A new internet-only car insurer could cause the most significant shake-up in the market for motor policies since Direct Line's launch 20 years ago, a report from Deloitte will suggest today.
The analyst's latest Quarterly Motor Insurance Market Report reveals the launch of Swiftcover this year has already resulted in a 5 per cent reduction in the average quote given by motor insurers for new policies.
Catherine Barton, an insurance partner at Deloitte, said: "Direct Line completely challenged the status quo by selling insurance directly to car owners, rather than through brokers, but it's fair to say Swiftcover may be moving that status quo on. The Net is part of other distributors' sales processes, but this is the first online-only car insurer."
Deloitte warned the challenge presented by Swiftcover could be particularly tough for rivals because many insurers lowered their premiums sharply during 2004, reducing the scope for them to make further cuts to counter the threat.
While Swiftcover claims its internet-only model significantly reduces its costs, enabling it to offer cheaper quotes to motorists, no figures are yet available on the market share it has captured. The Deloitte study compares prices but includes no data on policy sales.
Andrew Blowers, the chief executive of Swiftcover, said: "We launched in July with very ambitious sales targets and we've exceeded those targets by 5 per cent."
Swiftcover said its model is unique because in addition to insisting on internet applications for cover, it has also brought policy administration and claims-handling online, enabling the insurer to do without large teams of call-centre staff.Reuse content