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 Budget Direct has grown its market share by drawing away customers from industry giants in the Victorian car insurance market through competitive pricing on premiums

Budget Direct, with 2.6% of the Victorian personal car insurance market (2.825 million Victorians aged 18+, 12 months to September 2008), has been actively growing its market share in Victoria by taking market share away from major players such as AAMI (25.2%) and RACV (36.9%). In the last two years, Budget Direct has expanded its customer base by more than 50% (September 2008, Roy Morgan Research).

Chart 1: Share of car insurance switchers relative to market share - Victoria

(Period: 12 months to September, 2006, 12 months to September, 2008

Base: Victorians aged 18+ with Comprehensive or Third Party Insurance; n (2006) =8,196; n (2008) = 7,680)

A major source for Budget Direct’s growth has been through the acquisition of customers from larger competitors such as AAMI and RACV. AAMI and RACV have not been capturing their share of people switching their car insurance to increase their market share. In 2008, Budget Direct won 3.5 times more switchers relative to its market share, compared to just over 0.5 times for RACV.

Budget Direct, on the other hand, has been successful in winning over AAMI and RACV customers through competitive premium pricing. Pricing has been a drawcard for Budget Direct, with its customers paying lower premiums in Victoria compared to AAMI and RACV customers.

Table 1: Median Annual Premiums ($) Paid For Comprehensive Car Insurance — Victoria

(Period: 12 months to September, 2008; Base: Victorians aged 30-59; n=3,966)

Norman Morris, Industry Communications Director at Roy Morgan Research, says: 

“Brands making in-roads in the crowded car insurance marketplace through aggressive pricing provides more choices for consumers in current times of economic uncertainty for consumers looking to tighten budgets, including areas such as car insurance. This creates opportunities for existing major players to be more innovative with their products to match their competitors and retain market share.”

About Roy Morgan Research:

Roy Morgan Research is the largest independent Australian research company, with offices in each state of Australia, as well as in the United States, United Kingdom, New Zealand and Indonesia. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan Research has more than 65 years experience in collecting objective, independent information on consumers. In Australia, Roy Morgan Research is considered to be the authoritative source of information on print media measurement, financial behaviour, voting intention and consumer confidence. Roy Morgan Research is a specialist in recontact customised surveys which provide invaluable and effective qualitative and quantitative information regarding customers and target markets.

For comments or further detail, please contact:

Norman Morris, Industry Communications Director,

Email: Norman.Morris@RoyMorgan.com

Telephone: +61 (03) 9224 5172

Mobile: 0402 014 474

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. The following table gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. The figures are approximate and for general guidance only, and assume a simple random sample. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size	Percentage Estimate
	40%-60%	25% or 75%	10% or 90%	5% or 95%
5,000	±1.4	±1.2	±0.8	±0.6
10,000	±1	±0.9	±0.6	±0.4

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