Table of Contents
Introduction and Abbreviations
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- Key sources
- Market definitions
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- See how fast we can process your claim
- There’s nothing to fear
- Have you seen this one?
- A two-year contract
- THIS is why
Executive Summary
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- Market drivers
- Market size
- Claims
- Pricing
- Uninsured driving
- Key players
- Distribution
- Non-standard risk
- Advertising and promotion
- The consumer
- Typologies
- The future
Market Drivers
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- Consumer expenditure is decelerating relative to PDI
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- Figure 1: PDI and consumer expenditure, at current prices, 1989-2010
- Economic conditions drive up car parc numbers
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- Figure 2: UK car parc, by type of ownership, 1994-2010
- New car registrations are starting to falter
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- Figure 3: UK new car registrations, 1994-2004
- Older consumers driving more
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- Figure 4: Full driving licence holders, by age group, 1975-2003
- One is not enough
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- Figure 5: Household ownership of cars, 1999-2004
- Growth in older consumers good news to market
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- Figure 6: UK adult population trends, 1995-2010
Market Size and Trends
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- More moderate times ahead
- Profitability is just beyond reach
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- Figure 7: UK motor insurance revenue account for all business and domestic market, incorporating investment income, 1993-2004
- Investment income
- The worst is behind us
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- Figure 8: Illustration of NWP and outgoing payments vs the underwriting result for the business and domestic market, 1993-2004
- Premium inflation boosts GWP growth
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- Figure 9: Domestic motor insurance exposure, gross written premiums and average premium rates, at current and constant prices, 1999-2004
- 26 million policies!
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- Figure 10: Estimation of the number of live motor insurance policies, 2005
- More than 4 in 5 private cars are covered by a comprehensive policy
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- Figure 11: Proportion of cars with comprehensive and non-comprehensive cover, 1993-2003
Claims Experience
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- The number of claims made surpassed 4 million in 2004
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- Figure 12: Total number of private motor insurance claims and claims frequency, 1996-2004
- Claim costs breach the £6 billion mark
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- Figure 13: Value of comprehensive, non-comprehensive and total claims, 1993-2003
- Motor theft is down, but claims are getting more expensive
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- Figure 14: Motor theft claims, by volume, cost, and average claim, 1994-2004
- Insurers work with manufacturers to keep claim costs down
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- Figure 15: Price indices for car replacement parts, windscreens, paint prices and garage charge-out rates compared with RPI, 1994-2004
Key Issues: Pricing and Uninsured Driving
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- AA index suggests premium deflation
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- Figure 16: Illustration of comprehensive motor and home contents insurance premiums, 1994-2005
- The war against the uninsured
- Working toward the goal
Key Underwriters
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- A recipe for concentration
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- Figure 17: Timeline of major mergers and acquisitions in the motor insurance sector, 1996-2003
- RBS and Aviva hold almost half the market
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- Figure 18: Top 15 insurers for private motor risks, by GWP, 2003
- The advent of the superinsurer?
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- Figure 19: Illustration of the market share of the top 10 insurers, 2002-03
- Company profiles
- RBS
- Aviva
- Royal & SunAlliance
- Zurich Financial Services
Distribution and the Internet
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- Once upon a time, there were brokers
- The direct revolution
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- Figure 20: Timeline of the appearance of direct writers in the motor insurance market, 1985-2005
- The retailer revolution
- Today’s balance of power
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- Figure 21: Distribution of motor insurance sales, 2001-05
- Almost 4 million drivers bought a policy online
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- Figure 22: Method used to arrange most recent motor insurance policy, 2001-05
- Online quotes encourage online sales
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- Figure 23: Method of arranging policy by those who used the Internet to obtain the best quote, February 2005
Non-standard Risk
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- Omnipresent cameras drive up speeding convictions
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- Figure 24: Police and speed camera fixed penalties and prosecutions, England and Wales, 1991-2004
- Entry level models boost sales of luxury cars
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- Figure 25: New car sales, by sector, 2001-03
- No, we’ll take you
Advertising and Promotion
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- Record amount spent on advertising in 2004/05
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- Figure 26: Advertising expenditure of top ten motor insurance advertisers, by provider, March 2003-February 2005
- £76.8 million spent on TV adverts alone
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- Figure 27: Advertising expenditure of top five motor insurance advertisers, by provider and outlet type, March 2004-February 2005
- Incorporating ideas from outside financial services
- You could be saving £££s!
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- Figure 28: recent advertising end lines and slogans of a selection of motor insurance providers, 2005
- Internet providers advertise on TV
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- Figure 29: Advertising expenditure of Internet-based motor insurance providers, by outlet type, March 2004-February 2005
Consumer Financial Activity
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- Activity levels are down
- Relationship with the main financial services providers (MFSP)
- Saving and investment activity is set to slow
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- Figure 30: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2003-December 2004
- Above average activity from those aged 40-49
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- Figure 31: Expected financial activity, by socio-demographic and income groups, December 2004 and average for the last twelve quarters
- Consumers are placing a deposit, but not much else
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- Figure 32: Leading financial activities planned in the next 6 months, December 2003-December 2004
- Mortgage demand reflects slowdown in the property sector
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- Figure 33: Intended mortgage and property purchase activity, June 2002-December 2004
- The position primarily unchanged among MFSPs
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- Figure 34: Leading main financial services providers: Market shares, December 2003-December 2004
- RBS set to benefit from increased mortgage activity
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- Figure 35: Saving, investment and lending, market sizes by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), December 2004
- RBS customers remain the most active – NatWest can also expect high business levels
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- Figure 36: Activity levels of main financial providers’ customer bases, December 2004
The Consumer: Product Ownership and Purchase Preferences
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- 26 million adults have a motor policy
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- Figure 37: Penetration of motor insurance, February 2005
- Younger consumers unlikely to have comprehensive cover
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- Figure 38: Motor insurance coverage, by gender, age and socio-economic group, February 2005
- Working mothers are the most likely to be covered under partner’s policy
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- Figure 39: Penetration of motor insurance, by detailed lifestage, February 2005
- Most drivers buy direct
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- Figure 40: Distribution channels of motor insurance policies, February 2005
- Brokers offer expertise
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- Figure 41: Channels of distribution, by gender, age and socio-economic group, February 2005
- Retired singles prefer brokers
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- Figure 42: Channels of distribution, by detailed lifestage, February 2005
- More affluent consumers are more likely to have special requirements
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- Figure 43: Channels of distribution, by working status, gross annual household income and tenure, February 2005
- Technology rules!
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- Figure 44: Method used to arrange most recent motor insurance policy, February 2005
- Women prefer the telephone
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- Figure 45: Method used to arrange policy, by gender, age and socio-economic group, February 2005
- Pre-/no family couples go online
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- Figure 46: Method used to arrange policy, by detailed lifestage, February 2005
- The Internet is an important distribution channel for supermarkets
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- Figure 47: Method of arranging policy, by distribution channel, February 2005
The Consumer: Provider Loyalty and Targeting Opportunities
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- Length of time with current provider
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- Figure 48: Length of time with current provider, February 2005
- Nothing is forever
- Half of drivers aged 65+ have been with current provider more than 5 years
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- Figure 49: Length of time with current provider, by gender, age and socio-economic group, February 2005
- Pre-/no family singles are the most promiscuous
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- Figure 50: Length of time with current provider, by detailed lifestage, February 2005
- Whose customers are the most loyal?
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- Figure 51: Length of time with current provider, by who arranged last policy, February 2005
- Internet arrangers are not very loyal
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- Figure 52: Length of time with current provider, by method used to arrange policy, February 2005
- The average motorist gets 2.6 quotes
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- Figure 53: The number of quotes obtained before purchasing/renewing a policy, 2001-05
- Web whizzes get more quotes
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- Figure 54: The number of quotes obtained, by those who used the Internet to do so, February 2005
- Less affluent consumers tend to renew
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- Figure 55: The number of quotes obtained before purchasing/renewing a policy, by gender, age and socio-economic group, February 2005
- Young parents need to look after the pennies
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- Figure 56: The number of quotes obtained before purchasing/renewing a policy, by detailed lifestage, February 2005
- Loyalty decreases as quotes increase
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- Figure 57: Length of time with current provider, by the number of quotes received, February 2005
- Consumers who arrange by Internet are highly likely to get 4+ quotes
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- Figure 58: Number of quotes received, by method used to arrange policy, February 2005
- I have motor insurance because…?
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- Figure 59: Consumer attitudes towards motor insurance, February 2005
- It’s not always about price
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- Figure 60: Top four attitudes towards motor insurance, by gender, age and socio-economic group, February 2005
- Typologies
- Younger consumers are the most price-driven
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- Figure 61: Consumer typologies, by gender, age and socio-economic group, February 2005
- Children are likely to make price an issue
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- Figure 62: Consumer typologies, by detailed lifestage, February 2005
- Older consumers are Service Savvy
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- Figure 63: Consumer typologies, by working status, gross annual household income and tenure, February 2005
- Consumers in the North West tend to pinch pennies
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- Figure 64: Consumer typologies, by region and ACORN categories, February 2005
- Dutiful Deal Seekers go direct
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- Figure 65: Consumer typologies, by distribution channel, February 2005
- Who knows where to find the cheapest deals?
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- Figure 66: Consumer typologies, by method of arranging last motor insurance policy, February 2005
- The Penny Pinchers are the most promiscuous
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- Figure 67: Consumer typologies, by the amount of time with current provider, February 2005
- Dutiful Deal Seekers are quote crazy
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- Figure 68: Consumer typologies, by the number of quotes obtained, February 2005
- CHAID analysis
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- Figure 69: CHAID analysis of motor insurance typologies, February 2005
Industry Views
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- The Internet
- Policy priorities
- Uninsured driving
- Other issues
The Future
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- One way, or another, we’re gonna find you
- More moderate times ahead
- “Calm down dear, it isn’t a real mouse”
- More providers to get viral marketing bug
- Non-standard providers are stealing brokers’ thunder
Forecast
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- Figure 70: Forecast of the UK’s private motor insurance market, by net written premiums and outgoing costs, at current and constant prices, 2004-10
- Factors used in the forecast
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