Finaccord recently released new research about schemes for affinity and partnership marketing for personal non-life insurance in the UK, including travel insurance, household, motor, pet, and private medical. Sarah Watson looks at the key facts
Across a total of 2,650 actual and potential partner organisations surveyed, and for the five consumer insurance lines considered, the research identified a total of 1,473 affinity programmes organised in conjunction with one or more external providers (plus a further 155 cases where distributors underwrote or brokered the proposition themselves on an internal basis). Of the 1,473 externally organised schemes, the majority (819 or 55.6 per cent) were found to have been arranged with a single, external broker with a specifi c underwriter identifi able in 232 of these cases. Moreover, 394 (or 26.7 per cent) were set up directly with a single underwriter with no broker involvement; and the balance of 260 (or 17.7 per cent) were based on other operating models (e.g. use of aggregators, captive brokers or underwriters, multiple external brokers or underwriters). Hence, the results of this research, which Finaccord has updated periodically since 2003, show that brokers still account for the majority of affi nity relationships within personal lines. However, the latest analysis identifi es not only the brokers and underwriters of these types of insurance with the most partnerships (overall, and within each category of partner organisation), but for the fi rst time, it also measures the likely importance of these partnerships using a proprietary formula devised by Finaccord. This takes account of the characteristics of the partners, especially the effectiveness of each category of partner in distributing each type of insurance, and the volumes of UK-based traffic visiting their websites. This formula produces a weighted share of partnerships for each broker and underwriter, in order to highlight the ones that are likely to hold the most valuable relationships for each form of insurance.
This analysis indicates that at the time of publication in January 2013, the leading two providers judged to hold the partnerships offering the most potential value for each of the five products were as follows:
Travel: 1st theidol.com, 2nd Ageas;
Private medical: 1st AXA PPP, 2nd Bupa;
Household: 1st UK Insurance, 2nd Aviva;
Motor: 1st BISL, 2nd UK Insurance;
Pet: 1st RSA, 2nd AXA.
Alan Leach, director at Finaccord, commented on the findings: “While the aforementioned figures underline the fact that brokers hold the most affinity relationships in terms of their outright number, the rankings of the top two providers for each product suggest that major underwriters are generally more successful in securing the most valuable deals. In fact, only two companies are visible here that are not underwriters, namely BISL and theidol.com.” Theidol.com (a trading style of Investment Discounts On-Line) came first in travel insurance as a consequence of its provision of the search engine used by aggregators such as Comparethemarket. com, Confused.com, Gocompare.com, Tesco Compare and uSwitch. Alan Leach concluded: “While the initial ‘gold rush’ in affinity and partnership marketing began over a decade ago in the UK, and while alternative distribution systems, most notably aggregators, have since brought about enormous changes to the playing field, this continues to be an area of strategic importance for both brokers and underwriters. Naturally, relationships change from time to time as new providers emerge with better propositions for particular types of distributor; for example, Original Insurance Services has been successful in recent years in winning schemes for motor insurance with automotive manufacturer brands. In addition, there is also plenty of scope for brokers to compete for or create niche schemes with small and medium-sized distributors beyond the major brands.”
Finaccord’s specific research into UK travel insurance affinity and partnership marketing analyses the penetration, operating models and provider share of relationships for travel insurance across a range of distributor categories. Such categories include every kind of partnership, from airlines and banks to travel companies and trade unions. The database that accompanies the report, the PartnerBASE, provides details of more than 500 affinity and partnership marketing initiatives traced by Finaccord. Furthermore, the latest analysis identifies not only the providers of travel insurance with the most partnerships, it also highlights the providers that are most likely to hold the most valuable relationships given the characteristics of their partners.