Direct insurance brands have started to threaten established insurers’ dominance in personal lines because consumers believe they are cheaper, Accenture insurance practice MD Ravi Malhotra says.

He believes the direct brands “have to have a much deeper understanding of their customer base, much more like a retailer”.

Insurers should know how many people are in a household, their life stages and service expectations, so they can tailor offerings and service.

Challenger brand offerings are based on price, so established brands must have a clearer value proposition to retain consumers of home, contents and vehicle insurance, Mr Malhotra told insuranceNEWS.com.au.

An Accenture survey of 3500 consumers earlier this year found 45% of consumers seek quotes from insurers they believe will be cheapest, and they often consider that a new brand will fit the bill.

Budget Direct, Youi and Real Insurance are identified as leading challenger brands.

Mr Malhotra says consumers will buy tailored products, with 63% interested in motor insurance that is priced on actual driving behaviour. Many younger people want cover customised to their budgets.

He says the market is still expanding but insurers should expect slower growth and reduced profitability as competition intensifies.

Consumers are growing more comfortable researching products online. They are more price-sensitive and feel more empowered because they can shop around via the internet.

About 26% of consumers use comparison websites, and the figure is rising rapidly, Mr Malhotra says.