Table of Contents
Executive Summary
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- Impact of COVID-19 on home insurance
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- Figure 1: Short, medium and long-term impact of COVID-19 on home insurance, January 2020
- The market
- A mature market struggling to generate growth
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- Figure 2: Market size for home insurance, 2015-25 (prepared in December 2020)
- Value of claims falls in 2019
- Fewer storms leads to improved profitability in 2019
- Direct sales are taking a growing share of the market
- Smart home adoption is gathering pace
- FCA publishes final report into pricing practices
- Companies and brands
- Aviva is the leading insurance brand
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- Figure 3: Customer share of home insurance brands, October 2020
- Smart devices sweeten the deal
- Expanding the boundaries of home insurance
- Advertising becomes more generalised
- The Direct Line brand offers a clear point of difference
- The consumer
- Market penetration stagnates in a mature market
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- Figure 4: Home insurance ownership, October 2020
- Those who pay monthly pay more
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- Figure 5: Home insurance premiums, by how consumers pay for home insurance, October 2020
- Comparison sites dominate home insurance research
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- Figure 6: Quote sources for new policies, October 2020
- Encourage consumers to consider the value of their possessions
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- Figure 7: Barriers to purchase, October 2020
- Customer service is crucial to persuading consumers to switch
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- Figure 8: Factors that would encourage switching, October 2020
- The over-55s seek protection in cyberspace
- Young people are willing to pay for prevention
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- Figure 9: Attitudes towards home insurance, October 2020
Issues and Insights
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- COVID-19 is changing our relationship with our homes
- Redefine value by taking a more proactive approach
- Protecting the future home from cyber threats
The Market – Key Takeaways
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- COVID has a limited impact on the home insurance market
- A highly mature and stable market
- Value of claims falls in 2019
- A turbulent year reflected in the claims data
- Profitability improves in 2019 but storms will hit profits in 2020
- Growth in direct sales
- FCA publishes final report into pricing practices
Market Size and Forecast
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- Impact of COVID-19 on home insurance
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- Figure 10: Short, medium and long-term impact of COVID-19 on home insurance, January 2020
- A mature market struggling to generate growth
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- Figure 11: Gross written premiums for home insurance, 2015-20
- The pandemic will encourage savvy spending
- The pandemic has highlighted the fragility of our world
- Technology offers a way to reframe home insurance
- Untapped opportunities remain for whoever can crack them
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- Figure 12: Market size for home insurance, 2015-25 (prepared in December 2020)
- Market drivers and assumptions
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- Figure 13: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared: December 2020)
- Learnings from the last recession
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- Figure 14: Gross and net written premiums, 2007-13
- Forecast methodology
Claims Incurred
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- Value of claims incurred falls 8% in 2019
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- Figure 15: Value of domestic home insurance claims incurred, 2014-19
- Escape of water accounts for over a quarter of claims
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- Figure 16: Proportional distribution of gross domestic property claims incurred, by value of claims, 2014-19
- COVID-19 leads to more fires but fewer burglaries
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- Figure 17: Quarterly distribution of gross domestic property claims incurred, by value of claims, Q1 2018-Q3 2020
Average Premiums
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- Premiums reach new highs in 2020…
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- Figure 18: Average home insurance premium, Q1 2012-Q3 2020
- …but premiums have often fallen in real terms
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- Figure 19: Annual change in average premiums and all items CPI, 2012-19
Underwriting Result
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- Profitability improves in 2019
- Weather events of 2020 will hit profitability
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- Figure 20: Domestic property outgoings and underwriting result, 2014-19
Channels to Market
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- Growing proportion of sales go direct
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- Figure 21: Proportional distribution of gross domestic property premiums, by sales channel, 2014-19
Market Drivers
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- Impact of Brexit on home insurance
- A turbulent year for the housing market
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- Figure 22: Monthly housing transactions, January 2016-October 2020
- ‘Generation Rent’ demands a different kind of insurance
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- Figure 23: Housing tenure, by age, 2018/19
- Consumers are embracing the smart home revolution
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- Figure 24: Ownership of connected home devices, March 2020
- Changing weather conditions
Regulatory and Legislative Changes
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- COVID rules to protect household finances
- FCA publishes final report into pricing practices
- CMA fines ComparetheMarket for keeping home insurance costs high
- Stamp Duty holiday
Companies and Brands – Key Takeaways
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- Aviva is the leading insurance brand
- Smart devices sweeten the deal
- Expanding the boundaries of home insurance
- Advertising becomes more generalised
- Direct Line offers a clear point of difference
Market Share
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- Market consolidation in 2019
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- Figure 25: Top 20 domestic property underwriters – UK, by share of total market GWP, 2018-19
- Aviva is the leading home insurance brand
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- Figure 26: Customer share of home insurance brands, October 2020
- LV= acquires L&G’s general insurance business
- Santander and Aviva renew partnership in 2020
- Co-op Insurance sells underwriting business to Markerstudy
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- Figure 27: Underwriting arrangements, November 2020
Competitive Strategies
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- Supporting households during COVID-19
- Banks use data to speed up the quote process
- John Lewis eyes a bigger share of the market
- Putting spending analytics to work to avoid overpaying
- Protection for the future
- Smart home devices to sweeten the deal
- Integrating the smart home to deliver value
Launch Activity and Innovation
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- LV= launches Flow renters insurance
- NFU Mutual introduces Cybercrime cover
- LV= launches through smart assistants
Advertising and Marketing Activity
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- Adspend declines two years running
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- Figure 28: Total above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, 2015/16-2019/20
- Confused.com and Direct Line lead on spending
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- Figure 29: Above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by advertiser, 2019/20
- Shift towards generalised advertising
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- Figure 30: Above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by product type, 2015/16-2019/20
- Direct Line launches “We’re on it” campaign
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- Figure 31: Donatello Home Insurance advert, Direct Line, March 2020
- LV= focuses on customer service and price
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- Figure 32: LV= home insurance, July 2020
- Saga shows that not everything has to change
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- Figure 33: Saga home insurance ‘Time Shouldn’t Change a Thing’, May 2020
- Churchill the dog becomes a bit more real and a bit more chilled
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- Figure 34: Chur-Chill advert, October 2019
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 35: Attitudes towards and usage of selected brands, November 2020
- Key brand metrics
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- Figure 36: Key metrics for selected brands, November 2020
- Brand attitudes: Aviva stands out for service
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- Figure 37: Attitudes, by brand, November 2020
- Brand personality: Direct Line plays on its fun image
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- Figure 38: Brand personality – macro image, November 2020
- Hiscox seen as prestigious and authoritative
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- Figure 39: Brand personality – micro image, November 2020
- Brand analysis
- Aviva is the most used and trusted brand
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- Figure 40: User profile of Aviva, November 2020
- LV= offers honest and affordable insurance
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- Figure 41: User profile of LV=, November 2020
- AXA is a well-known brand that struggles to stand out
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- Figure 42: User profile of AXA, November 2020
- Admiral’s messaging around loyalty cuts through
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- Figure 43: User profile of Admiral, November 2020
- Direct Line stands apart from the rest
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- Figure 44: User profile of Direct Line, November 2020
- NFU Mutual offers a reassuring and ethical choice
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- Figure 45: User profile of NFU Mutual, November 2020
- Hiscox lacks brand awareness but scores highly among those who know it
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- Figure 46: User profile of Hiscox, November 2020
- MORE TH>N struggles to garner customer satisfaction
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- Figure 47: User profile of MORE TH>N, November 2020
The Consumer – Key Takeaways
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- An opportunity remains among Generation Rent
- Encourage consumers to consider the value of their possessions
- Customer service is crucial to persuading consumers to switch
- The over-55s seek protection in cyberspace
- Young people are willing to pay for prevention
Impact of COVID-19 on Home Insurance
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- COVID-19 has changed our relationship with our homes
- A focus on value will lead people to reassess cover
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- Figure 48: Impact of COVID-19 on household finances, 10-19 November 2020
- Changing behaviours demand clarity of messaging
- People have been pushed online and are worried about new threats
Home Insurance Ownership
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- Two thirds of people have some kind of home insurance
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- Figure 49: Home insurance ownership, October 2020
- Stable penetration rates create intense competition for customers
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- Figure 50: Trends in home insurance ownership, 2014-20
- Less than half of renters have any home insurance
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- Figure 51: Home insurance ownership, by housing tenure, October 2020
- Londoners lack home insurance
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- Figure 52: Home insurance ownership, by region, October 2020
How Consumers Pay for Home Insurance
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- Four in 10 pay monthly insurance premiums
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- Figure 53: How consumers pay for home insurance, by age, October 2020
- Struggling households are most likely to pay monthly
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- Figure 54: How consumers pay for home insurance, by financial situation, October 2020
How Much Consumers Pay for Home Insurance
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- Those who pay monthly pay more
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- Figure 55: Home insurance premiums, October 2020
- Uncertainty over cost could lead to overpayment
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- Figure 56: Home insurance premiums, by age, October 2020
Sources of Information
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- Comparison sites dominate home insurance research
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- Figure 57: Quote sources for new policies, October 2020
- People are less likely to go direct than they think
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- Figure 58: Expected sources for a home insurance quote, October 2020
- Those with the highest premiums prefer to go direct
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- Figure 59: Quote sources for new policies, by home insurance premium, October 2020
Barriers to Purchase
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- Affordability is a key concern
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- Figure 60: Barriers to purchase, October 2020
- Highlight the value of contents to appeal to renters
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- Figure 61: Barriers to purchase, by housing tenure, October 2020
Factors Encouraging Switching
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- Customer service is key
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- Figure 62: Factors that would encourage switching, October 2020
- Putting the customer in control
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- Figure 63: Selected factors that would encourage switching (any rank), by age, October 2020
- Appeal to the over-55s by offering protection in cyberspace
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- Figure 64: Selected factors that would encourage switching, by age, October 2020
Attitudes towards Home Insurance
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- COVID changes demand better communication
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- Figure 65: Attitudes towards home insurance, October 2020
- Consumers trust insurers…to a point
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- Figure 66: Attitudes towards home insurance, October 2020
- Millennials are comfortable buying insurance from unknown brands
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- Figure 67: Home insurance behaviours, CHAID analysis, Tree output, October 2020
- Young people are willing to pay for prevention
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- Figure 68: Willingness to pay for smart devices, by age, October 2020
- Clarity required on digital assets
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- Figure 69: Home insurance and digital assets, by age, October 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis Methodology
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- Figure 70: Home insurance behaviours – CHAID – Table output, October 2020
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