UK consumers have gone back to shopping around for insurance because prices have risen sharply but cheap deals on energy bills are unlikely to be available this year, according to the boss of price comparison website Moneysupermarket.
In full-year results on Thursday, the company — which earns fees from insurers, banks and other businesses when customers choose them through its site — reported that sales rose more than a fifth in 2022 to £388mn, just short of analyst consensus estimates.
Revenue in its biggest division of insurance rose 8 per cent, with rising prices driving search traffic, the company said.
Travel insurance also grew strongly as the sector continues to recover from the pandemic. But on energy, Moneysupermarket said it is “unlikely” that switching activity will return to the market this year.
A drop in wholesale prices makes it easier for energy companies to offer the cheaper deals that have disappeared from the UK market but Moneysupermarket chief executive Peter Duffy said that they did not expect this to happen this year.
He added that UK consumers were certainly “looking for help in terms of how they can begin to reduce their energy bills” and that related traffic to its site rose last year, even though it was not advertising any deals.
But he warned that wholesale prices would need to come down further to make it worthwhile for energy companies to offer deals, given the cap on what they can charge consumers and other switching costs.
“While it is a really exciting market . . . we just can’t see that happening in 2023,” said Duffy.
In insurance, there has been less switching between providers since UK regulators banned “loyalty penalties” — higher charges for customers that do not change insurer when they renew their policy. But the rising cost of claims for insurers has prompted them to raise prices and more customers have started shopping around again.
Duffy said switching volumes, which were down by a double-digit percentage at the start of 2022, fell just 4 per cent by the year end — and have improved again in January.
“We see premium inflation continuing in 2023 and we see consumers continuing to want to make sure they get the best value product,” he added. A third of the site’s motor insurance providers have recently launched new deals, he said.
Comparison revenues in the group’s money division rise more than a third, partly because of customers switching bank accounts to take advantage of higher interest rates.
But fewer customers used its website to take out loans after they became more expensive following the ill-fated “mini” budget in September.
Moneysupermarket’s shares, which have rallied this year, were down 1 per cent in afternoon trading in London. Peel Hunt analysts said management’s guidance on energy was already accounted for in market expectations.
“We expect the [price comparison] market to stay robust as inflation and cost-of-living pressures continue to bite in 2023,” they added in a morning note.
