Consumers and General Insurance - UK - December 2017

OVERVIEW
What you need to know
Products covered in this Report
Definitions
EXECUTIVE SUMMARY
The market
Value of general insurance premiums rose by £600 million in 2016
Figure 1: General insurance revenue – retail products – UK risks, by gross written premiums, 2012-16
Motor insurance premiums account for 40% of incomings…
Figure 2: Share of premium income, by category, UK general insurance retail products, by gross written premiums, 2016
Companies and brands
Motor insurance accounts for over a third of total adspend
Figure 3: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2012/13-2016/17*
The consumer
Motor and home policies sit at the core of general insurance
Figure 4: Insurance product ownership, September 2017
Consumers show little loyalty towards general insurers
Figure 5: Switching activity in general insurance markets, September 2017
The importance of multichannel communication is clear
Figure 6: Channel preferences in general insurance, September 2017
Price guarantees most likely to improve retention
Figure 7: Things that would encourage consumers to renew policies with their existing insurers, September 2017
Consumers want more ways to customise policies
Figure 8: Interest in new features, September 2017
Insurers can utilise Open Banking to improve engagement
Figure 9: Interest in sharing financial data with different providers, September 2017
What we think
ISSUES AND INSIGHTS
Flexible policies can help to address the insurance gap
The facts
The implications
The loyalty exchange
The facts
The implications
PFMs could manage consumers’ insurance needs
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Value of general insurance premiums rose by £600 million in 2016
Motor insurance premiums account for 40% of incomings
Improving transparency at renewal
Open Banking gives insurers the opportunity to get personal
MARKET SIZE
Value of general insurance premiums rose by £600 million in 2016
Figure 10: General insurance revenue – retail products – UK risks, by gross written premiums, 2012-16
Drop in claims helps insurers to boost underwriting profits
Figure 11: General insurance – retail products – UK outgo and underwriting result, 2012-16
MARKET SEGMENTATION
Motor insurance premiums account for 40% of incomings…
Figure 12: Share of premium income, by category, UK general insurance retail products, by gross written premiums, 2016
… but cost pressures and claim costs lead to motor underwriting losses
Figure 13: Underwriting result – UK general insurance retail products, 2012-16
The calm after the storm
Figure 14: Claims ratio – UK general insurance retail products, 2012-16
MARKET ENVIRONMENT
Solvency II forces insurers to boost reserves
GDPR underpins the need for transparency
Figure 15: Types of information that consumers would like insurers to share, May 2017
Open Banking gives insurers the opportunity to get personal
Figure 16: Types of information that consumers would be comfortable sharing with insurers, May 2017
FCA calls for greater access to insurance…
…and investigates insurers’ pricing practices
IPT increases again
Figure 17: Changes to the insurance premium tax rate, 1 October 1994-1 June 2017
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Smart policies: the new-generation of add-ons
Multiple policies under one umbrella
Motor insurance accounts for over a third of total adspend
COMPETITIVE STRATEGIES
Smart policies: the new-generation of add-ons
Figure 18: Ownership/interest in owning smart devices, May 2017
Figure 19: Willingness to share information from devices with insurers, May 2017
Multiple policies under one umbrella
Rewarding customer loyalty
Figure 20: Consumers’ perceptions of how well brands reward customer loyalty, August 2017
ADVERTISING AND MARKETING ACTIVITY
Motor insurance accounts for over a third of total adspend
Figure 21: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2012/13-2016/17*
Confused.com spent more on ATL ads than any insurer in 2016/17
Figure 22: Top 20 brands for above-the-line, online display and direct mail advertising expenditure on general insurance, 2014/15-2016/17*
Sponsorships help to keep insurers in the public eye
TV remains insurers’ favoured ATL channel
Figure 23: Total above-the-line, online display and direct mail advertising expenditure on general insurance, by media type, 2016/17*
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Motor and home policies sit at the core of general insurance
Consumers show little loyalty towards general insurers
The importance of multichannel communication is clear
Price guarantees most likely to improve retention
Consumers want more ways to customise policies
Insurers can utilise Open Banking to improve engagement
PRODUCT OWNERSHIP
Motor and home policies sit at the core of general insurance
Figure 24: Insurance product ownership, September 2017
Flexible policies can help to address the age and income gaps
Figure 25: Insurance product ownership (any insurance), September 2017
Most consumers have multiple policies
Figure 26: Repertoire of insurance product ownership, September 2017
SWITCHING ACTIVITY
Consumers show little loyalty towards general insurers
Figure 27: Switching activity in general insurance markets, September 2017
The loyalty exchange
Price promises could improve retention
CHANNEL PREFERENCES
Online channels are favoured for basic interactions…
… however less than half would go with an online-only provider
Figure 28: Channel preferences in general insurance, September 2017
Millennials demand more options
IMPROVING CUSTOMER RETENTION
Price guarantees most likely to improve retention
Figure 29: Things that would encourage consumers to renew policies with their existing insurers, September 2017
Reward schemes could make younger consumers less price sensitive
Figure 30: Things that would encourage consumers to renew policies with their existing insurers (ongoing rewards), September 2017
INTEREST IN NEW FEATURES
Consumers want more ways to customise policies
Figure 31: Interest in new features, September 2017
PFMs could transform the way that Millennials access insurance
Figure 32: Interest in new features, by generation, September 2017
Smart devices could give insurers a valuable new touchpoint
INTEREST IN SHARING FINANCIAL DATA
Insurers can utilise Open Banking to improve engagement
Figure 33: Interest in sharing financial data with different providers, September 2017
Pro-active price comparison tools
BARRIERS TO DATA SHARING
Consumers concerned about insurers’ ability to handle data securely
Figure 34: Barriers to sharing financial data with insurance companies, September 2017
Convincing consumers of the value exchange
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology