The past, present and future of online car insurance

Fifteen years ago buying car insurance was always an over-the-phone affair. Drivers didn’t have much choice but to spend ages relating details over and over again to various companies if they wanted to shop around for the best car insurance quote.

Firms such as Direct Line were founded on this very basis and were extremely successful in selling car insurance this way. However, what they did not expect was the massive growth of the internet during the late 1990s and the huge potential for car insurance to be bought over the net.

Admiral is another company that was originally intended to provide car insurance via the telephone but one which quickly recognised the promise of the internet. In 1995, Admiral became the first car insurance company to have a website.

It furthered its online presence in 2000 with the launch of its brand Elephant.co.uk. This brand marked an important point in motor insurance history as the first purely online car insurance provider in the UK.

Not a company to simply be content with its past successes, Admiral breached new ground on the internet once more in 2002. Confused.com became the UK’s first car insurance aggregator, comparing quotes from a large number of sources but not actually selling any motor insurance policies.

Elephant.co.uk and Confused.com represent the two main types of online car insurance site that are currently available. Both have proven incredibly popular with customers, with 66% of people searching for online car insurance turning to aggregator sites and most of the rest getting quotes from individual websites and comparing them manually.

However, there are three companies that have such brand awareness that people will search them out specifically on the net, rather than typing in “online car insurance” or the like. These three firms are Tesco, Norwich Union and Direct Line, all of which are better known for their offline activities than their online.

Research from 2005 revealed that 63% of motorists in the UK who have access to the internet were planning to purchase their next policy online, compared to 32% who were then doing so. A similar study projects that the number of people buying online car insurance will dramatically increase from 7 million in 2006 to 11 million in 2011.

Strangely, this pattern is not replicated in most other parts of Europe. In Spain and France, for example, little over a million people are buying their car insurance online each year whilst in Germany about 3 million motorists search the net for the best quotes. The reasons behind this trend are unclear, but it is believed to be related to a lack of trust of net security.

As can be seen from these statistics, people in the UK are much more trusting of the internet and online car insurance sales are going from strength to strength. The reasons? Convenience and cost. It is quick and easy to surf around the net, plus it doesn’t matter what time you are doing it, rather than being confined to call centre hours. Also, most companies offer cheaper car insurance for those who buy it online, as web business is less costly than over-the-phone business.

These benefits are expected to push online car insurance sales up even in further, prompting a rather long-range prediction that 82% of motorists will be buying motor insurance from the net in 2016.

However, research into the usability of car insurance websites has concluded that many sites need to up their game if they don’t want to lose custom. The survey concluded that 31% of motorists give up on their car insurance quote before finishing it due to bugs and unclear questions in the quote engine.

What these people do next it is difficult to tell but it is likely that at least some of them will revert back to using the phone. If internet users continue to have bad experience such as this, there is a chance that it will affect the popularity of the web as a medium for getting car insurance. What is more likely, however, is that the easily accessible sites which have flawless, intuitive quote engines will find themselves with the majority of the net users’ business.

As technology improves and the net becomes fully integrated into mobile phones and perhaps also TVs, it is very likely that online car insurance is going to be big business for years to come. However, there will always be a sector of the motoring population who will not use the internet, perhaps because of the security fears that we see in the rest of Europe, and it is likely that these people will carry on using the phone when organising their car insurance cover.