New regulation announced in the UK by the Competition and Markets Authority (CMA) aims to introduce measures that it ‘expects to increase competition in the car insurance market’.* In an already fiercely competitive industry these are liable to have short term implications on how insurers offer products, as well as longer term ones on consumer behavior. The measures respond to two findings. Firstly that agreements existed between insurers and price comparison sites that prevented insurers from offering cheaper policies through other online channels. Legislation has been introduced which will effectively ban the practice. Secondly the CMA has concluded that ‘the way motor-insurance-related add-on products are sold makes it hard for customers to obtain the best value’. The CMA is calling for the Financial Conduct Authority (FCA), as part of its ongoing work on insurance add-ons, to consider how drivers could be better informed in making their choices.
Optimization has repeatedly shown that users respond positively to clear value propositions. For this to be so it requires insurers to be adept at understanding when and how to sell add-ons within their sales funnels. The current model of offering them on separate pages within the sales funnel is adopted as standard. Challenging this framework should be a key strategy of insurers adapting to the new environment.
The present framework presents shoppers with a simple choice: go direct or go to a comparison site. However, with insurers now enjoying greater freedom to experiment with new marketing channels, the possibility that some of these will become effective is high.
Such a shift would require a revaluation of pages outside the sales funnel. The dated look of many high profile motor insurance homepages is indicative of their diminished importance within sales funnels. The current model has made them redundant; re-absorbing them as effective components in the marketing funnel means they would require serious optimization.
The CMA announcements are likely to be viewed as a favorable outcome for insurers. For this verdict to bring about significant change in user behavior and the insurer’s financial performance, insurers must be willing to innovate. Optimization offers a unique framework to do this. In many aspects motor insurance is grounded in orthodoxies established close to a decade ago. If these can be challenged, and new approaches adopted, then CMA announcements might prove to be a significant milestone in the online insurance industry.