Motor is the most common policy sold over the phone, but you can now also buy household insurance, mortgage protection, critical illness and personal finance.
Richard Branson launched Virgin Direct to sell financial services earlier this year and Kwik-Fit, the car parts repair and replacement organisation, leapt into the fray with the launch of its own phone-based Kwik-Fit Insurance Services.
Relying on its brand name, brokers' Alexander & Alexander and a panel of fifteen insurers, Kwik-Fit hopes to cash in on the consumers' change of habit for buying motor insurance.
The arrival of Direct Line in 1985, the brain-child of Peter Wood, heralded the start of sale of financial services over the phone. UK composites Royal Insurance and General Accident followed suit and both launched into the direct market in 1989 with Insurance Services and General Accident Direct to ensure multi-channel distribution.
Mori Financial Services says that motor insurance telesales now have a 35 per cent penetration of the entire motor market and the Association of British Insurers estimate that by 2000 over half the population of the UK will buy its motor insurance over the phone.
An instant quote over the phone is not for everyone, though. Characterised by out-of-town locations with low overheads, efficient and fast technology for speedy service and open seven days a week, telesales do not want you if you are a bad risk. The industry calls this "cherry-picking", targeting only the lowest risk drivers, such as women. Accusations of such behaviour in the industry are rife. If you drive a fast car and are under 25, you will probably have to approach a broker through more traditional channels for cover.
As the market has become cut-throat in motor, telesales have moved on to the home insurance market, particularly mortgage and contents insurance. Mori estimates a market penetration of 16 per cent for household insurance over the phone but as most direct operators target this area the figure is likely to rise substantially this year.
Philip Heelis, at General Accident Direct, will not say how many policies they sell a year, but admits there has been a change of emphasis. "We are still selling motor policies," says Mr Heelis, but the main emphasis is on the home side."
The AA's insurance service, one of the casualties of the boom in direct sales, has spent pounds 19m restructuring its operation. Mark Wood says: "It is clear that over the long term people will pay less for their insurance because of the efficiency of the direct sell."
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