Table of Contents
Issues in the Market
-
- Key issues
- Definitions
Insights and Opportunities
-
- Aggregators could go beyond price
- New ways to reward loyalty
- ‘Big Brother’ could be a good thing
- Success is in the detail
Market in Brief
-
- More drivers and a growing car parc fuel demand
- Market grows in size, but performance is still lacklustre
-
- Figure 1: Illustration of NWP and outgoing payments vs the underwriting result for the business and domestic market, 1994-2006
- The claims performance also worsened in 2006
-
- Figure 2: Total number of private motor insurance claims and claims frequency, 1996-2006
- Key underwriters
- Direct insurers take business away from independent intermediaries
-
- Figure 3: Motor insurance distribution trends, 1992-2006
- Some 50% of adults have comprehensive motor cover
- Online arrangement of car insurance has risen rapidly
- Motorists are less likely to ‘just renew’
Fast Forward Trends
-
- Trend 1: Pay Attention
- Definition
- Context
- What next?
- Trend 2: Non-standard Society
- Definition
- Context
- What next?
Broader Market Environment
-
- Key points
- Spending power will slow slightly
-
- Figure 4: PDI and consumer expenditure, 1996-2012
- Savings ratio will increase from 2006 onwards
- Population rises among the 45-54s
-
- Figure 5: UK adult population trends, 1996-2011
- Internet penetration appears to have peaked
-
- Figure 6: British Internet penetration, at home/work/place of study or elsewhere, 2002-06
Internal Market Environment
-
- Key points
- New car registrations have slowed
-
- Figure 7: UK new car registrations, 1995-2008
- Car parc is now over 31 million vehicles
-
- Figure 8: UK car parc, 1995-2012
- There are over 33 million driving licence holders in the UK
-
- Figure 9: Full driving licence holders, by gender, 1975-2005
- Almost 80% of households have at least one car
-
- Figure 10: Household ownership of cars, 1998-2006
Competitive Context
-
- Comprehensive or non-comprehensive?
-
- Figure 11: Proportion of cars covered with comprehensive and non-comprehensive cover, 1995-2005
Strengths and Weaknesses in the Market
-
- New opportunities will materialise for providers…
- …but trading conditions are likely to remain difficult
Who’s Innovating?
-
- Norwich Union develops an alternative online sales channel
- Price rather than product rules in this sector
- Aggregator websites continue to proliferate
- CIS launches ‘Eco’ car insurance
Trade Perspective
-
- Buying motor insurance via the Internet…
- …and the impact on brokers
- Rising rates
- Challenges for the industry
- The role of aggregators
Market Size and Forecast
-
- Key points
- Profitability is still elusive
-
- Figure 12: UK motor insurance revenue account for all business and domestic market, incorporating investment income, 1994-2006
- Market deficit remains a concern
-
- Figure 13: Illustration of NWP and outgoing payments vs the underwriting result for the business and domestic market, 1994-2006
- Rates have fallen in real terms
-
- Figure 14: Domestic motor insurance exposure, gross written premiums and average premium rates, at current and constant prices, 2000-06
- There are around 27 million policies in force
-
- Figure 15: Estimate of the number of live motor insurance policies, 2007
- Forecast
-
- Figure 16: Forecast of private motor insurance market, 2006-12
- NWPs will increase – but so will Outgoing payments.
- Factors used in the forecast
Claims Performance and Pricing
-
- Key points
- Claims frequency starts to rise again
-
- Figure 17: Total number of private motor insurance claims and claims frequency, 1996-2006
- Net claims cost the industry £6.2 billion in 2005
-
- Figure 18: Value of claims in the domestic motor insurance sector, 1995-2005
- Average motor theft claim surpasses £1,500
-
- Figure 19: Motor theft claims, by volume, cost, and average claim, 1995-2006
- Rise in bodily injury claims
-
- Figure 20: Number and average cost of bodily injury claims, 2000-05
- Comprehensive rates rose in the last quarter of 2006
-
- Figure 21: AA’s British Insurance Premium Index, July 1994-January 2007
Market Share
-
- Key points
- Slight increase in concentration
- No change in the top three
-
- Figure 22: Top 20 insurers for private motor risks, by GWP, 2005
Companies and Products
-
- Key points
- The two ‘super-insurers’ dictate pricing strategies
- Profiles
- RBS
- Aviva
- Zurich Financial Services
- Royal & SunAlliance
- Fortis
Brand Elements
-
-
- Figure 23: Motor Insurance brand map, May 2007
- Direct Line
-
- Figure 24: Words associated with Direct Line brand, May 2007
- Brand qualities
- Perfect positioning in a hardening market
- Norwich Union
-
- Figure 25: Words associated with Norwich Union brand, May 2007
- Brand qualities
- Time to phone home?
- AA
-
- Figure 26: Words associated with AA brand, May 2007
- Brand qualities
- It’s a very nice brand – a very, very nice brand
- Sheila’s Wheels
-
- Figure 27: Words associated with Sheila’s Wheels, March 2007
- Brand qualities
- Sheila’s Wheels on fire? Or does it lack traction?
- Usage of brands
- RBS brands it way to success
-
- Figure 28: Consumer usage of various Motor Insurance brands, May 2007
- Attitudes Towards Motor Insurance Brands
- Sheila’s Wheels – in need of a puncture repair kit?
-
- Figure 29: Attitudes towards Motor Insurance brands, May 2007
- Brand satisfaction and performance
- Saga – meeting expectations
-
- Figure 30: Customer satisfaction rating of Motor Insurance brands, May 2007
- Brand commitment
- Direct Line first choice for insurance
-
- Figure 31: Degree of customer commitment to Motor Insurance brands, May 2007
- Round up
-
Brand Communication and Promotion
-
- Key points
- Advertising is central in the battle for motor insurance customers
- More spent on insurance advertising than any other sector
-
- Figure 32: Advertising expenditure for financial sectors, 2002-06
- Nearly £180 million allocated to car insurance promotion in 2006
-
- Figure 33: Annual advertising expenditure for insurance sectors, 2002-06
- Direct mail and TV dominate
-
- Figure 34: Motor insurance advertising expenditure, by media outlet, 2006
- Direct Line is once again the top advertiser
-
- Figure 35: Top motor insurance advertisers, 2002-06
Channels to Market
-
- Key points
- Background to the ‘direct revolution’
- The changing distribution balance in detail
-
- Figure 36: Motor insurance distribution trends, 1992-2006
- Direct me to the nearest insurer
-
- Figure 37: Distribution channel used to purchase motor insurance, 2001-07
- Online is the future
-
- Figure 38: Method used to arrange most recent motor insurance policy, 2001-07
Consumer Financial Activity
-
- Testing times for financial services providers
- Activity levels down again
-
- Figure 39: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2005-December 2006
- UK savings and spending climate
-
- Figure 40: UK savings and spending climate – indexed, January 2001-January 2007
- Subdued picture across all sub-groups
-
- Figure 41: Expected financial activity, by socio-demographic and income groups, December 2006 and average for the last 20 quarters
- Declining business across the board
-
- Figure 42: Leading financial activities planned in the next six months, December 2005-December 2006
- Mortgage providers may have to work harder for revenue
-
- Figure 43: Intended mortgage and property purchase activity, December 2004-December 2006
- Identifying main financial services providers
- Abbey customers are the most ‘fairly’ active
-
- Figure 44: Activity levels of main financial services providers’ customer bases, December 2006
- Halifax customers are savers
-
- Figure 45: Activity intentions and current household financial situation, by MFSP, December 2006
The Consumer – Product Ownership
-
- Key points
- Penetration of comprehensive cover reaches 50%
-
- Figure 46: Penetration of motor insurance, 2004-07
- Men and those aged 45-64 provide the core of comprehensive business
-
- Figure 47: Motor insurance coverage, by gender, age, socio-economic group and region, February 2007
- Part-time workers and those with low incomes tend to favour third party insurance
-
- Figure 48: Motor insurance coverage, by working status, gross annual household income and tenure, February 2007
- Waitrose shoppers opt for full cover
-
- Figure 49: Motor insurance coverage, by newspaper readership, new technology, Internet usage, daily commercial TV viewing and supermarket usage, February 2007
The Consumer – Source and Method of Purchase
-
- Key points
- Direct insurers supply the majority of policies
-
- Figure 50: Distribution channel used to purchase last policy, February 2007
- Brokers lose out to the direct providers
-
- Figure 51: Distribution channel used to purchase motor insurance, 2001-07
- Young drivers take the direct route
-
- Figure 52: Distribution channel used to arrange most recent policy, by gender, age, socio-economic group and region, February 2007
- ‘Stretched’ consumers more likely to visit a broker
-
- Figure 53: Distribution channel used to arrange most recent policy, by working status, gross annual household income and tenure, February 2007
- Heavy Internet users go direct
-
- Figure 54: Distribution channel used to buy most recent insurance policy, by newspaper readership, new technology, Internet usage, daily commercial TV viewing and supermarket usage, February 2007
- The comforts of home
-
- Figure 55: Method used to arrange most recent motor insurance policy, February 2007
- The inexorable rise of the Internet
-
- Figure 56: Method used to arrange most recent motor insurance policy, 2001-07
- Click with the kids
-
- Figure 57: Distribution channel used, by gender, age, socio-economic group and region, February 2007
- Income and Internet still go together
-
- Figure 58: Distribution channel used, by working status, gross annual household income and tenure, February 2007
- The branch makes a change from the TV
-
- Figure 59: Method used to arrange most recent policy, by newspaper readership, new technology, Internet usage, daily commercial TV viewing and supermarkets, February 2007
- From nowhere to here
-
- Figure 60: Used Internet to arrange most recent motor insurance policy, 2001-07
- New entrants use the Internet for distribution
-
- Figure 61: Method used to arrange most recent motor insurance policy, by distribution channel used, February 2007
The Consumer – Quotation Searching, Loyalty and Switching Behaviour
-
- Key points
- Just renewing is no longer an option
-
- Figure 62: Number of motor insurance quotes obtained on last renewal, 2001-07
- Older drivers go for convenience
-
- Figure 63: Number of quotes received, by gender, age, socio-economic group and region, February 2007
- Homebuyers seek more quotations
-
- Figure 64: Number of quotes received, by working status, gross annual household income and tenure, February 2007
- Aggregators have growing appeal
-
- Figure 65: Consumers using aggregator websites to get motor insurance quotes, by age group, February 2007
- Internet users search far and wide
-
- Figure 66: Number of quotes obtained, by method used to arrange last policy, February 2007
- New entrant users make the effort
-
- Figure 67: Number of quotes obtained, by where last policy was arranged, February 2007
- The changing nature of ‘loyalty’
-
- Figure 68: Length of time with current provider, 2001-07
- Youngsters look for a good deal
-
- Figure 69: Length of time with current provider, by gender, age, socio-economic group and region, February 2007
- Retirees maintain the status quo
-
- Figure 70: Length of time with current provider, by working status, gross annual household income and tenure, February 2007
- Medium Internet users use their online time wisely
-
- Figure 71: Length of time with current provider, by newspaper readership, new technology, Internet usage, daily commercial TV viewing and supermarket usage, February 2007
- Churners seek more quotations
-
- Figure 72: Number of quotes obtained before purchasing last policy, by number of years with existing provider, February 2007
Back to top