CEO Ian Hughes argues that with insurers such as Aviva and Direct Line forging a path for other cover providers to follow, we could soon be entering an era of re-disintermediation – although in a different way to the rise of the direct insurer as spearheaded by Direct Line.
“Insurance has gone through a series of cycles where it was initially heavily intermediated, and then it became disintermediated with the launch of the likes of Direct Line, Esure and others,” he said.
“Then you have re-intermediation with the rise of the price comparison websites, and what is now being pointed to is the possibility of the reappearance of disintermediation, with consumers saying they don’t want to have all these different providers and do all these different things to get a quote.”
Recent entrants to the market are being forced to re-evaluate
And such a realignment of the motor insurance distribution network could lead to more recent entrants to the market being forced to re-evaluate the way they conduct their business.
“Insurers that have grown up in the era of price comparison have really traded off of the fact they haven’t needed to spend a lot of money on their brand, because they can just go onto a price comparison website to get customers and all they needed was to drive their prices down,” he said.
“They might now find that will get them so far, but in the long-run some of these other guys with a slightly broader game and a strong brand may have more opportunities in terms of profitability and growth.”
Insurers not prepared to chase down premiums even further and squeeze already dwindling profits must reinvigorate their focus on branding.