Channel Metrics: Consumer Distribution Trends in UK Insurance

Finaccord

Channel Metrics: Consumer Distribution Trends in UK Insurance

Channels Metrics:
Consumer Distribution Trends in UK Insurance
Series Prospectus
February 2014

Expertise in financial services
© Finaccord Ltd., 2014

Web: www.finaccord.com. E-mail: info@finaccord.com

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Prospectus contents
Page
What is the research?
Which insurance products and services are covered?
What is the difference between distribution interfaces and distribution channels?
Which specific distribution channels are covered for each insurance product or service?
What is the rationale?
How are the briefings structured?
What are the key features of the research?
How can the research be used?
Who can use the research?
What are some of the key findings?
What methodology has been used?
How does the consumer sample break down?
What is the cost and format?
How can the research be purchased?

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What is the research?
The Channel Metrics series is the most detailed and up-to-date guide to insurance distribution
trends in the UK that is available on a published basis. It covers ten separate insurance product
and service categories, endowing it with a unique level of detail and information about a number of
policy types that are otherwise ignored or under-researched.
It analyses:
• how consumers acquire or take out these products and services - e.g. online, telephone, post or
in person;
• from whom they acquire them or take them out - e.g. direct from the provider, through brokers or
affinity schemes;
• how often they acquire them or take them out - i.e. how many consumers acquired a product in
the last year, either for the first time or by switching provider instead of renewing or carrying on with
an existing product.

Findings from this survey, which depicts trends in 2013, are compared for most products with those
from 2007, 2009 and 2011 to show trends over time. Each of the ten insurance product categories
is covered by its own briefing accompanied by an Excel MetricsBASE™ dataset.



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Which insurance products
and services are covered?
Accident and health insurance *
Annual travel insurance
Breakdown recovery insurance
Financial advice
Home emergency insurance
Household insurance
Life insurance
Motor insurance
Pet insurance
Single-trip travel insurance
Note – the briefing for accident and health insurance incorporates results for four insurance policy types: dental
insurance, health / hospital cash plans, personal accident insurance and private medical insurance. These are presented
both in an aggregated format and also separately for each policy type in the appendix.
Note – Finaccord also produces separate research about distribution interfaces and channels used in the UK for card
protection insurance (see Card Protection Metrics), extended warranties for white, brown and grey goods (see Warranty
Metrics) and mobile gadget and phone insurance (see Mobile Metrics).



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What is the difference between distribution
interfaces and distribution channels?
Channel Metrics analyses how consumers acquire insurance products and services by distribution
interface and distribution channel. Customers buy through an interface and from a channel, and
each channel can use a number of interfaces (e.g. a bank or building society can sell insurance
face-to-face, online, by inbound or outbound phone or by post).
DISTRIBUTION INTERFACES

DISTRIBUTION CHANNELS
Direct sales (bought directly from the product provider)

Face-to-face

Financial advisers, brokers and online aggregators

Online (via laptop / desktop, tablet or mobile phone)

Not-for-profit affinity groups (e.g. charities, trade unions)

Inbound telephone (consumer calls provider)

Commercial partners (e.g. media firms, Post Office, supermarkets)

Outbound telephone (provider calls consumer)

Financial partners (i.e. financial firms if not the ultimate providers)

Post

Worksite (i.e. through employers)

Sector-specific distribution channels (e.g. travel firms, vets)



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Which specific distribution channels are
covered for each insurance product or service?
Insurance product or service

Direct sales

Insurance aggregators,
brokers and financial
advisers

Not-for profit affinity groups

Aggregators

Insurance
brokers /
advisers

Charities

Educational
institutions

Yes

Yes

Yes

Yes

Yes

Yes

Dental insurance

Yes

Yes

Yes

Yes

Yes

Health / hospital cash plans

Yes

Yes

Yes

Yes

Yes

Personal accident insurance

Yes

Yes

Yes

Yes

Private medical insurance

Yes

Yes

Yes

Annual travel insurance

Yes

Yes

Breakdown recovery insurance

Yes

Yes

Financial advice

Yes

Home emergency insurance

Yes

Yes

Household insurance

Yes

Life insurance

Non-financial commercial partners

Automotive
associations
(when not
direct)

Trade unions

Banks or
building
societies

Credit card
issuers

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Motor insurance

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Pet insurance

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Single-trip travel insurance

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Accident and health insurance

Professional or
Sports
trade
organisations
associations

Financial partners

Worksite

Cashback
websites

Catalogue or
other retailers

Electricity, gas
or water
companies

Football or
other sports
clubs

Loyalty
schemes

Magazines,
newspapers or
other media

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Post Office

Supermarkets

within which

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Note – other specific distribution channels included for a limited number of insurance products or services are: airlines for annual and single-trip travel insurance; automotive clubs for
breakdown recovery and motor insurance; car dealers for breakdown recovery and motor insurance; car manufacturers for breakdown recovery and motor insurance; dentists for dental
insurance; estate agents for household insurance; insurance companies (where not direct) for breakdown recovery insurance, financial advice and home emergency insurance; pet owners'
clubs for pet insurance; stockbrokers for financial advice; travel agents and tour operators for annual and single-trip travel insurance; and vets for pet insurance.



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What is the rationale?
While the characteristics of the insurance products themselves evolve over time at a fairly gradual
rate, changes in distribution dynamics are more rapid and subject to regular competitive and
technological disruptions. Thus, understanding these changes is key to successful marketing of
insurance. Indeed, consumers can acquire insurance products and services in a great many ways,
but standard industry data often misses the complexity of these from the consumer’s point of view
meaning that it is of limited practical value.
In contrast, the Channel Metrics series makes the essential distinction between distribution
interfaces and distribution channels. Moreover, leveraging Finaccord's knowledge of affinity and
partnership marketing, Channel Metrics also provides data across all significant distribution
channels (e.g. over 20 in the case of motor insurance including car dealers, car manufacturers,
cashback websites, the Post Office, professional associations, supermarkets and trade unions, as
well as banks and building societies, direct sales, insurance brokers and online aggregators).
As such, it helps to answer a variety of key questions. For example, how do the retention rates of
cashback websites and online aggregators compare to those of other distribution channels? Can
online aggregators carry on growing across all insurance product categories or have they now
peaked in some areas? Which affinity and corporate partner distribution channels are making
progress and which are falling back?



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How are the briefings structured?
0. Executive Summary: providing a concise evaluation of the principal findings for the insurance
product or service covered in each briefing.
1. Introduction: offering rationale and a detailed description of the methodology.
2. Survey findings: presentation of the survey results broken down into: switching rates, brand new
sales and renewals; distribution interfaces; generic distribution channels (e.g. commercial partners);
and specific distribution channels (e.g. supermarkets). Data is presented for 2013, 2011, 2009 and
2007 to show how distribution trends are changing over time. For the online distribution interface,
note that the results for 2013 are also segmented by type of device used, differentiating between
laptop / desktop computers, tablets and mobile phones.
3. Appendix: providing a sample breakdown by age group, household income band and
geographical location plus a transcript of the online survey script used.



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What are the key features of the research?
Key features of these briefings include:
• separate data given across ten key insurance product and service categories;
• presentation of figures not only depicting distribution trends in 2013 but also comparing them to
those recorded by previous surveys carried out in 2007, 2009 and 2011;
• differentiated results provided for all consumers with the insurance product or service in question
(i.e. the 'stock' of insured respondents), for those switching provider or buying for the first time in
2013 (i.e. the available market in that year given that they made a choice about which distribution
interface and channel to use) and for those who simply renewed their policy in 2013 (i.e. showing
the distribution choices that they made in the year that they originally acquired the insurance product
or service);
• coverage of all significant distribution channels for each insurance product or service category
including those that are specific to particular policy types (e.g. airlines in the case of annual and
single-trip travel insurance, car dealers and manufacturers for motor insurance, estate agents for
household insurance, pet owner clubs and vets for pet insurance).



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How can the research be used?
You may be able to use these briefings and the MetricsBASE™ datasets that accompany them in
one or more of the following ways:
• understand trends in usage of distribution interfaces and channels for the specific insurance
product categories that are relevant to you;
• use the time series data to appreciate which distribution interfaces and channels are gaining in
importance, which are stable and which are in decline;
• appreciate how annual retention rates vary radically across the various distribution interfaces and
channels researched – the most rapidly growing distribution systems are not necessary the most
attractive to insurance providers because they are often characterised by high churn rates;
• gain insight into the apparent distribution share of under-researched affinity and corporate partner
channels for which product-specific data is not otherwise available in the public domain.



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Who can use the research?
1.

Insurance companies: understand trends across the five distribution interfaces, to see which
products are becoming ‘online only’ and which can be distributed by other means;

2.

Banks, building societies and credit card issuers: assess what volume of sales you should
make as an intermediary, to see which products you should seek to promote and through which
interface;

3.

Affinity and commercial partners: for organisations ranging from automotive associations to
trade unions and from catalogue retailers to supermarkets, this research will show you which
types of insurance consumers are most - and least - likely to buy from you;

4.

Management consultancies: are you helping an insurance company or an affinity / commercial
partner with its distribution strategy? Understand channel metrics across a broad range of
insurance products and services, saving time and effort on researching the subject yourself.



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What are some of the key findings?
1. Among new buyers and switchers for insurance product X, online distribution
became even more dominant in 2013 while face-to-face sales disappeared altogether
% split of distribution interfaces among new buyers and switchers
100%

80%

Post
Outbound phone

60%

Inbound phone
40%

Online
Face-to-face

20%

0%
2007

2009

2011

2013

Note – insurance product X is disclosed in the relevant briefing
Source: Finaccord Channel Metrics surveys, 2007, 2009, 2011 and 2013



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What are some of the key findings? (cont.)
2.

Among all respondents with insurance product Y, usage of insurance
aggregators and brokers declined slightly in 2013 relative to 2011
% split of distribution interfaces among all respondents
100%

80%

Worksite
Commercial partners

60%

Financial partners
40%

Not-for-profit affinity groups
Insurance aggregators
and brokers

20%

Direct sales

0%
2007

2009

2011

2013

Note – insurance product Y is disclosed in the relevant briefing



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3.

For insurance product Z, banks and building societies enjoy vastly higher
renewal rates than other important channels, especially aggregators
% of respondents renewing a policy taken out prior to 2013
50%
x Banks or building societies
40%

HIGHER SHARE
OF RENEWALS

30%

x All other channels
x Direct sales

20%

HIGHER SHARE

10%

0%

Insurance
OF SALES
brokers
x Aggregators
x
x Cashback websites
x Post Office
0%

10%

20%

30%

40%

50%

% of switchers and new buyers in 2013
Note – insurance product Z is disclosed in the relevant briefing



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Key findings from the Channel Metrics series in its entirety include:
• across all of the relevant insurance products and services (i.e. all apart from financial advice) the
distribution share of insurance aggregators among new buyers and switchers increased in just one
case in 2013 relative to 2011 and declined in eight cases;
• within the same audience, and again only for insurance products and services where they are
active, the distribution share of cashback websites in 2013 ranged from a minimum of 5.9% to a
maximum of 12.1%;
• across all insurance products and services, the distribution share of not-for-profit affinity groups
among new buyers and switchers averaged 10.6% in 2013, up from 7.8% in 2011;
• the results for 2013 across the relevant insurance products indicate that less than half of all
consumers holding a policy taken out through an insurance aggregator had renewed an existing
policy; in comparison, policies held directly with insurers were 1.6 times more likely to be renewals
with equivalent multiples for not-for-profit affinity groups and non-financial commercial partners of
1.5 and 1.3, respectively.



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What methodology has been used?
The Channel Metrics series is based on the results of an online survey of over 1,000 consumers
carried out during December 2013. 48.3% of respondents were male and 51.7% female. These
respondents provided answers for each of the insurance products reviewed, and the breakdown of
the total sample by age group, annual household income band and geographical region is as
shown on the following page.



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How does the consumer sample break down?
65 or over,
17.9%

16-24, 14.5%

25-34, 14.3%

Over £80,000,
4.6%
Less than
£60,000 £10,000, 8.1%
£79,999, 5.9%
£50,000 £59,999, 7.4%
£40,000 £49,999, 8.8%

£10,000 £14,999, 12.7%

INCOME BANDS
£15,000 £19,999, 11.4%

55-64, 15.8%

AGE GROUPS
35-44, 18.6%

45-54, 18.8%

£30,000 Northern Ireland, £39,999, 15.8%
North-East, 3.1% 3.0%
South-East (ex.
Wales, 5.3%
Gtr London),
£25,000 East Midlands,
14.9%
£29,999, 12.6%
7.4%
Greater London,
11.4%
Scotland, 8.2%

GEOGRAPHIES

South-West,
8.4%

£20,000 £24,999, 12.8%

North-West,
11.5%

East Anglia,
Yorkshire /
9.2%
Humberside,
West Midlands,
8.4%
9.2%



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What is the cost and format?
The Channel Metrics briefings are available as standard PDF documents and associated
MetricsBASE™ datasets in Excel format. The cost structure for this research series is as follows: 1
briefing = GBP 495, 2 briefings = GBP 945, 3 briefings = GBP 1,345, 4 briefings = GBP 1,695, 5
briefings = GBP 1,995, 6 briefings = GBP 2,245, 7 briefings = GBP 2,345, 8 briefings = GBP 2,395,
9 briefings = GBP 2,445, all 10 briefings = GBP 2,495.
For UK-based clients, VAT at the prevailing rate will be added to the basic price.
Costs quoted are for a single site user licence only.
For a corporate user licence, please see the final slide for further details.
Invoices can be paid in EUR or USD, at the prevailing exchange rate, if preferred.



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How can the research be purchased?
Simple. Just go to the relevant area of the Finaccord web site available at
www.finaccord.com/order_uk_channel-metrics.htm and fill in the online order form, clearly
indicating:
• report required
• type of corporate user licence, if required *
• billing name
• address and e-mail address
• purchase order number, if applicable
Please allow up to one working day for the delivery of electronic copy by e-mail.
* For the corporate user licence please choose one of the following options:
1. One office, one country: no supplement over and above basic cost of reports ordered
2. Multiple offices, one country: additional 20% over and above basic cost of reports ordered
3. Multiple offices, two to ten countries: additional 50% over and above basic cost of reports ordered

4. Global (unlimited offices in unlimited countries): additional 100% over and above basic cost of reports ordered
VAT at the prevailing rate will be added to the price of any corporate user licence acquired by UK-based buyers.



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Channel Metrics: Consumer Distribution Trends in UK Insurance

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