The major car insurance comparison sites operating in the UK may need to brace themselves for more competition, as the advent of telematics-based motor car insurance could bring more up-and-coming comparison sites to the market, experts say.
With discount car insurance for young drivers almost completely out of reach, a nation of younger, inexperienced motorists have turned in droves to online car insurance comparison sites in order to find the best deals. In fact, more than half of all motor insurance was purchased off the internet in 2010, according to the Association of British Insurers.
The comparison website market is quite similar to the retail banking industry, with four large online insurance aggregators holding the majority of market share. However, insurance experts say that smaller comparison websites could capitalise on the emergence of telematics to claw their way out of obscurity and compete with the insurance comparison industry’s version of the Big Four.
The ‘black box’ technology is a tool that comparison sites can use to differentiate themselves from others in the market, though the industry has yet to adopt the technology as a new standard due to the higher up-front costs of supplying the devices to customers. However, there are many insurers that may be reconsidering their reticence to embrace telematics, especially as the December deadline for the new European Court of Justice ruling that brought an end to using gender differences in risk assessment comes ever closer.
Meanwhile, telematics offers a tailor-made solution to the dilemma, as the technology is genuinely gender-neutral; it gathers real-time motoring data from drivers without taking into account their gender, and acts as motivation for a motorist to drive safely and responsibly.