Table of Contents
Executive Summary
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- Impact of COVID-19 on motor insurance
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- Figure 1: Short, medium and long-term impact of COVID-19 on motor insurance, April 2021
- The market
- Market size and forecast
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- Figure 2: Forecast of gross written personal motor insurance premiums (UK domestic business only), 2015-25
- New rules on unfair pricing set to shake up the market
- Whiplash reforms to be implemented in May 2021
- Growth of alternative fuel vehicles creates opportunities for insurers
- Companies and brands
- Admiral grows motor insurance policies by 9% in 2020
- Aviva brand finally launches on PCWs
- COVID-19 drives more development of flexible policies
- Pricing strategies will come to the fore in 2021
- The consumer
- Car insurance ownership holds up amid COVID-19 disruption
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- Figure 3: Car insurance ownership, 2019 and 2020
- Almost twice as many people opt to pay premium annually
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- Figure 4: Car insurance payment methods, November 2020
- Shop-around behaviour is ingrained
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- Figure 5: Planned renewal behaviour, November 2020
- COVID-19 drives policy adjustments
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- Figure 6: Interactions with car insurance providers over the last 12 months, November 2020
- 63% of policyholders find shopping around a rewarding process
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- Figure 7: Attitudes towards car insurance, November 2020
Issues and Insights
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- COVID-19 increases the focus on product flexibility
- Subscription-style policies will increase market segmentation
The Market – Key Takeaways
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- Premium income declines in 2020 as claims costs plummet
- New rules on unfair pricing set to shake up the market
- Growth of alternative fuel vehicles creates opportunities for insurers
Market Size and Forecast
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- Impact of COVID-19 on motor insurance
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- Figure 8: Short, medium and long-term impact of COVID-19 on motor insurance, April 2021
- GWP declined for the third consecutive year in 2020
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- Figure 9: Gross written personal motor insurance premiums (UK domestic business only), 2016-20
- Premiums expected to decline again in 2021
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- Figure 10: Forecast of gross written personal motor insurance premiums (UK domestic business only), 2015-25
- Figure 11: Market size and forecast of gross written personal motor insurance premiums, 2015-25
- Market drivers and assumptions
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- Figure 12: Key drivers affecting Mintel’s market forecast, 2015-25
- Learnings from the last recession
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- Figure 13: Gross written personal motor insurance premiums (UK domestic business only), 2007-12
- Forecast methodology
Claims and Underwriting Performance
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- Claims notified fell by 28% in 2020…
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- Figure 14: Total number of claims notified and claims frequency, private cars, 2010-20
- ...but average costs increased
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- Figure 15: Average claims costs of settled claims for private car insurance, Q1 2019-Q4 2020
- Bodily injury claims declined by 33% in 2020
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- Figure 16: Claims notified for private cars, by category, 2017-20
- Underwriting performance to be boosted in 2020
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- Figure 17: Underwriting result for domestic motor insurance, 2015-19
Market Drivers
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- COVID-19 disruption but prospects have improved due to vaccine rollout
- Total miles driven decline significantly during pandemic
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- Figure 18: Rolling annual total of miles driven by cars in Great Britain, Q1 2019-Q3 2020
- Average premiums fall sharply due to COVID-19 lockdowns
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- Figure 19: Average premium for comprehensive car insurance policies, quarterly data, Q1 2017-Q1 2021
- Limited car parc growth in 2020 but share of alternative fuel types is growing
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- Figure 20: Number of licensed cars, Great Britain, 2010-20
- New and used car sales fell sharply in 2020…
- …but it was a record year for new electric car sales
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- Figure 21: New and used car registrations, 2013-20
- Telematics stalls but more personalised cover is emerging
Regulatory and Legislative Changes
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- FCA publishes findings from its pricing practices study…
- …with the new rules due to be implemented by the end of 2021
- Whiplash reforms to be implemented in May 2021
- FCA issued guidance on treating customers fairly during pandemic
- Drivers to EU need Green Card but trade deal should limit any increase in Brexit-related costs
Companies and Brands – Key Takeaways
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- Admiral grows motor insurance policies by 9% in 2020
- Aviva brand finally launches on PCWs
- COVID-19 drives more development of flexible policies
- Pricing strategies will come to the fore in 2021
Market Share
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- Direct Line and Admiral continue to lead the market
- Acquisition activity at LV=GI
- Aviva brand finally launches on PCWs
- Markerstudy boosts share through Co-op Insurance acquisition
- Tesco Underwriting divests from Ageas
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- Figure 22: Top insurance providers of domestic motor insurance (ABI members), by GWP, 2018 and 2019
Competitive Strategies
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- Pricing strategies are the key focus for 2021
- Insurers commit to supporting customers during the COVID-19 pandemic
- Admiral offers refunds to all policyholders
- Direct Line develops its Mileage Moneyback initiative
- Motor insurers also rally to support NHS workers
- Young drivers continue to be a focus for product development
Launch Activity and Innovation
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- Flexibility remains in the spotlight
- Motor insurers are embracing mobile apps
- Well-known brands extend into car insurance
- Vitality launches VitalityCar
- Amazon enters the motor insurance market in India
Advertising and Marketing Activity
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- Car insurance adspend increased by 11% in 2020/21
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure in car insurance, breakdown recovery, motorcycle insurance and van insurance, 2016/17-2020/21
- Price comparison websites continue to increase their spending
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure in car insurance, by top 10 advertisers, 2018/19-2020/21
- LV= General Insurance uses digital channels to promote Flow
- Direct Line launches a new campaign starring iconic heroes
- TV dominates advertising expenditure
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- Figure 25: Total above-the-line, online display and direct mail advertising expenditure in car insurance, by media type, 2020/21
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
- AA Insurance leads the way on trust and differentiation
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- Figure 26: Attitudes towards and usage of selected brands, February 2021
- AA Insurance and Admiral are the most used brands
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- Figure 27: Key metrics for selected brands, February 2021
- Admiral and Co-op Insurance are associated with good customer service
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- Figure 28: Attitudes, by brand, February 2021
- Churchill is seen as a fun brand
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- Figure 29: Brand personality – Macro image, February 2021
- Admiral, Churchill and Co-op Insurance stand out as honest and progressive
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- Figure 30: Brand personality – Micro image, February 2021
- Brand analysis
- Co-op and AA Insurance can capitalise on their prominence in other sectors
- Churchill’s ‘fun’ image is key, while Admiral stands out for affordability and accessibility
- People struggle to understand what Saga, Hastings and esure stand for
The Consumer – Key Takeaways
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- Car insurance ownership holds up amid COVID-19 upheaval
- Age-related preferences will influence the development of subscription-style policies
- Ingrained renewal behaviour will limit short-term impact of FCA pricing rules
- Understanding the psychology of shopping around for car insurance
Impact of COVID-19 on Consumer Behaviour
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- Household finances have largely weathered the COVID-19 storm
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- Figure 31: Financial confidence, January 2015-February 2021
- Financial impact will become more apparent in 2021
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- Figure 32: Impact of COVID-19 on household finances, 28 February-13 March 2021
- 55% of car insurance holders driving less than pre-pandemic
- Driving less could lead people to question the value of insurance
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- Figure 33: Driving activity over the last 12 months, November 2020
Car Insurance Ownership and Use of Short-term Cover
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- Car insurance ownership remains stable
- Telematics policy ownership stalls at 2%
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- Figure 34: Car insurance ownership, 2019 and 2020
- 32% of Gen Z and Younger Millennials turned to temporary cover in the last year
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- Figure 35: Use of short-term car insurance over the last 12 months, November 2020
Paying for Car Insurance – Annual vs Monthly Payment
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- Almost twice as many people opt to pay premium annually
- Lockdown savings could increase annual payments
- Subscription-style policies to challenge the status quo
- 17% of Gen Z drivers have premiums paid by someone else
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- Figure 36: Car insurance payment methods, November 2020
Behaviour at Last Renewal
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- Renewal behaviour is ingrained limiting short-term impact of FCA pricing rules
- Auto-renewal rules could have limited impact on switching
- Switching could reduce in the longer term
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- Figure 37: Last car insurance renewal behaviour, 2018-20
Planned Renewal Behaviour
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- 80% expect to shop around at their next renewal
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- Figure 38: Planned renewal behaviour, November 2020
- A third who didn’t shop around at last renewal are unlikely to do so at their next renewal
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- Figure 39: Planned renewal behaviour, by last renewal behaviour, November 2020
Confidence in Current Deal
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- One in four policyholders are very confident in their insurance deal
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- Figure 40: Confidence in current car insurance deal, November 2020
- 70% of those who didn’t shop around are confident they are getting a good deal
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- Figure 41: Confidence in current car insurance deal, by behaviour at last renewal, November 2020
Adjusting or Amending Car Insurance Policy in the Last Year
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- 30% of policyholders adjusted their policy in the last 12 months
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- Figure 42: Interactions with car insurance providers over the last 12 months, November 2020
- Policyholders are satisfied with insurer response to their issues…
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- Figure 43: Satisfaction with providers’ response, November 2020
- …but satisfaction isn’t strengthening loyalty
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- Figure 44: Likelihood to shop around at next renewal, by satisfaction with providers’ response, November 2020
Attitudes towards Car Insurance
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- Price promises appeal…
- …but people enjoy shopping around for a deal
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- Figure 45: Attitudes towards car insurance, November 2020
- Young dads are most likely to leave their renewal until the last minute
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- Figure 46: Motor Insurance – CHAID – Tree output, November 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Methodology
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- Figure 47: Motor Insurance – CHAID – Table output, November 2020
Appendix – Market Size and Forecast
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- Forecast methodology
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