Halifax’s online general insurance subsidiary Esure will launch in July.
Halifax, the UK mortgage bank that owns most of Esure, has invested over GBP150 million in the venture. Peter Wood, the founder of Direct Line, is Executive Chairman of Esure, which has ambitious plans to become a top-five motor insurer within three years. It will use the most up-to-date technology to offer better products, pricing and service than is currently available in a multi-channel offering. However, Esure’s launch in July is unlikely to have insurance firms running for cover.
Esure plans to shake up the personal general insurance market in a similar way to Direct Line in the late 1980s. There is a fundamental difference between the two companies though. Direct Line pioneered a revolutionary new method of insurance distribution, the direct selling model by telephone. It achieved this as the first direct insurance operation.
In contrast, Esure’s proposition is limited to a different direct distribution channel, the Internet, with the option of also buying insurance over the telephone. This is already an overcrowded and competitive distribution proposition in the personal general insurance market. As a result it is unlikely that Esure will have a significant impact on the personal general insurance market.
The success of Esure is also largely dependent on attitudes of the consumer, rather than the sophistication of the products and services it offers. If consumers do not choose to search for or purchase general insurance through online insurance firms, the launch of Esure will not fundamentally change this. It is more likely that Esure will take market share away from other insurance websites and make some gains from direct writers – but this will not be sufficient to turn it into a top-five motor insurer by 2004.
