Table of Contents
Executive Summary
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- The market
- Total car insurance premiums fall in 2019
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- Figure 1: Gross written personal motor insurance premiums (UK domestic business only), 2015-19
- Premiums forecast to return to growth over the next five years
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- Figure 2: Forecast of the value of gross written personal motor insurance premiums (UK domestic business only), 2014-24
- New car registrations decline for the third consecutive year
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- Figure 3: Number of new car registrations and used car sales, 2013-19
- Average premiums reach the highest level since 2017
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- Figure 4: Average premium for comprehensive car insurance policies, quarterly data, Q1 2015-Q4 2019
- Rising claims costs are a growing challenge in the market
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- Figure 5: Volume and gross value of private car claims settled, Q1 2015-Q3 2019
- Insurers left dissatisfied by the Ogden rate change
- Companies and brands
- Admiral is the UK’s largest motor insurer
- Rising claims costs hit profits at Hastings and Ageas
- More flexible solutions enter the market
- Honcho launches in a bid to challenge traditional PCWs
- Insurers struggle for trust and differentiation
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- Figure 6: Attitudes towards and usage of selected brands, February 2020
- The consumer
- Rising car insurance penetration
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- Figure 7: Car insurance ownership, 2017, 2018 & 2019, November 2019
- People prefer to remain with their existing provider
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- Figure 8: Behaviour at last car insurance policy renewal or arrangement, November 2019
- Smartphones and tablets are niche channels when managing a policy
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- Figure 9: Preferred methods of interacting with insurers, November 2019
- Price and quality are the key purchasing factors
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- Figure 10: Motor insurance purchase drivers, November 2019
- A protected no claims bonus stands out as the most important feature
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- Figure 11: Most important policy features, November 2019
- Policy-related actions are most popular when saving on car insurance
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- Figure 12: Actions taken to reduce the cost of car insurance, November 2019
- The majority enjoy looking for a good deal
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- Figure 13: Attitudes towards car insurance, November 2019
- What we think
Issues and Insights
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- Providers will have to be selective in who they reward for loyalty
- The facts
- The implications
- Younger drivers force the development of new insurance models
- The facts
- The implications
The Market – What You Need to Know
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- Total car insurance premiums fall in 2019
- New car registrations decline for the third consecutive year
- Average premiums reach the highest level since 2019
- Rising claims costs a growing challenge in the market
- Insurers left dissatisfied by the Ogden rate change
- The FCA steps up efforts to tackle the ‘loyalty penalty’
Market Size and Forecast
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- Marginal fall in car insurance premiums for the second consecutive year
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- Figure 14: Gross written personal motor insurance premiums (UK domestic business only), 2015-19
- Premiums expected to return to growth over the next five years
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- Figure 15: Forecast of the value of gross written personal motor insurance premiums (UK domestic business only), 2014-24
- Forecast methodology
Market Drivers
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- Marginal car parc growth in 2019
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- Figure 16: Number of licensed cars, Great Britain, 2010-19
- New and used car sales decline for the third consecutive year
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- Figure 17: Number of new car registrations and used car sales, 2013-19
- Average annual premium falls …
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- Figure 18: Average premium for comprehensive car insurance policies, annual data, 2012-19
- … but premiums track upwards in the second half of 2019
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- Figure 19: Average premium for comprehensive car insurance policies, quarterly data, Q1 2015-Q4 2019
- Claims costs rise whilst the number of claims settled falls
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- Figure 20: Volume and gross value of private car claims settled, Q1 2015-Q3 2019
- The number of younger drivers dramatically rises in 2018
Regulatory and Legislative Changes
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- Government raises the Ogden discount rate but by less than expected
- FCA proposes remedies to tackle the ‘loyalty penalty’
- New claims system to minimise whiplash pay-outs set for release
Companies and Brands – What You Need to Know
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- Admiral is the UK’s largest motor insurer
- Direct Line sees premium income decline in 2019
- Rising claims costs hit profits at Hastings and Ageas
- More flexible solutions enter the market
- Honcho launches in a bid to challenge traditional PCWs
- Insurers struggle for trust and differentiation
Market Share
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- Admiral expands its influence
- Direct Line Group saw premium income decline in 2019
- Allianz becomes the UK’s third largest motor insurer
- Aviva’s premium income falls
- Rising claims costs impact profits at both Hastings and Ageas
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- Figure 21: Selected leading personal motor insurance underwriters (UK-domiciled), by gross written premiums, 2017-18 (UK business only)
Launch Activity and Innovation
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- The trend toward improving flexibility continues
- By Miles partners with Tesla
- Cuvva looks set to enter the monthly subscription market
- BGL enters the short-term car insurance market
- New fintech partnerships help brands extend their influence
- Direct Line partners with Drover …
- … while Allianz teams up with Wrisk
- New reverse-auction marketplace app launces
- Comparethemarket.com hopes to save those paying the ‘loyalty penalty’
Advertising and Marketing Activity
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- Total advertising spend falls for the second consecutive year
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- Figure 22: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, 2016-19
- LV= was the largest spender on car insurance advertising in 2019
- PCWs drastically increase their adspend
- Churchill replaces the iconic ‘nodding dog’
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, by advertiser, 2017-19
- TV accounts for the majority of advertising expenditure
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, by media type, 2019
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
- Insurers struggle for trust and differentiation
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- Figure 25: Attitudes towards and usage of selected brands, February 2020
- AA’s dominance in breakdown recovery is reflected in awareness and usage
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- Figure 26: Key metrics for selected brands, February 2020
- AA and Aviva more closely associated with rewarding loyalty
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- Figure 27: Attitudes, by brand, February 2020
- Churchill and Direct Line stand out as fun brands
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- Figure 28: Brand personality – macro image, February 2020
- Ageas struggles to stand out on positive attributes
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- Figure 29: Brand personality – micro image, February 2020
- Brand analysis
- Aviva’s loyalty strategy appears to be working
- Direct Line and Churchill stand out through their strong reputations and fun image
- Negative perceptions about Ageas’s accessibility and affordability
The Consumer – What You Need to Know
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- Rising car insurance penetration
- People prefer to remain with their existing provider
- Smartphones and tablets are niche channels when managing a policy
- Price and quality are the key purchasing factors
- A protected no claims bonus stands out as the most important feature
- Policy-related actions are most popular when saving on car insurance
- The majority enjoy looking for a good deal
Car Insurance Ownership
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- Car insurance ownership grows
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- Figure 30: Car insurance ownership, 2017, 2018 & 2019, November 2019
- Comprehensive car insurance accounts for the vast majority of policies
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- Figure 31: Car insurance ownership, insurance holders only (rebase), November 2019
- One fifth of younger millennials own third party cover
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- Figure 32: Car insurance ownership, insurance holders only (rebase), by generation, November 2019
Renewal and Arrangement Behaviour
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- 40% stayed with existing provider after shopping around
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- Figure 33: Behaviour at last car insurance policy renewal or arrangement, November 2019
- Younger customers are less likely to shop around
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- Figure 34: Behaviour at last car insurance policy renewal or arrangement, by generation, November 2019
Preferred Methods of Interacting with Insurers
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- Smartphones and tablets remain niche channels for most customers
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- Figure 35: Preferred methods of interacting with insurers, November 2019
- Recent switchers prefer online channels
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- Figure 36: Preferred methods of interacting with insurers when renewing/taking out a policy, by renewal behaviour, November 2019
Motor Insurance Purchase Drivers
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- Price and quality the key drivers when choosing motor insurance
- Convenience and innovation matter more for newer drivers
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- Figure 37: Motor insurance purchase drivers, November 2019
- Loyal customers look for more than just price
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- Figure 38: Motor insurance purchase drivers, by behaviour at last car insurance renewal, November 2019
Important Policy Features
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- A protected no claims bonus is by far the most policy important feature
- 30% would prioritise a fair premium commitment
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- Figure 39: Most important policy features, November 2019
- A singular focus on price can come at the cost of other benefits
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- Figure 40: Most important policy features, by motor insurance purchase drivers, November 2019
Potential Actions to Reduce the Cost of Motor Insurance
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- Policy related actions are the most popular …
- … while younger drivers consider alternative methods
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- Figure 41: Actions taken to reduce the cost of car insurance, November 2019
- Reluctant switchers are less likely to take action to save
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- Figure 42: Actions taken to reduce the cost of car insurance, by renewal behaviour, November 2019
Attitudes towards Motor Insurance
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- Trying to find a good deal is an enjoyable pursuit
- Consumers are keen on rewards for driving an electric car
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- Figure 43: Attitudes towards car insurance, November 2019
- Policyholders are looking for reasons to stay loyal
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- Figure 44: Attitudes towards car insurance, by renewal behaviour, November 2019
- Insurance apps hold most appeal for working parents
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- Figure 45: Motor Insurance – CHAID – Tree output, November 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 46: Motor Insurance – CHAID – Table output, November 2019
Appendix – Market Size and Forecast
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- Figure 47: Best and worst-case forecast for the value of gross written premiums for personal motor insurance (UK business only), 2019-2023
- Forecast methodology
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