Endsleigh Insurance: Still by and for Students?

NCD News: Endsleigh Student Insurance - 07.07.08

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Endsleigh Insurance: Still by and for Students?: Endsleigh has one of the most interesting histories among British companies. Founded by the National Union of Students (NUS), it developed into a major British insurer. However, Endsleigh still maintains students as a core market, and it has several products and services (such as young driver and student contents insurance) that are directly designed for younger people. Even now, a large number of its branches are located on or near universities. Overall, the insurer's image (particularly compared to older firms), is youthful and fresh.

Recently, however, media reports note that Endsleigh is closing 119 branches just as the new school season begins. Some observers have blasted this move, stating that the insurer is thereby neglecting its central youth market to save a few pounds on branch operation costs. Our analysis suggests that the matter is not as simple as all that, however. At the same time that Endsleigh was closing its branches it was making heavy investments into IT.

A 25 June press release by British technology company CIBER UK confirmed that Endsleigh has made a substantial investment into installing (with CIBER's help) a large Microsoft Customer Relationship Management (CRM) system that would essentially allow all employees to get access to the company's insurance data in real-time. This would not only be available on their office computers, but laptops at home or in the field as well. This would rapidly increase the efficiency and speed of sales, premium processing, and policy claims.

The branch closures and the IT investment then appear to be part of Endsleigh's strategy to better serve the youth market. While most industry experts say that both on and offline sales and marketing techniques are necessary to serve and grow a customer base, the youth market may be different. Young people tend to be more tech-savvy, and more willing to purchase all types of insurance and financial products online.

Moreover, unlike older customers, "churn (loss of customers through them switching)" always has the potential to be higher among youth. Unlike older people, they tend to value loyalty to a company less, and may sometimes change based on only marginal differences between them.

Endsleigh's closure of branches but comprehensive upgrade of its IT systems thus makes a great deal of sense in this light. By speeding up and increasing the efficiency of its online services, it makes itself more attractive to young people and may reduce churn amongst them. At the same time, the branch closures obviously save the company money on staff and leasing costs, and may result in no significant loss of revenue.

The risk of course is the bad publicity that may result from the closures. Another is that an insurance rival will seek to take up the offline space that Endsleigh is conceding. Also, while younger people have higher online purchase rates than older ones, a large portion still purchases in-person. Lastly, an offline, "physical" presence remains a powerful marketing tool, regardless of how many young people actually buy an insurance product from a campus branch each day.

Endsleigh's move may be something of a gamble, but there is a clear strategy behind it. †