Dual pricing sees price comparison sales drop


A greater awareness of dual pricing among customers is seeing fewer people buying insurance online, according to research.

A study by Lexis Nexis Risk Solutions found the number of sales via comparison sites, as well as insurer websites, fell from 70% in 2015 to 65% last year.

Meanwhile the volume of phone transactions as a proportion of all insurance sales rose from 20% in 2015 to 24% in 2017.

Andrew Lowe, director of motor insurance, UK and Ireland, at Lexis Nexis said: “These findings demonstrate the impact of the sector’s differential pricing at new business and renewal.”

Dual pricing is the practice whereby insurers charge lower premiums for new customers than existing customers on renewal.

It is the subject of a super-complaint by the Citizen’s Advice Bureau and an ongoing investigation by the Financial Conduct Authority.

Lowe said a greater shift toward phone transactions could drive up the costs of providing insurance.

He added: “This move back to the phone will increase cost of acquisition, depleting margins and price cutting opportunities in an already profit-challenged market.

“The price comparison websites are still a valuable resource for consumers when it comes to renewal, and the insurance industry needs to look at how it can encourage loyalty among consumers by going beyond just accurate pricing.”

The study showed that motor purchases via comparison sites saw a decline from 38% in 2015 to 33% in 2017.

However, a spokesperson for Confused disputed the findings.

“Our latest market intelligence data tells us that aggregators and direct web sources saw a rise in sales volumes by 7.5% and 4.3% respectively,” the spokesperson said.

“Telephone-orginated sales continued to decline, with the fall accelerating to 12% year-on-year.”

Go Compare declined to comment, and Compare the Market did not immediately respond to a request for comment.

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