Insurance services

The AA acts as an intermediary between those seeking insurance cover and insurance underwriters and earns a commission at the point of sale. As an insurance broker the AA assume no underwriting risk, but works with one or more underwriters who compete for the risk. However, in January 2016 the AA launched its own motor underwriting business to complement existing broker operations.

Market share

In 2016, the AA accounted for approximately 2% and 3% of new motor and home insurance policies respectively.  

Competition

The UK motor and home insurance markets experience high levels of competition. Along with brand, pricing is a key consideration for customers, particularly for motor insurance.

Insurance brokers compete with each other and direct insurers through a range of channels. Distribution through price comparison websites (PCWs) amounts to up to 70% of the market in motor insurance. In home insurance PCWs are less dominant, largely because home insurance policies are less homogeneous and less expensive than motor. Our competitors include Hastings, Swinton and RIAS.

Insurance underwriters compete primarily on price, although brand is also a key consideration. Our competitors include Saga, Hastings and Esure.

Customers

Our insurance business serves both roadside Members and non-Members. At the end of 2016, approximately 9% of our roadside Membership base had motor insurance with us and 5% had home insurance.

Our underwriter serves predominantly Roadside Assistance Members. We believe Members, in many cases, should be able to obtain competitive insurance as a result of the extensive data we hold.

Market drivers

In the UK, motor insurance is a legal requirement and market volumes are strongly influenced by the number of vehicles and licensed drivers. The number of cars, motorists and overall cost of motoring are key volume drivers.

The residential property market drives the home insurance market as insurance is typically taken when purchasing a property. Mortgage lending, house price momentum and new build volumes are all factors to consider.