Market cashback value drops 42% to around £620 and number of deals cut by more than a third. But major motor insurers still succeed on new business with deals.

 

The value and number of cashback deals on car insurance have been cut by up to 40% as companies reduce incentives for new customers, new analysis1 from insurance market research experts Consumer Intelligence shows.

Three years ago new customers were being offered cash back deals adding up to a total of more than £1,065 in cashback through cashback sites — but now the total amount on offer is worth 42% less at around a total of £620.

The number of offers available from car insurers have also shrunk dramatically from 30 in 2013 to around 19 now.

Consumer Intelligence data shows the value of cashback deals began declining in 2014 but the major falls came in the middle of last year and have accelerated throughout 2016.

The drop in cashback value and number of deals flies in the face of the success of cashback sites across other retail sectors such as fashion and food and comes at a time when drivers are under pressure from rising insurance costs.

Price rises for car insurance are increasing at around 13% a year2, according to Consumer Intelligence’s analysis which is used by the Government’s Office of National Statistics to calculate official inflation statistics, taking the average to £683.

Consumer Intelligence’s analysis shows that providers which continue to offer cashback are winning new business. Across the market around 10% of new business is won by cashback deals.

Ian Hughes, Chief Executive of Consumer Intelligence said: The number of people buying car insurance through cashback websites is decreasing and that is mirrored by the decline in the number of deals and the value of deals.

“But with car insurance price rises racing ahead and switching at a three-year high it makes sense for customers to take advantage of the deals available on cashback websites.

“For providers it’s no secret that customers who buy through cashback sites are more likely to switch — our data shows they stay with an insurer for an average of two years compared with three years for the market as a whole.”

 1 Consumer Intelligence analysis of its own database
2The cheapest premiums were calculated by comparing the prices offered for 3,600 people by all the major Price Comparison Sites and key direct insurers. The top 5 prices for each person were compared to the previous month’s top 5, then these variations averaged to produce the index. This data was produced in 2016

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About Consumer Intelligence

Consumer Intelligence (CI) is a market research agency specialising in the General Insurance and Banking Sectors. We have spent the last 12 years perfecting the art of collecting data so that organisations can benchmark themselves. Since 2003, we have been collecting and analysing millions of prices across the telephone, direct insurer websites and aggregator channels.


 

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