Table of Contents
Introduction and Abbreviations
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- Market conditions begin to improve
- The scope of the report
- Definitions and report coverage
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
Executive Summary
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- Report coverage
- Demand for home insurance is driven by number of households
- 2003 was a better year in terms of claims
- Home insurance sector was worth an estimated £5.61 billion in 2003
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- Figure 1: Estimated value of the domestic buildings and contents insurance sectors, by gross written premium, 1998-2003
- The market moves back to profitability
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- Figure 2: Illustration of domestic property insurance underwriting result, 1998-2003
- Consumer penetration of home insurance is high
- Distribution developments
- Switching is a significant feature with price still fairly key
Market Drivers
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- One-person households are key area of growth
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- Figure 3: Number of UK households, by size of household, 2000-09
- Owner-occupied sector drives demand for buildings cover
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- Figure 4: Total UK dwellings, by sector, 2000-09
- Demographic clues as to the home insurance market targets
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- Figure 5: Tenure, by age, socio-economic group, commercial TV viewing and supermarket usage, January 2004
- First-time buyer market slows in 2003
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- Figure 6: Property transactions, new mortgages and proportion of first-time buyer loans – UK, 1998-2003
Market Size and Trends
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- The property insurance sector approaches £10 billion
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- Figure 7: UK general insurance – annual business, gross written premium, by the five main categories of insurance, 1998-2002
- The domestic home insurance sector was worth £5.6 billion in 2003
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- Figure 8: Domestic versus commercial property insurance, gross written premium, 1998-2003
- Reinsurance rates level off in 2003
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- Figure 9: Domestic property insurance, net written premium and reinsurance ceded, 1998-2003
- Profit at last!
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- Figure 10: Breakdown of domestic property insurance underwriting result, 1998-2003
- The industry gets its house in order
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- Figure 11: Illustration of claims, expenses and underwriting result as a proportion of NWP, 1998-2003
- Building upwards
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- Figure 12: Estimated value of the domestic buildings and contents insurance sectors, by gross written premium, 1998-2003
Claims Experience
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- Claim levels fall significantly in 2003
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- Figure 13: Overall gross incurred claims for the domestic property insurance market, by the four major perils, at current prices, 1998-2003
- Subsidence claims form a larger proportion of the total in 2003
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- Figure 14: Domestic property gross incurred claims, by proportional representation of the four major perils, 1998-2003
- Insurers find a port in the storm
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- Figure 15: Domestic weather damage gross claims incurred, by cause, 1998-2003
- Less crime is good news for all
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- Figure 16: Total cost of domestic theft claims and average claim cost, 1998-2003
- Slipping back into the mire
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- Figure 17: Number and value of claims for subsidence – domestic, 1996-2003
Main Underwriters
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- General insurance market has had its share of troubles
- A variety of companies offer home insurance
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- Figure 18: Selected home insurance providers and their underwriters, June 2004
- Aviva and R&SA lead the way in this sector
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- Figure 19: Top ten property insurance underwriters, by gross premiums, 2000-02
- Significant moves in terms of market share
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- Figure 20: Market share of the top ten property insurance underwriters, 2001 versus 2002
- Main underwriter snapshots
- Aviva/Norwich Union
- Royal & SunAlliance
- Zurich
- AXA Insurance
- Direct Line
Pricing and Products
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- Home insurance premium rates begin to rise slowly
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- Figure 21: AA British Insurance Premium Index, by policy, April 1998-April 2004
- Resourceful consumers can achieve significant savings
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- Figure 22: Buildings and contents insurance, shoparound versus market average premiums, April 2004
- Products offer at least a minimum level of cover
- Under-insurance may provide suppliers with an opportunity
- The HNWI market has continued to expand
Distribution and the Internet
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- Insurers, lenders and retailers carve up the market
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- Figure 23: Distribution breakdown of total household insurance premiums, by channel, 1999-2003
- More detailed analysis indicates that national brokers have suffered
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- Figure 24: Illustration of distribution of household insurance premiums, by detailed channel, 2000 and 2002
- Internet sales are gaining momentum
Advertising and Promotion
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- Direct mail accounts for nearly four fifths of expenditure
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- Figure 25: Total advertising spend on home insurance products, by outlet type, 2003/04
- Lloyds TSB supplants Direct Line as the major advertiser
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- Figure 26: Top ten advertisers of home insurance products, 2002/03 and 2003/04
Consumer Financial Activity
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- Consumers are confident about financial activity going forward
- Demand on the main financial services providers
- Borrowing, saving and debt repayment activity
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- Figure 27: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2002-March 2004
- ABs, 23-29s and those earning over £35,000 are likely to be the most financially active
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- Figure 28: Expected financial activity, by socio-demographic and income groups, March 2004 and average for the last eight quarters
- Consumers looking to service debt
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- Figure 29: Leading financial activities planned in the next six months, September 2002-March 2004
- HSBC and NatWest were strong in the latest quarter
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- Figure 30: Leading main financial services providers: market shares, March 2003-March 2004
- Bank of Scotland can expect active customers in investments sector
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- Figure 31: Saving, investment and lending, market sizes, by expected customer demand and brand leaders, March 2004
- RBS and BoS customers will be the most active
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- Figure 32: Activity levels of main financial providers’ customer bases, March 2004
The Consumer
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- The majority of adults have home insurance
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- Figure 33: Ownership of insurance products, by gender, May 2004
- Consumers aged 45-64 are most likely to have both types of cover
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- Figure 34: Penetration of home contents and buildings insurance, by gender, age and socio-economic group, May 2004
- ABC1 third age lifestage is prime insurance buying Special Group
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- Figure 35: Penetration of home contents and buildings insurance, by marital status, lifestage and Mintel’s Special Groups, May 2004
- High earners are likely to be covered
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- Figure 36: Penetration of home contents and buildings insurance, by working status, gross annual household income and tenure, May 2004
- Londoners are least likely to have home insurance
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- Figure 37: Penetration of home contents and buildings insurance, by TV region and ACORN categories, May 2004
- Broadsheet readers and people shopping at Waitrose/Marks & Spencer have high penetration of buildings/contents insurance
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- Figure 38: Penetration of home contents and buildings insurance, by newspaper readership, new technology users, commercial TV viewing and supermarket usage, May 2004
- The 'direct revolution' has changed contents insurance distribution
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- Figure 39: Source used to obtain home contents insurance, May 2004
- Older respondents favour using insurers
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- Figure 40: Source used to obtain home contents insurance, by gender, age, socio-economic group, tenure and area, May 2004
- Traditional relationship is changing
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- Figure 41: Source used to obtain buildings insurance, May 2004
- Age is significant in provider choice
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- Figure 42: Source used to obtain buildings insurance, by gender, age, socio-economic group, tenure and area, May 2004
Consumer Attitudes and Targeting Opportunities
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- Method of purchasing home contents insurance
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- Figure 43: Method of purchasing home contents insurance, May 2004
- Remote channels are favoured by men
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- Figure 44: Method of purchasing home contents insurance, by gender, age, socio-economic group, tenure and area, May 2004
- The link between direct insurer and telephone is clear
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- Figure 45: Method of purchasing home contents insurance, by source, May 2004
- Some 12% of home insurance owners switched policy at the last opportunity
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- Figure 46: Behaviour when renewing last contents/buildings policy, May 2004
- Renewers increase with age
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- Figure 47: Behaviour when renewing last contents/buildings policy, by gender, age, socio-economic group, tenure and area, May 2004
- A sizeable proportion of adults sought alternative quotations
- Price is important, but not predominant
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- Figure 48: Most influential factors affecting choice of home insurance provider, May 2004
- Suitable cover and convenience are also important
- Having the right policy is important to those aged 45-64
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- Figure 49: Most influential factors affecting choice of home insurance provider, by gender, age and socio-economic group, May 2004
- Internet users seek the cheapest rate
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- Figure 50: Most influential factors affecting choice of home insurance provider, by new technology users, commercial TV viewing and supermarket usage, May 2004
- 'Seek and stickers' most interested in price
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- Figure 51: Most influential factors affecting choice of home insurance provider, by behaviour when renewing last contents/buildings policy, May 2004
- Home insurance purchasing typologies
- Respondents aged 45-64 are key Personalisers
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- Figure 52: Home insurance purchasing typologies, by gender, age and socio-economic group, May 2004
- Waitrose and M&S shoppers likely to be Convenience Bargain Hunters
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- Figure 53: Home insurance purchasing typologies, by new technology users, commercial TV viewing and supermarket usage, May 2004
Industry Views
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- Can the industry prepare for future eventualities?
- Will the weather directly impact underwriting and pricing considerations?
- The market settles down
The Future
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- Insurers moving towards proactive prevention/treatment of claims
- Repairer networks allow claim costs to be capped
- Predicting the climate – the great imponderable
- Profitability guaranteed?
- Declining theft claims and the link to unemployment
Forecast
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- Figure 54: Forecast of the domestic buildings and contents insurance sectors, by gross written premium, 2003-09
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