Research by Defaqto showed that the rise in providers has been driven by comparison websites and major retail brands, creating unprecedented choice for consumers and driving down prices.
However, Defaqto said that the industry was now on a “knife edge” as providers face the challenge of getting their business approach right.
It noted that the industry has moved away from a one-size-fits-all approach in order to meet the needs of different customer groups, with a greater focus being put on prices at the expense of the cover and benefits offered by policies.
Mike Powell, Defaqto’s insight analyst for general insurance, said: “It is clear that insurance providers will be competing in a challenging environment over the coming years.
“We believe there are long-term implications for insurers, who may need to consider how they restrict premiums while simultaneously lowering the cost of acquiring and retaining new customers. In addition, there are increasing signs that a race to the bottom with regards to premiums could emerge – and this could be detrimental to consumers and the industry as a whole.”
