Canadian Underwriter
News

New low-cost distribution channels gaining momentum in U.K. market


October 20, 2008   by Canadian Underwriter


Print this page Share

Insurers in the United Kingdom are obligated to adopt multi-channel strategies as consumer preferences for interaction with insurers continues to shift, and tough economic times require lean operations, Celent reports.
In its latest findings, ‘Top Trends in UK Distribution: A General Insurance View,’ Celent notes the company agent channel has halved since 2000, while banks and retailer/affinity channels have seen large rises of 49% and 422% respectively (albeit from small bases).
Tough economic times will ensure continued growth of aggregators in personal lines, with a shift from motor to home, Celent continues. This will result in increasing levels of premium traded online at the expense of the direct Web sites.
Aggregators or online insurance shopping tools are increasing the bargaining power of the consumer, as well as price transparency and lowering distribution costs, Celent says.
“The UK market is in a mature development stage, with low-cost channels and new channels, such as aggregators and affinity, becoming increasingly active,” said Catherine Stagg-Macey, author of the report. “This is driven from both the sell side insurers trying to adopt lean business models in order to compete and the buy side, with increasing customer demand for flexibility in buying insurance products.”
In the UK’s personal lines sector, the dominant channels are direct (30%) and the independent intermediary (32%).
Independent intermediaries dominate the commercial insurance sector, with 83% of insurance being sold in this channel in 2006, Celent notes.