channel can use a number of interfaces (e.g. a bank or building society can sell insurance

face-to-face, online, by inbound or outbound phone or by post).

DISTRIBUTION INTERFACES DISTRIBUTION CHANNELS

Face-to-face

Online (via laptop / desktop, tablet or mobile phone)

Inbound telephone (consumer calls provider)

Outbound telephone (provider calls consumer)

Post

Direct sales (bought directly from the product provider)

Financial advisers, brokers and online aggregators

Not-for-profit affinity groups (e.g. charities, trade unions)

Commercial partners (e.g. media firms, Post Office, supermarkets)

Financial partners (i.e. financial firms if not the ultimate providers)

Worksite (i.e. through employers)

Sector-specific distribution channels (e.g. travel firms, vets)






Which specific distribution channels are

covered for each insurance product or service?

Note – other specific distribution channels included for a limited number of insurance products or services are: airlines for annual and single-trip travel insurance; automotive clubs for

breakdown recovery and motor insurance; car dealers for breakdown recovery and motor insurance; car manufacturers for breakdown recovery and motor insurance; dentists for dental

insurance; estate agents for household insurance; insurance companies (where not direct) for breakdown recovery insurance, financial advice and home emergency insurance; pet owners'

clubs for pet insurance; stockbrokers for financial advice; travel agents and tour operators for annual and single-trip travel insurance; and vets for pet insurance.

Insurance product or service Direct sales Worksite

Aggregators

Insurance

brokers /

advisers

CharitiesEducational

institutions

Professional or

trade

associations

Sports

organisationsTrade unions

Banks or

building

societies

Credit card

issuers

Automotive

associations

(when not

direct)

Cashback

websites

Catalogue or

other retailers

Electricity, gas

or water

companies

Football or

other sports

clubs

Loyalty

schemes

Magazines,

newspapers or

other media

Post Office Supermarkets

Accident and health insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

within which

Dental insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Health / hospital cash plans Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Personal accident insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Private medical insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Annual travel insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Breakdown recovery insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Financial advice Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Home emergency insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Household insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Life insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Motor insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Pet insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Single-trip travel insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Insurance aggregators,

brokers and financial

advisers

Not-for profit affinity groups Financial partners Non-financial commercial partners






What is the rationale?

While the characteristics of the insurance products themselves evolve over time at a fairly gradual

rate, changes in distribution dynamics are more rapid and subject to regular competitive and

technological disruptions. Thus, understanding these changes is key to successful marketing of

insurance. Indeed, consumers can acquire insurance products and services in a great many ways,

but standard industry data often misses the complexity of these from the consumer’s point of view

meaning that it is of limited practical value.

In contrast, the Channel Metrics series makes the essential distinction between distribution

interfaces and distribution channels. Moreover, leveraging Finaccord's knowledge of affinity and

partnership marketing, Channel Metrics also provides data across all significant distribution

channels (e.g. over 20 in the case of motor insurance including car dealers, car manufacturers,

cashback websites, the Post Office, professional associations, supermarkets and trade unions, as

well as banks and building societies, direct sales, insurance brokers and online aggregators).

As such, it helps to answer a variety of key questions. For example, how do the retention rates of

cashback websites and online aggregators compare to those of other distribution channels? Can

online aggregators carry on growing across all insurance product categories or have they now

peaked in some areas? Which affinity and corporate partner distribution channels are making

progress and which are falling back?






How are the briefings structured?

0. Executive Summary: providing a concise evaluation of the principal findings for the insurance

product or service covered in each briefing.

1. Introduction: offering rationale and a detailed description of the methodology.

2. Survey findings: presentation of the survey results broken down into: switching rates, brand new

sales and renewals; distribution interfaces; generic distribution channels (e.g. commercial partners);

and specific distribution channels (e.g. supermarkets). Data is presented for 2013, 2011, 2009 and

2007 to show how distribution trends are changing over time. For the online distribution interface,

note that the results for 2013 are also segmented by type of device used, differentiating between

laptop / desktop computers, tablets and mobile phones.

3. Appendix: providing a sample breakdown by age group, household income band and

geographical location plus a transcript of the online survey script used.






What are the key features of the research?

Key features of these briefings include:

• separate data given across ten key insurance product and service categories;

• presentation of figures not only depicting distribution trends in 2013 but also comparing them to

those recorded by previous surveys carried out in 2007, 2009 and 2011;

• differentiated results provided for all consumers with the insurance product or service in question

(i.e. the 'stock' of insured respondents), for those switching provider or buying for the first time in

2013 (i.e. the available market in that year given that they made a choice about which distribution

interface and channel to use) and for those who simply renewed their policy in 2013 (i.e. showing

the distribution choices that they made in the year that they originally acquired the insurance product

or service);

• coverage of all significant distribution channels for each insurance product or service category

including those that are specific to particular policy types (e.g. airlines in the case of annual and

single-trip travel insurance, car dealers and manufacturers for motor insurance, estate agents for

household insurance, pet owner clubs and vets for pet insurance).






How can the research be used?

You may be able to use these briefings and the MetricsBASE™ datasets that accompany them in

one or more of the following ways:

• understand trends in usage of distribution interfaces and channels for the specific insurance

product categories that are relevant to you;

• use the time series data to appreciate which distribution interfaces and channels are gaining in

importance, which are stable and which are in decline;

• appreciate how annual retention rates vary radically across the various distribution interfaces and

channels researched – the most rapidly growing distribution systems are not necessary the most

attractive to insurance providers because they are often characterised by high churn rates;

• gain insight into the apparent distribution share of under-researched affinity and corporate partner

channels for which product-specific data is not otherwise available in the public domain.






Who can use the research?

1. Insurance companies: understand trends across the five distribution interfaces, to see which

products are becoming ‘online only’ and which can be distributed by other means;

2. Banks, building societies and credit card issuers: assess what volume of sales you should

make as an intermediary, to see which products you should seek to promote and through which

interface;

3. Affinity and commercial partners: for organisations ranging from automotive associations to

trade unions and from catalogue retailers to supermarkets, this research will show you which

types of insurance consumers are most - and least - likely to buy from you;

4. Management consultancies: are you helping an insurance company or an affinity / commercial

partner with its distribution strategy? Understand channel metrics across a broad range of

insurance products and services, saving time and effort on researching the subject yourself.






What are some of the key findings?

1. Among new buyers and switchers for insurance product X, online distribution

became even more dominant in 2013 while face-to-face sales disappeared altogether

Note – insurance product X is disclosed in the relevant briefing

Source: Finaccord Channel Metrics surveys, 2007, 2009, 2011 and 2013

0%

20%

40%

60%

80%

100%

2007 2009 2011 2013

Post

Outbound phone

Inbound phone

Online

Face-to-face

% split of distribution interfaces among new buyers and switchers






What are some of the key findings? (cont.)

2. Among all respondents with insurance product Y, usage of insurance

aggregators and brokers declined slightly in 2013 relative to 2011

Direct sales

Insurance aggregators

and brokers

Not-for-profit affinity groups

Financial partners

Commercial partners

Worksite

Note – insurance product Y is disclosed in the relevant briefing


0%

20%

40%

60%

80%

100%

2007 2009 2011 2013

% split of distribution interfaces among all respondents







3. For insurance product Z, banks and building societies enjoy vastly higher

renewal rates than other important channels, especially aggregators

Note – insurance product Z is disclosed in the relevant briefing


0%

10%

20%

30%

40%

50%

0% 10% 20% 30% 40% 50%

% of respondents renewing a policy taken out prior to 2013

% of switchers and new buyers in 2013

x Banks or building societies

HIGHER SHARE

OF RENEWALS

x All other channels

x Direct sales

x Aggregators

x Cashback websites

x Post Office

Insurance

brokers

x

HIGHER SHARE

OF SALES







Key findings from the Channel Metrics series in its entirety include:

• across all of the relevant insurance products and services (i.e. all apart from financial advice) the

distribution share of insurance aggregators among new buyers and switchers increased in just one

case in 2013 relative to 2011 and declined in eight cases;

• within the same audience, and again only for insurance products and services where they are

active, the distribution share of cashback websites in 2013 ranged from a minimum of 5.9% to a

maximum of 12.1%;

• across all insurance products and services, the distribution share of not-for-profit affinity groups

among new buyers and switchers averaged 10.6% in 2013, up from 7.8% in 2011;

• the results for 2013 across the relevant insurance products indicate that less than half of all

consumers holding a policy taken out through an insurance aggregator had renewed an existing

policy; in comparison, policies held directly with insurers were 1.6 times more likely to be renewals

with equivalent multiples for not-for-profit affinity groups and non-financial commercial partners of

1.5 and 1.3, respectively.






What methodology has been used?

The Channel Metrics series is based on the results of an online survey of over 1,000 consumers

carried out during December 2013. 48.3% of respondents were male and 51.7% female. These

respondents provided answers for each of the insurance products reviewed, and the breakdown of

the total sample by age group, annual household income band and geographical region is as

shown on the following page.






How does the consumer sample break down?

AGE GROUPS

INCOME BANDS

GEOGRAPHIES

Less than £10,000, 8.1%

£10,000 -£14,999, 12.7%

£15,000 -£19,999, 11.4%

£20,000 -£24,999, 12.8%

£25,000 -£29,999, 12.6%

£30,000 -£39,999, 15.8%

£40,000 -£49,999, 8.8%

£50,000 -£59,999, 7.4%

£60,000 -£79,999, 5.9%

Over £80,000, 4.6%

South-East (ex. Gtr London),

14.9%

Greater London, 11.4%

North-West, 11.5%

Yorkshire / Humberside,

8.4%West Midlands,

9.2%

East Anglia, 9.2%

South-West, 8.4%

Scotland, 8.2%

East Midlands, 7.4%

Wales, 5.3%

North-East, 3.1%

Northern Ireland, 3.0%

16-24, 14.5%

25-34, 14.3%

35-44, 18.6%

45-54, 18.8%

55-64, 15.8%

65 or over, 17.9%






What is the cost and format?

The Channel Metrics briefings are available as standard PDF documents and associated

MetricsBASE™ datasets in Excel format. The cost structure for this research series is as follows: 1

briefing = GBP 495, 2 briefings = GBP 945, 3 briefings = GBP 1,345, 4 briefings = GBP 1,695, 5

briefings = GBP 1,995, 6 briefings = GBP 2,245, 7 briefings = GBP 2,345, 8 briefings = GBP 2,395,

9 briefings = GBP 2,445, all 10 briefings = GBP 2,495.

For UK-based clients, VAT at the prevailing rate will be added to the basic price.

Costs quoted are for a single site user licence only.

For a corporate user licence, please see the final slide for further details.

Invoices can be paid in EUR or USD, at the prevailing exchange rate, if preferred.






How can the research be purchased?

Simple. Just go to the relevant area of the Finaccord web site available at

www.finaccord.com/order_uk_channel-metrics.htm and fill in the online order form, clearly

indicating:

• report required

• type of corporate user licence, if required *

• billing name

• address and e-mail address

• purchase order number, if applicable

Please allow up to one working day for the delivery of electronic copy by e-mail.

* For the corporate user licence please choose one of the following options:

1. One office, one country: no supplement over and above basic cost of reports ordered

2. Multiple offices, one country: additional 20% over and above basic cost of reports ordered

3. Multiple offices, two to ten countries: additional 50% over and above basic cost of reports ordered

4. Global (unlimited offices in unlimited countries): additional 100% over and above basic cost of reports ordered

VAT at the prevailing rate will be added to the price of any corporate user licence acquired by UK-based buyers.



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Channel Metrics: Consumer Distribution Trends in UK Insurance

Economy & Finance

Transcript of Channel Metrics: Consumer Distribution Trends in UK Insurance