Richard Brown asks Andrew Ballard what the finance industry can learn from its adapting insurance counterpart?
More than half, 52%, of 25-34 year-olds switch car insurance every year in search of a better deal, according to a survey by Experian, with 61% of respondents planning to swap their existing insurance in the next 12 months. The biggest motivator for change was looking for a more favourable price (65%), followed by moving house (60%) or the end of a current contract (59%). A third of respondents added they could not afford their current repayments.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Although the majority of younger consumers are switching insurance every 12 months to five years, those over 45 years old were less likely to change, and those over 65 were least likely to do so, with over a third wishing to remain with a well-known brand.
While the uptake of Vauxhall’s service plan has risen 75% year-on-year and shows the manufacturer brands can compete, scrutiny of money comparison websites by the Financial Conduct Authority may worry consumers about the veracity of the information they are using when switching.
“The next generation of young motorists are more savvy than ever and are part of a less brand loyal disposition when it comes to acquiring and protecting their assets,” says Andrew Ballard, principal consultant at Experian Automotive. “They are more comfortable using online websites and comparison tools and take time to research the market for the best deals on credit and cover options.”
With higher premiums likely in their budget, insurance is paramount within a younger motorist’s purchasing decision, adds Ballard, and the best insurance deals must be communicated by those “who want to maximise aftersales opportunities”.
Richard Brown: How can data on insurance habits be applied to car finance?
Andrew Ballard: We’ve found a combination of improvements in technology and awareness of things like aggregator sites have changed the consumer journey. We’ve seen analytics from Experian Hitwise, around where the car-buying journey starts – 70% start with online research. People are also researching finance and assessing affordability quite early, not just car or budget. Assessing available finance options is often a mechanism for buying the car in the first place.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataBrown: Could such behaviour warrant flexible retail finance contracts?
Ballard: Motor finance contracts generally operate to pre-agreed terms, so there is, hopefully, a wider awareness at the beginning of whether PCP is a more applicable product than perhaps a personal loan or secured hire purchase agreement. People are quite mindful of contract renewal and contact with the consumer before that point can generate a useful discussion to assess future needs. This survey showed loyalty, and affiliation around a brand, is something that tends to fall away more with younger consumers. How does somebody feel around their relationship with their finance company? Is it tied up with the vehicle brand? Whether it’s engagement with the dealer or the finance company throughout the ownership of that vehicle, not everybody’s going to run it to the end of the term.
Brown: Can changes in attitude toward insurance bleed into contract renewal management?
Ballard: The idea of a carefully managed monthly budget will lead to things which challenge actual ownership of the vehicle.
If that can be influenced by changing something outside a normal cycle, because it’s the best outcome for them, people are much more prepared to start considering such things. It’s more complex with a finance agreement than insurance, but if people realise they can get a good deal by influencing that change cycle, the thought process will extend to motor finance.
Brown: Given the growth of Vauxhall’s plan, are insurance and finance learning from each other’s operation?
Ballard: A way to manage costs from the outset is the use of aggregators and the cost-comparison sites. You’re actually giving somebody a metric which matters to them. Companies are looking at ways to differentiate themselves, in addition to price, such as ‘star ratings’ and including different criteria. People look at a pound-note number and then chase the lower one. It depends on presentation and clarity. Some used car websites are now asking consumers to create a ‘basket’ of vehicles and then applying that to a monthly finance and insurance cost. If people are minded to shop in that way – think of that vehicle purchase as a monthly commitment – that’s something insurers and, certainly, influencers such as the aggregators need to take on board.
Brown: What could F&I or business managers at dealerships apply from this?
Ballard: The first part is to understand better the buying motivations. With a car, it’s often driven with a particular desire for a model or a brand, and could be very rarely swayed from that. Or it could be budget-driven; a particular sum of money a person is prepared to part with. Rather than see that as an absolute sum, dealers could work on exploring that as a monthly budget.
Does somebody want another model, the latest vehicle or the most reliable form of transport? If those sort of questions can be asked, qualified and recorded, dealers can then decide whether it’s appropriate to engage with an individual during the ownership of the vehicle and not assume it’s going to run to its natural conclusion. Dealers should explore if there are appropriate opportunities to check in with the customer, check their motivation. If they’ve just seen the latest version of a vehicle, then perhaps when their car gets replaced or upgraded, in their mind that might be a trigger point; that’s a reason for a dealer to reach out
and engage.
Brown: What should consumers consider when using price comparison websites?
Ballard: It’s part of the process, not the beginning and end, of a finance agreement, more so than insurance. You take out an insurance agreement to protect you; a lot of the value comes when you have a reason to claim. As well as chasing the best deal (and I wouldn’t stand in anyone’s way when chasing the best value), I would encourage people to think about value in terms of: what would happen were I to rely on this product? Is it giving me what I need?
One of the things a price comparison can avoid is dialogue with the people you’re going to do business with. When it’s something quite important like an insurance policy I would always recommend that if you’re with a provider and you’ve taken the trouble to understand what that product offering is, at least you can compare one organisation with another and go to a similar amount of effort to make sure you’re getting a like-for-like product. For example, if you don’t send your vehicle back to an approved repairer there can be £200 or £300 of excess. Or the reasons how and why a courtesy vehicle can be supplied can be quite varied. People might assume they’re looking at something comparable because they’re looking at a table or a series of data items on a screen.
But I do think it’s important to engage with the organisation you’re about to spend money with.
