General Insurance. General Insurance Online Shopping Survey 02. How UK consumers shop online for insurance. September 2008

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2 General Insurance How UK consumers shop online for insurance September 2008 Author: Annemarie Van Egmond With: Natalie Machon, Julia Williams and Tom Wood This report is licensed to you free of charge for individual, personal use. Foolproof Ltd retains its copyright and no part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. General Insurance Online Shopping Survey 02

3 Published by Foolproof Limited in September Foolproof Limited Seebohm House, 2-4 Queen Street, Norwich NR2 4SQ T: E: W: Acknowledgements The Foolproof team would like to thank Ciao for their help in crafting the quantitative aspects of the study. The report was designed by and artworked by Naked Marketing ( Conditions of use 1. Foolproof Limited is the legal owner of the copyright existing in this Report. Any use and/or copying of such document and materials which is not in accordance with Foolproof Limited s standard terms and conditions or these conditions of use is unauthorised. Any unauthorised use may give rise to Foolproof Limited bringing proceedings for copyright infringement against you and claiming an injunction, damages and costs. 2. Unless otherwise agreed in writing in advance by Foolproof Limited, the Report may not be sold, nor passed on, communicated or disseminated in any form, nor access granted, to any individual, contractor or agency third party, or any subsidiary, associated or holding company of the original purchaser ( Licensee ). 3. You (the Licensee) acknowledge that all materials and information contained in Foolproof Limited s Reports are the copyright property of Foolproof Limited and are protected inter-alia by the Copyright, Designs and Patents Act 1988 and by the specific terms and conditions of purchase. As you will obtain no rights in this Report you must undertake that (unless for the permitted purposes above), you will not copy, reproduce, print or store in any manner, extract or transmit in any form or otherwise deal within any way the whole or part of this Report. 4. You agree you will not place any financial reliance upon any figure, statement or inference contained in this Report. 5. Full details can be found at OSS, ONLINE SHOPPING SURVEY and FOOLPROOF are trademarks of Foolproof Limited. General Insurance Online Shopping Survey 03

4 Contents Page Foreword Introduction Summary Before shopping: attitudes and expectations Shopping online for Insurance Recruitment Shopping sessions online User objectives Search engines Aggregator and Comparison Sites Insurance Provider Sites Quote form usability issues Financial Interest and Consumer review sites Session outcome Decision making: purchase behaviour and channel preference Conclusion Methodology Overview Quantitative method Qualitative method About OSS About Foolproof General Insurance Online Shopping Survey 04

5 Foreword Our third look at the general insurance market has produced some very interesting findings. In the 18 months since our last report, a significant evolution in consumer shopping behaviour has taken place. Comparison sites dominate the market, not just in terms of share of visits (this year 88% of our shoppers used a comparison site, up from 64% in 2006) but, more importantly, their use is less peripheral than in previous years. Comparison sites are a now central part of most consumers shopping strategy. Previously, comparison sites were used early on in shopping as a filter for price competitiveness, but consumers preferred to cut them out of later stages of decision-making and purchase. Now, comparison sites are trusted far more as a path-to-purchase. However, what comparison sites deliver in volume of quotes, they fail to deliver when it comes to helping shoppers choose between similarly priced providers. At this point, many shoppers start to get stuck, particularly as providers themselves have yet to adapt to the shift in shopper behaviour. The handover from a comparison site to a provider site is rarely smooth and providers make it hard for shoppers to access the information that they need at the point in the process that they need it. For all the promise of an easier shopping experience, the current interplay between comparison sites and provider sites, fails to deliver this. By the end of our study, 53% of shoppers had telephoned a provider to ask the questions that they couldn t get answered online. This report records and explains the behaviour and frustration of online consumers and should give the industry some ideas about how to maximise return in this intensely competitive market. Thank you for your support for this project. Natalie Machon September 2008 General Insurance Online Shopping Survey 05

6 1 Introduction OSS General Insurance examines the way UK consumers use the web to find, evaluate and buy home and car insurance. In particular we wanted to understand: What are consumers expectations and pre-conceptions about how and where they will shop for insurance? What sites and tools do they expect to be available to them? How easy is it for shoppers to complete quote forms? What are shoppers attitudes to pricing and offers? What steps are there between the initial online shopping session and purchase? How do consumers formulate a shortlist of potential providers? What dissuades some shoppers from buying online? What differences in behaviour can we observe between fieldwork for the 2008 report and the previous studies in 2005 and 2006? In its third edition, OSS remains a unique resource for the UK insurance industry. There are very few other (if any) robust sources of qualitative insight into this marketplace. No other research study paints such a rich picture of how consumers think and act while shopping for home and motor insurance. Our study allows marketers, product managers and e-commerce professionals to optimise their online offering. The report presents tactical insights which can increase marketing effectiveness and improve conversion to sale. It also offers the opportunity to look at trends which may influence the way the industry develops in the future. General Insurance Online Shopping Survey 06

7 Definitions The following is a list of definitions we use throughout the report to describe the type of site shoppers used: Search Engine: stand-alone search site or the search channel of a major portal or Internet Service Provider (ISP) Insurer/provider: specialist insurance or financial service brands. This includes major national brokers (like the AA) because we found that shoppers do not make an active distinction between brokers and direct insurance brands Aggregator/comparison: sites which gather prices from a very large proportion of the major insurers and brokers, provide comparison table content and give consumer tools to filter this content online according to personal needs and preferences Affiliate/directory: sites which offer links to a number of different insurers sites, normally on a cost-per-click or cost-per-quote basis Local/specialist broker: smaller high street or specialist broker firms General interest website: general site with financial content e.g. Tiscali Financial interest website: site specialising in financial content e.g. Moneysavingexpert.com Consumer interest or Review site: site which publishes user or editorial reviews of products e.g. Which? General Insurance Online Shopping Survey 07

8 2 2.1 Shopping objectives and behaviours Summary The majority of shoppers approach the market with one of two objectives: - Looking to find the cheapest deal: These shoppers are more likely to see insurance cover as a commodity. They are willing to trade some aspects of cover or service quality against price - Looking to check they are not being ripped off: This group are in the market to make sure that the renewal price they have been offered is competitive. If they find that it is, they are likely to renew with their current provider Both groups want to maximise their productivity while shopping: they want to gather the maximum number of quotes while limiting their investment of time and effort For both groups, satisfaction with their current provider is not a predictor of loyalty - The vast majority were satisfied with their current provider, but were still prepared to switch Price is not the only factor in decision-making: - 40% of our shopper sample renewed with their existing provider even though most had found at least one cheaper quote - Those who do switch don t seem to be wholly motivated by price. Cover and service quality is a consideration factor. Few switched to the absolute cheapest provider that they found Brands are still important: shoppers use brand as a way of filtering comparison site long-lists down to shorter consideration sets - Consumers confer quality of cover and service to providers that they know - They believe that unknown brands carry risks around service quality and cover levels General Insurance Online Shopping Survey 08

9 How shoppers narrow down their purchase options Most shoppers journey from many potential providers to a few by using a comparison site and a few also seek out quotes from brands they know but which aren t on comparison sites All providers All providers on comparison sites Providers cheaper than my renewal quote Brands I trust Missing brands e.g. Direct Line My own bank 2.2 Comparison sites dominate early-stage shopping Aggregators have almost total control over the early stages of search and shopping - During the first session online, 88% of shoppers used a comparison site. They spent almost 60% of their shopping time on these sites - This represents an increase compared to our previous studies in this market: - In 2005, 30% used a comparison site - accounting for just 5% of their shopping time. - In 2006, 64% used a comparison sites - spending on average 28% of their shopping time on these sites. Early moments of search are focused on finding aggregator sites - Comparison sites dominate early clicks from search results - Only 11 out of 50 shoppers searched on the brand name of a specific insurance provider during their shopping - Changing patterns of search - and growing levels of trust in comparison sites - mean that search engines are used a lot less than in previous years studies. Just 4% of time in observed sessions was spent on search engines (a decline from 9% in 2005) - Shoppers are now happy to use aggregators as the search tool for insurance quotes General Insurance Online Shopping Survey 09

10 A typical shopping journey in 2006: in our last report we observed that shoppers were reluctant to click forward from comparisons sites on to provider sites. Shoppers wanted to cut out the middle man and buy direct from insurance providers that returned competitive quotes to comparison sites. This meant backing up to Google and searching for the sites of providers they had seen listed on comparison sites. Search engine Aggregator/ Comparison site Search engine Provider site A typical shopping journey in 2008: shoppers no longer waste time backing up to search engines. They are happy to click forward from aggregator results on to the sites of insurance providers. This changing behaviour caused a lot less use of search engines, and far fewer direct searches for provider sites Search engine Aggregator/ Comparison site Provider site Many shoppers have started to use more than one comparison site during their shopping session. This is driven by two needs: - Removing bias: shoppers want to gather evidence that a provider performs well on more than one aggregator - Covering more of the market: there is an increasing understanding that comparison sites don t necessarily offer whole-of-market comparison. Sites like Martin Lewis Moneysavingexpert.com are raising consumer awareness of this Productivity may be a decisive factor in an increasingly competitive aggregator sector - All the new entrants to the comparison site sector offer a relatively strong user experience: error rates and quote abandonment are not major problems - Confused.com continues to live up to its name with very high error rates within forms. Only 50% of quotes started on the site are completed (compared with around 90% for its competitors). - We predict that Confused.com will lose ground to its rivals unless usability and user experience issues are addressed General Insurance Online Shopping Survey 10

11 2.3 New realities for insurance providers There was a very dramatic fall in the observed use of insurance provider sites between our 2006 and 2008 studies: - Shoppers spend 64% less time on this sort of site versus the previous study - Most of the remaining visits came as a result of clicking on from comparison sites, rather than as a result of shoppers spontaneously searching for the sites of insurance brands Brands without a comparison site relationship, or a major advertising budget, will struggle for attention in this market dominated by aggregators The new realities of the marketplace create two new priorities for provider sites: - Create a seamless handover from comparison site to provider site - Re-engineer the sales experience around the quote results page Handover from aggregators can be a disjointed and frustrating experience: - Providers should avoid adding additional questions, or a requirement to log-in or register, before showing shoppers their quote. The aggregator journey drops shoppers into the very late stages of the sales process, but gives shoppers few resources to help interrogate the cover or service offered by the provider - At the point in the process when, for the first time, shoppers are not entirely focused on price, very few sites present content which differentiates their offering in any way or which allows shoppers to interrogate the detail of cover or find answers to their questions The insurance shopping journey via aggregators Aggregator/ Comparison site Aggregator process bypasses most of the provider pages that differentiate product and service Insurer Home page Category page Product page Quote form Quote result Buy/ Retrieve quote General Insurance Online Shopping Survey 11

12 This same problem applies to sales journeys which do not include aggregators: - Shoppers are almost totally uninterested in any aspect of service or cover until they have been served with a quote - This means that sales and product content presented before the quote process is unlikely to be read - When a quote has been presented (assuming it is competitive) shoppers become open to messages about product and service quality - However, at this stage most providers secure quote form environments do not allow them to offer rich content resources - As a result, shoppers don t become engaged with a reason to buy or switch other than price. Or worse, they don t buy simply because they cannot get the answer to simple questions that they have Broadly speaking, providers could consider the quote results page to be the start of the sales process, not the end: - Before the quote result page all marketing and sales messages should focus on price encouraging shoppers to get a quote - At the quote results page (and afterwards) the emphasis should switch to service and product differentiation Change the messaging emphasis during the sales journey Before your site Messages around price i.e. cheap and discount Before quote Messages around price i.e. cheap and discount After quote Message is around quality of company, product and service Switch messages from price to quality General Insurance Online Shopping Survey 12

13 3 Before shopping: attitudes and expectations Product holding The respondent sample of the quantitative phase of the research was 1,000 UK online adults for motor insurance and 1,008 UK online adults for home insurance selected to broadly match the online population To understand the behaviour of consumers shopping for home or motor insurance online, a quantitative survey was conducted to find out what the attitudes and expectations were towards these two products Fig. 1: Total OSS Sample (Gender & Age) vs. UK online population OSS sample demographics Online population FEMALE MALE AGE AGE AGE AGE AGE % 11% 19% 19% 20% 20% 18% 17% 33% 33% 51% 51% 49% 49% FEMALE 48% MALE 52% % % % % % 0% 20% 40% 60% Home Insurance Motor Insurance Source: Ciao for OSS Source of UK online population table: Marketing Pocket Book 2007 Base: All Adults, Motor Insurance (1000), Home Insurance (1008) All respondents were within or nearing the renewal period of their respective insurance product All were main or joint financial decision-makers for motor or home insurance in their household The OSS sample broadly matches the UK online population. However the OSS sample is skewed away from using respondents (under 25) and towards older respondents (over 55). This reflects product holding of insurance products amongst these groups General Insurance Online Shopping Survey 13

14 Insurance providers Fig. 2: Current home insurance provider NORWICH UNION DIRECT LINE HALIFAX LLOYDS TSB BARCLAYS MORE THAN RIAS SAGA TESCO AA CHURCHILL NATIONWIDE PRUDENTIAL ZURICH ABBEY NATIONAL AXA CIS/CO-OP ENDSLEIGH ESURE LEGAL & GENERAL NATWEST CORNHILL HSBC LIVERPOOL & VICTORIA MARKS & SPENCER PAYMENT SHIELD POST OFFICE CAN T REMEMBER OTHER 1% 1% 1% 1% 1% 1% 4% 4% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 7% 6% 6% 6% 20% 0% 3% 6% 9% 12% 15% 18% 21% Source: Ciao for OSS Base: All Adults, Home Insurance (1008) Unlike the other markets we studied in OSS, there are no clear leaders in the GI market. This reflects the reality of an extremely competitive market created by the Internet generally, and comparison sites in particular Norwich Union and Direct Line occupy first and second position of market share for both products. But this leadership is slim It is worth noting that three of the top 5 home insurance providers are high street banks However, retail banks don t have significant penetration in motor insurance: only Lloyds TSB achieves more than a 1% share General Insurance Online Shopping Survey 14

15 Fig. 3: Current motor insurance provider DIRECT LINE NORWICH UNION SAGA TESCO CHURCHILL MORE THAN AA ZURICH E-SURE POST OFFICE ELEPHANT SWIFT COVER PRUDENTIAL LIVERPOOL VICTORIA M&S ADMIRAL BUDGET HASTINGS PRIVILEGE RAC AXA SHEILAS WHEELS SWINTON LLOYDS TSB RIAS ENDSLEIGH DIAMOND QUINN DON T KNOW OTHER 1% 1% 1% 1% 1% 1% 4% 4% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 5% 5% 5% 5% 8% 19% 0% 3% 6% 9% 12% 15% 18% 21% Source: Ciao for OSS Base: All Adults, Motor Insurance (1000) General Insurance Online Shopping Survey 15

16 Main reason for choosing current provider Fig. 4: Main reason for choosing current provider CHEAPEST PRICE PROVIDER HAS A GOOD REPUTATION COVER IS EXTENSIVE AND HIGH QUALITY PROVIDED A GOOD SERVICE IN THE PAST RECOMMENDED BY FRIENDS / FAMILY UK ONLY CALL CENTRES NO CLAIMS DISCOUNT > 5 YEARS INTRODUCTORY OFFER RECOMMENDED BY BROKER 13% 11% 13% 10% 13% 12% 13% 10% 5% 32% 31% 29% 28% 27% 25% 56% 74% HAVE OTHER PRODUCTS WITH THIS PROVIDER TOO MUCH HASSLE TO SWITCH FREEPHONE HELPLINE SPECIALISED POLICY 9% 6% 8% 6% 5% 3% 5% 21% COVERS POSTCODES IN FLOOD AREAS 1% OTHER 5% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) Finding the cheapest price is the most commonly stated reason for why respondents picked their current insurer - This is particularly pronounced for motor, where 74% of respondents mention this factor - Interestingly, it is less dominant in home insurance where only 56% mentioned price. In this market, bundle of secondary factors (provider reputation, cover quality and past experience) create the sense that home insurance shoppers are more open to considering other factors alongside price General Insurance Online Shopping Survey 16

17 Another anomaly in the home insurance data is that home insurance customers are far more likely to have another product with their insurer - This seems to reinforce the idea that many shoppers are happy to buy insurance from their bank (perhaps bundled with a mortgage product) Later in the study, we see that, while price is a significant driver, brand is also a significant factor in decision making. It seems to be a proxy measure for aspects of product and service quality Length of time with current provider Fig. 5: Length of time with current provider 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS 8 YEARS 5% 5% 2% 3% 1% 1% 1% 2% 7% 7% 14% 12% 22% 23% 31% 37% 9 YEARS 10 YEARS YEARS YEARS YEARS 1% 1% 1% 1% 2% 0% 1% 3% 3% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) In both home and motor insurance over 50% of customers have been with their provider for two years or less. This indicates a very significant churn in this market-place General Insurance Online Shopping Survey 17

18 Customer lifetimes for motor insurance are significantly lower than for home - The average customer lifetime for home insurance is 3.89 years - The average customer lifetime for motor insurance is 3 years Removing the outliers of super-loyal motor insurance customers who have been with their provider for over 10 years, the average lifetime is 2.90 years The vast majority of respondents (33%) switched providers after the first year with nearly 50% switching after the second year Satisfaction Fig. 6: Level of satisfaction with current provider HOME MOTOR % 20% 40% 60% 80% 100% Very satisfied Satisfied Neither satisfied or unsatisfied Unsatisfied Very unsatisfied Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) Dissatisfaction does not seem to be the main cause of switching - 77% of home and 82% of motor insurance respondents were satisfied or very satisfied with their current provider - However, all of these respondents were prepared to switch when asked a subsequent question about attitudes to switching provider at renewal. All of these same respondents said they were prepared to switch to a new insurer This highlights a general danger around tracking customer satisfaction. It seems that general satisfaction does not directly equate to loyalty The sample of dissatisfied customers is too small to draw definitive conclusions (only 46 respondents) but a poor customer service was the most commonly cited reason for dissatisfaction This suggests a need for insurers to dig deeper than headline satisfaction scores. Providers need to explore which service and product features genuinely create stickiness and which problems put customers at risk General Insurance Online Shopping Survey 18

19 What are you looking for from a provider? This question asked respondents to look forward to their next insurance purchase Fig. 7: What are you looking for from a provider? CHEAPEST PRICE 74% 84% PROVIDER HAS A GOOD REPUTATION FOR SERVICE HAS GOOD REPUTATION FOR SETTLING CLAIMS A PROVIDER I CAN TRUST NOT TO MAKE MISTAKES DISCOUNT FOR BUYING ONLINE 58% 56% 50% 54% 50% 58% 64% 63% HAS UK ONLY CALL CENTRES OTHER SPECIFIC FEATURES ON POLICIES (E.G. NAMED DRIVERS) DISCOUNT FOR HAVING MORE THAN ONE PRODUCT ALLOW CONTACT BY CASH BACK OFFER FOR SWITCHING SHORTER QUEUING TIMES FOR CALLS SPECIALISED POLICIES (YOUNG DRIVER / CLASSIC CAR) 9% COVERS POSTCODES IN FLOOD AREAS 5% 25% 26% 30% 26% 25% 23% 24% 37% 41% 46% 48% OTHER 2% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) Note: Multiple responses were allowed on this question Price is still the main consideration when considering providers for home and motor insurance, but it s noteable how price is relatively less important in this context Looking back to fig. 4 (page 17) customers remember price as being far and away the most important factor that drove their decision. Looking forward to their next purchase shoppers allow that other factors will influence their decision In particular, home insurance shoppers seem less focused on price than for motor and more centred around reputation and service related factors This sets up an interesting tension in our findings: is price the dominant factor or not? General Insurance Online Shopping Survey 19

20 Later in the report, we observe how brand focus, reputation and service quality became critical factors in the later stages of decision-making. We also show how these factors fit together with price in the shopping journey Sources of information Fig. 8: What sources will you use to find information? INTERNET VIA COMPUTER SPEAK TO FRIENDS/FAMILY NEWSPAPER, TV OR RADIO ADVERTISING BY CALLING A BANK OR INSURANCE COMPANY AT A BRANCH TALK WITH IFA AT A SUPERMARKET UNSOLICITED MAIL FROM FINANCE COMPANIES UNSOLICITED S FROM FINANCE COMPANIES INTERNET VIA MOBILE OTHER (PLEASE SPECIFY) 3% 4% 2% 2% 3% 2% 10% 8% 7% 12% 6% 7% 25% 28% 21% 24% 13% 20% 17% 13% 93% 92% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) It is not surprising that nearly all our respondents are planning to shop online for their motor/home insurance. They were all recruited on the basis of being regular internet users That said, compared to previous years the reliance on the Internet as a source of information has grown - In 2006, 82% of both home and motor insurance respondents stated they would use the Internet via computer as an information source Shoppers have become less dependent on completing their internet shopping with other sources of help in other channels. Use of newspapers, TV or radio advertising or visiting a branch have all declined versus earlier OSS studies The implication is clear: if you have the internet, it is the main tool you use to shop for insurance General Insurance Online Shopping Survey 20

21 Types of sites planning to visit Fig. 9: What sites do you plan to visit to find information? PRICE COMPARISON SITES (E.G. MONEYSUPERMARKET.COM, GOCOMPARE.COM) INSURANCE PROVIDER SITES (E.G. LEGAL & GENERAL, NORWICH UNION) INDEPENDENT FINANCIAL INFORMATION SITES (E.G. MONEY SAVING EXPERT, BBC WATCHDOG) SUPERMARKET WEBSITES (E.G. CO-OP, TESCO, M&S) CUSTOMER REVIEW WEBSITES (I.E. WHERE PEOPLE REVIEW A PRODUCT AND GIVE IT A SCORE) BANK WEBSITES (E.G. BARCLAYS, LLOYDS TSB) OTHER (PLEASE SPECIFY) 1% 1% 16% 27% 34% 41% 33% 31% 32% 41% 66% 66% 89% 90% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults who would use the Internet as part of their shopping. Motor Insurance (940), Home Insurance (935) Price comparison sites continue to grow dramatically in popularity - In 2006, 69% of insurance shoppers said they would use a price comparison site compared to 89% in This preference is very clearly observed in the later qualitative phase of our study Only two-thirds of respondents said they would visit provider sites. It is worth underlining this point: one third of insurance shoppers do not expect to visit a provider site at any point in their shopping process - This shows a steady erosion compared with earlier OSS reports. In 2006, 75% of respondents said they expected to use a provider site Customer review and independent financial information sites like moneysavingexpert.com seem to have decreased in popularity with car insurance shoppers over the years. We discuss this in more detail later on in the report Banks are not a major part of the consideration set for sites when shopping for motor insurance. However, over a quarter of home insurance shoppers said they expected to visit a bank site General Insurance Online Shopping Survey 21

22 Buying channels Fig. 10: How you bought your insurance with your current provider OVER THE INTERNET OVER THE PHONE IN A BRANCH E.G. BANK OR HIGH STREET BROKER N/A THIS IS MY FIRST TIME BUYING INSURANCE 0% 2% 5% 18% 32% 35% 45% 63% 0% 10% 20% 30% 40% 50% 60% 70% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults, Motor Insurance (1000), Home Insurance (1008) For motor insurance, nearly two-thirds bought their insurance policy online. The internet is now clearly the preferred channel for research and buying For home insurance, less than half bought their insurance policy online. This perhaps stems from the greater use of other channels during shopping (and the fact that some consumers are still buying home cover bundled with their mortgage) - This is reinforced by the fact that nearly one in five home policies was bought on the high street in a bank or brokerage Around a third of respondents bought their current home insurance policy over the phone Nearly a fifth of our sample purchased their home insurance in branch with a bank or high-street broker Next steps online Fig. 11: What you expect to do online for your next insurance purchase? GET QUOTES/RATES 96% 95% FILL OUT AN APPLICATION AND BUY ONLINE 76% 76% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Motor Insurance Home Insurance Source: Ciao for OSS Base: All Adults who would use the Internet as part of their shopping. Motor Insurance (940), Home Insurance (935) General Insurance Online Shopping Survey 22

23 The majority of respondents said they would use the internet to gather quotes/rates (96% motor insurance; 95% home insurance) 76% of respondents who answered this question were expecting to purchase their insurance online - Compared to the same question in our 2006 report, the importance of the Internet as a sales channel has increased - In 2006, 66% of motor insurance shoppers and 50% of home insurance shoppers said they expected to apply and buy online This data suggests a significant trend towards people buying home insurance online - In 2006, 24% had bought their current home insurance online and 49% said they expected to buy their next policy online - In 2008, 45% of respondents had purchased their home insurance online while 76% said they would expect to buy their next policy online - While the figures above cannot be compared to each other directly, it does give us an indication that the appetite to apply and buy home insurance online is growing year-on-year General Insurance Online Shopping Survey 23

24 4 Shopping online: observed behaviour 4.1 Recruitment From here on our report follows a smaller sample of 50 shoppers from shopping through to sale. This gives us a much richer picture of online behaviour than a standalone quantitative method would allow Respondents for our qualitative shopping study were recruited to provide a broad match to the sample of insurance shoppers from our quantitative survey The 50 shoppers were divided equally between home and car insurance, with 25 shoppers per insurance product All shoppers were regular internet users All were the main or joint decision-maker for home/motor insurance in their household All were at the beginning of their insurance renewal period and respondents were asked to bring their renewal letters with them to the qualitative depth interviews All were early on in their shopping process, i.e. had not started researching and had not renewed or purchased their insurance yet All would use the Internet to research and (possibly) buy their insurance General Insurance Online Shopping Survey 24

25 Fig. 12: Gender of respondents TOTAL MOTOR HOME % 20% 40% 60% 80% 100% Male Female Base: 25 Home, 25 Motor Fig. 13: Age of respondents TOTAL MOTOR HOME % 20% 40% 60% 80% 100% Base: 25 Home, 25 Motor Fig. 14: Socio-economic group of respondents TOTAL MOTOR HOME % 20% 40% 60% 80% 100% AB C1 C2 Base: 25 Home, 25 Motor General Insurance Online Shopping Survey 25

26 Product ownership All respondents were asked who their current provider was. Below is the combined count for both home and motor insurance: Fig. 15: Current Insurance Providers for all respondents Motor and Home Provider Count MORE THAN 4 NORWICH UNION 4 BARCLAYS 3 HALIFAX 3 PRUDENTIAL 3 SWIFTCOVER 3 TESCO 3 DIRECT LINE 3 EQUITY RED STAR 2 LIVERPOOL VICTORIA 2 VIA BROKER (UNSURE OF PROVIDER) 2 NEW INSURE 2 ABBEY 1 CASTLE COVER 1 ENDSLEIGH 1 HASTINGS DIRECT 1 HIC 1 HIGHWAY 1 NATIONWIDE 1 NEW QUOTE 1 NIG 1 PRIVILEGE 1 SALVATION ARMY 1 ALLIANCE 1 AXA 1 LLOYDS TSB 1 NORWICH & PETERBOROUGH BS 1 SAINSBURY'S BANK 1 GRAND TOTAL 50 Use of online Two-thirds of the sample said they expected to both research and definitely purchase their insurance policy online (68% for home insurance, 64% for motor insurance) The remaining third of shoppers said they would research online and consider applying and purchasing their policy online, but they were not committed to online as a channel for purchase None of the respondents rejected the idea of applying and purchasing online outright General Insurance Online Shopping Survey 26

27 4.2 Shopping sessions online The following section of the report analyses activity during the online shopping sessions that we observed The way that home and motor insurance shoppers find and evaluate quotes is broadly similar. As a result we have amalgamated the home and motor figures in this report to give a total sample of 50 users. This gives more robust data for analysis - Where there are significant differences in behaviour between home and motor shoppers we note this in the commentary Fig. 16: Total activity online during the first (observed) shopping session recorded via Morae recording software Category Time spent online HH:MM:SS Total visits to this type of site Total shoppers who used this type of site % of shoppers who used this type of site Average time per visit HH:MM:SS Average total time per shopper on this type of site HH:MM:SS Time spent at this type of site as a % of total time Aggregator/Comparison 12:56: % 0:06:48.8 0:17: % Insurer/Provider 6:01: % 0:04:57.0 0:11: % Search Engine 0:56: % 0:00:30.3 0:01: % Local/Specialist Broker 0:50: % 0:02:38.9 0:06: % Other 0:26: % 0:02:13.7 0:04: % Financial interest 0:14: % 0:01:51.1 0:02: % General Interest 0:11: % 0:00:50.0 0:00: % Consumer interestor Review site 0:01: % 0:01:39.0 0:01: % Affiliate/Directory 0:00: % 0:00:15.0 0:00: % Grand Total 21:40: :03: :26: % 50 respondents spent a total of 21 hours and 40 minutes online during their first phase of shopping 80 different sites were visited On average, shoppers spent 26 minutes online with little difference between the average time spent by home and motor insurance shoppers - However, the quickest sessions were as short as minutes (these shoppers used a comparison site as their sole reference source) The average number of sites visited per shopper in 2008 was 7.1 compared to 9.3 in Use of comparison sites is reducing the amount of visits to individual provider sites Shoppers spent by far the most amount of time on comparison sites. Nearly 60% of the total time online was spent on these sites with an average time of almost 18 minutes per user General Insurance Online Shopping Survey 27

28 In our 2005 study only 55 minutes of the total time was spent on comparison sites. This grew to 8 hours in our 2006 study. In 2008 this has again grown to nearly 13 hours Significantly, in this latest study, comparison sites have overtaken direct provider sites in terms of visits, time-on-site and volume of users. In every measure comparison sites now dominate the online shopping landscape Search engines still attract the highest number of visitors: 90% of our respondents used search, but time spent on search engines has declined by a third compared to our previous OSS in 2006 This could be explained in one of two ways: - Search engines have become better at providing sites shoppers are looking for - Users rely less on search engines as comparison sites have proliferated This second explanation seems most compelling. 10% of our sample did not use a search engine at all, preferring to type in the URLs of sites they wanted to visit Actual vs expected site usage Fig. 17: Comparison of EXPECTED site usage (in the quantitative survey) against ACTUAL site usage recorded (during the qualitative study) COMPARISON SITE PROVIDER FINANCIAL INTEREST REVIEW SITE SUPERMARKET SITES BANK WEBSITES 2% 8% 16% 16% 22% 32% 38% 37% 56% 66% 88% 90% OTHER 1% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Expected use Actual use Base: All Home and Motor insurance shoppers expecting to use the Internet plotted against 50 qualitative respondents General Insurance Online Shopping Survey 28

29 The chart above compares the types of sites respondents in our quantitative survey predicted they would use to investigate an insurance purchase, with the actual site usage observed in our qualitative study Predictions for the the use of comparison and provider sites proved accurate However, every other sort of site received significantly fewer visits than our quantitative survey suggested It seems that Financial Interest sites are no longer getting the high rankings in search engine results, and as a consequence get fewer visits. Few shoppers take the time to seek out these more generalist sites Supermarket and bank sites were also used less than predicted. Again without prominent search rankings, few shoppers actively seek out these sites Overall this analysis highlights some of the problems with relying on intended behaviour data that comes from standard, survey-based market research: consumers are not fully able to predict the sites they will use General Insurance Online Shopping Survey 29

30 4.3 User objectives Since we last looked at the insurance market in 2006, there have been few changes to reasons why shoppers enter the online market place, or what they plan to achieve from their shopping - As we discuss later in the report, the principal change in 2008 is the way in which shoppers go about achieving their objectives Shoppers are still looking to maximise their productivity: gather the highest possible number of quotes during an initial minute shopping session Shoppers entering the insurance market do so with one (or more) of three objectives in mind: - Check I m not being ripped off by my current provider These shoppers tend to be happy with their current provider but want to check that they are still getting a competitive deal. Their approach could be described as defensive : they want to see whether they are right to renew with their current provider. About 40-50% of shoppers were of this type - See whether I could get it cheaper elsewhere This type of shopper approaches shopping for insurance as a game. Their objective is to try to find a cheaper quote, regardless of whether or not they are happy with their current provider. This approach could be described as offensive : they are actually expecting to find a better deal and then switch. About 40-50% of shoppers were of this type - Find better quality of cover or service as my current provider doesn t meet my needs This type of shopper is looking to improve the quality of cover due to a number of reasons such as a change in lifestyle or bad experience with a claim. Price is a secondary factor in the initial phases of shopping. Around 10-20% of shoppers were of this type In choosing between insurance providers, shoppers rely on evaluating three factors: - Price. This is still by far the most important factor for shoppers during search and comparison activity. It is the initial filter by which shoppers shortlist providers - Brand. Brand seems to act as a proxy for the quality of both the product and service. Well-known brands are often associated with higher quality and providing better service. Less well-known brands are often immediately dismissed (although younger shoppers seem to be less concerned with brand: price is the most important factor for them). Well-known brands may get shortlisted even if they are not the cheapest in the market General Insurance Online Shopping Survey 30

31 - Quality of cover and service. As mentioned above, brand has become a surrogate for quality of cover and service. Older respondents were more likely (than younger shoppers) to place more importance on explicit factors affecting the quality of cover and service than younger shoppers These three factors are used to narrow down providers to a shortlist of quotes to be considered for purchase General Insurance Online Shopping Survey 31

32 4.4 Search engines Search activity 45 out of the 50 shoppers used a search engine at least once during their session Only 4.4% of the total time was spent on search engines. This represents a pattern of decline over the OSS series: - In % of the total time was spent on search engines - In % of the total time was spent on search engines This is also significantly lower than we have observed in other financial services markets. In our 2008 Current Account study, we observed that 14% of the total shopping time was spent on search engines Google dominates with 40 out of the 45 shoppers using it 5 shoppers did not use a search engine during their session. Most of these shoppers visited an aggregator/comparison site as a starting point by directly typing the URL - 3 home insurance shoppers did not use search. 2 visited aggregator/comparison sites via direct URLs while one visited Moneysavingexpert as a starting point to get to a comparison site - 2 motor insurance shoppers did not use search. Both used direct URLs to visit uswitch and Moneysavingexpert We have observed this steady decline in search engine usage over a number of financial services markets online. Online shoppers now have a clearer idea of how they shop for financial services products online. Their use of search is more focused (in this market, to locate comparison sites) and shoppers spend less time formulating searches and considering their results The number of actual searches made by shoppers is also lower than in other financial services markets and has declined compared to previous years The 45 search engine users conducted 87 distinct searches (i.e. used a different search keyword or phrase) - This represents a decline from 2006, where 100 distinct searches were conducted by 49 search engine users Each respondent who used a search engine conducted, on average, 1.93 searches during their observed session - In 2006, the average shopper conducted 2 searches - In 2005, the average was 3.33 searches Despite the decline in frequency of use, search engines are still important as a starting point in the shopping journey - Of 45 search engine users, 44 visited a search engine as a first port of call, highlighting the importance of search in helping shoppers find the sites they are after General Insurance Online Shopping Survey 32

33 However, further into their shopping session, shoppers started to replace the use of search engines with the use of comparison sites. Search was used as a stepping stone to comparison content, which in turn provided shoppers with a list of brands to interrogate further In previous OSS studies, shoppers tended, through the course of their shopping session, to regularly return to a search engine to seek out the websites of the providers they had seen on a comparison site This bouncing behaviour between a search engine and provider site has changed to bouncing behaviour between comparison sites and provider sites, cutting out the search engine in later stages of shopping In 2005, shoppers visited a search engine on average 5 times during their session while this reduced to 3.36 in 2006 and has further declined to 2.51 in 2008 Fig. 18: A typical typical shopping journey in 2006 Search engine Aggregator/ Comparison site Search engine Provider site Fig. 19: A typical typical shopping journey in 2008 Search engine Aggregator/ Comparison site Provider site Figure 18 and 19 summarise the change in site usage in Shoppers rely much more heavily on comparison sites than in previous years General Insurance Online Shopping Survey 33

34 Search terms The tables below show the search terms used by our shoppers in each of the searches that they made Fig. 20: Home insurance search terms used. Search terms are presented in chronological order (colour coded by type) General Insurance term Provider/Broker Brand Specific Insurance Feature Comparison Brand Search "Compare" Insurance Term "Cheap" Term Other Shopper Keyword (1st Search) Keyword (2nd Search) Keyword (3rd Search) Keyword (4th Search) Keyword (5th Search) 1 2 home insurance and contants insursace 3 home insurance comparison sites 4 home insurance 5 home insurance 6 comparison sites for building isurance 7 buildomg insurance building insurance building insurance 8 martin lewis 9 10 insure supermarket car insure supermarket (related search words) house insurance supermarket 11 contents and buildings insurance contents and buildings insurance comparison contents and buildings insurance comparison prices Fool home insurance best value home insurance halifax home insurance 14 home insurance virgin home insurance home insurance home contents insurance 17 home insurance 18 home insurance thatched house insurance when building work is ongoing thatched building insurance thatched home insurance listed building property owners club 19 cheap home insurance 20 home and contents insurance 21 moneysupermarket 22 household insurance household insurance 23 moneysupermarket 24 cheapest home insurance cheap home insurance 25 home insurance halifax insurances home insurance Fig. 21: Motor insurance search terms used. Search terms are presented in chronological order (colour coded by type) General Insurance term Provider/Broker Brand Specific Insurance Feature Comparison Brand Search "Compare" Insurance Term "Cheap" Term Other Shopper Keyword (1st Search) Keyword (2nd Search) Keyword (3rd Search) Keyword (4th Search) Keyword (5th Search) 1 car insurance providers 2 car insurance tesci 3 car insurance quote 4 insurance policies car insurance policies confused.com 5 cheap car insurance london comparison website elephant car insurance 6 AA car insurance direct line car insurance more than car insurance churchill car insurance admiral car insurance 7 car insurance quotes car insurance quotes car insurance quotes 8 car insurance comparion sites morethan cheapest car insurance 9 10 cheap car insurance cheap car insurance 11 insurance companies 12 VW camper insurance 13 cheap car insurance 14 car insurance comparison site car insurance comparison 15 direct line car insurance 16 cheap motorcycle insurance cheap car insurance 17 car insurance 18 car insurance 19 car insurance car insurance norwich union car insurance 20 motor vehicle insurance 21 go compare breakdown cover 22 car insurance compare moneysupermarket.com 23 confused.com Norwich union direct line insurance N.B. spelling errors have not been corrected General Insurance Online Shopping Survey 34

35 Using search results The majority of search terms were generic, i.e. not for any particular brand, for example car insurance or home insurance At this early stage in their shopping, shoppers do not seem to search for provider brands - Only 3 out of 25 home insurance shoppers searched for specific insurance providers; 2 searched for Halifax and 1 for Virgin - 8 out of 25 motor insurance shoppers searched for a specific insurance provider. There was quite a lot of variety in the brands searched for. Only one motor shopper visited provider sites before visiting a comparison site We observed an increase in the number of people using search terms that include the word compare, reinforcing that more insurance shoppers are specifically looking for this type of content early in their shopping - 10 instances in 2008 compared to 2 instances in 2006 A small number of shoppers (8) searched for a specific website other than a provider i.e. Motley Fool and Moneysavingexpert - This in an increase from 2 shoppers in 2006 Unlike other markets where searches on consumer review content are becoming more common, insurance shoppers are not searching for these support sites. This is discussed in more detail later in the report Compared to 2006, shoppers spent the same amount of time per visit on search engines with, on average, 30 seconds per visit. However the amount of visits has declined Motor insurance shoppers spent less time on search engine results - On average, just 21 seconds per visit compared to home insurance shoppers who spent, on average, 42 seconds per visit We did not observe any shoppers visiting the second page of search results The speed at which shoppers find a suitable link, and the fact that they are not returning to the results page to try again, suggests that Google is returning results that are immediately relevant to shoppers - They are looking for comparison content and that is what they are presented with General Insurance Online Shopping Survey 35