Table of Contents
Introduction and Abbreviations
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- Definitions and report coverage
- Key Sources
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Habitat home insurance?
- Websites must be user-friendly
- Are you covered?
- Brand identity is key to establishing lasting relationships
- Helping you find the right policy for you
- Premium guarantees
Executive Summary
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- Growing trend for smaller households
- In the black for the second consecutive year
- Climate change may drive up the cost of claims
- Stealing share from intermediaries
- Promoting quality policies…and ever cheaper premiums
- To switch or not to switch?
- And the evolution of the industry continues
Market Drivers
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- The number of one-person households continues to grow
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- Figure 1: Number of households, by size of household, 1990-2011
- The increase in owner-occupied dwellings has positive implications
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- Figure 2: Number of GB dwellings, by tenure, 1981-2004
- Semi-detached houses accounted for 31% of households in 2004
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- Figure 3: Households, by type of dwelling, 2004
- First-time buyers are increasingly finding themselves outpriced
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- Figure 4: New loans for house purchase and remortgages, 1995-2005
- The house rebuilding index continues to climb
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- Figure 5: House rebuilding index, January 2002-March 2006
Market Size and Trends
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- Property business accounts for over a quarter of total general insurance business
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- Figure 6: General insurance business, by annual net written premiums, 1999-2004
- Domestic property sector continues to outperform commercial property sector
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- Figure 7: Domestic and commercial property insurance, by GWPs, 2000-05
- Reinsurance business nearly doubled over last five years
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- Figure 8: Domestic property insurance, NWPs and reinsurance ceded, 2000-05
- The domestic property sector records a profit for second consecutive year
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- Figure 9: Domestic property, insurance underwriting result, NWPs, 2000-05
- The claims ratio continues to fall
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- Figure 10: Claims, expenses and underwriting result as a proportion of NWP, 2000-05
- Buildings sector stays ahead of contents
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- Figure 11: Estimated value of the domestic buildings and contents insurance sectors, by GWP, 1999-2005
Claims Experience
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- Handling of claims to take a consumer-centric approach
- The cost of weather-related claims rose again in 2005
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- Figure 12: Gross incurred claims for the domestic property insurance market, by the major perils, at current prices, 1995-2005
- Index shows decline in theft claims
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- Figure 13: Index of the cost of claims incurred, 1995-2005
- Number of theft claims has contracted over last decade
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- Figure 14: Theft claims, by number, value and average value, 1995-2005
- Climate change may increase the cost of weather-related claims
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- Figure 15: Gross incurred claims for weather damage, by category, 1998-2005
- Fears of drought for summer 2006
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- Figure 16: Subsidence claims, by number, value and average value, 1995-2005
Key Players and the Competitive Environment
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- The top three players accounted for almost half of GWPs in 2004
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- Figure 17: Underwriter market share, 2004
- Aviva brings in almost £2 billion in GWPs in 2004
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- Figure 18: Top ten property insurance underwriters, by gross written premiums, 2001-04
- Company snapshots
- Aviva
- Royal & SunAlliance
- RBS
- Zurich Financial Services
- New players, new products
Premium Pricing and Product Development
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- What influences the cost of a premium?
- Survey findings suggest the importance of security devices in deterring burglary
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- Figure 19: Households most at risk of burglary, 2004/05
- Buildings and contents premiums have not risen by much over the last 12 years
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- Figure 20: AA British Insurance Premium Index, July 1994-April 2006
- Shoparound premiums have increased
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- Figure 21: AA shoparound premiums, for buildings, contents, comprehensive and non-comprehensive cover, April 2005-April 2006
- Premium differentials are much higher for motor insurance than for home insurance
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- Figure 22: Market average premium and shoparound premium, for home and motor insurance, April 2006
- From standard policies…
- …to new product development
- Extra goodies
- Over 3 million people work from home
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- Figure 23: Number of homeworkers, 1997-2005
Distribution and the Internet
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- IFAs and company agents are losing share to banks and direct providers
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- Figure 24: Distribution of property insurance sales, by gross written premiums, 1994-2004
- Sound competition from the high street
- A significant proportion of consumers arranged their last policy direct with an insurance provider
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- Figure 25: Distribution channel used to purchase home insurance – contents and buidlings cover, April 2006
- Two in five policyholders arranged their last contents policy over the phone
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- Figure 26: Method of arranging most recent home contents policy, 2004-06
Advertising and Promotion
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- More than a fifth of adspend in financial services went to general insurance
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- Figure 27: Advertising expenditure on financial services, by sector, 2001/02-2005/06
- Over £390 million was spent advertising home insurance over the last five years
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- Figure 28: Advertising expenditure across a selection of insurance – other sub-categories, 2001/02-2005/06
- Lloyds TSB is the top advertiser of home insurance
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- Figure 29: Top 15 advertisers of home insurance, 2001/02-2005/06
- Two thirds of adspend went to direct mail
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- Figure 30: Advertising expenditure on home insurance, by media type, 2005/06
- It’s not all about price
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- Figure 31: Recent advertising end lines from a selection of home insurance providers, 2006
- Catching the attention of online shoppers
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- Figure 32: Selection of sponsored home insurance links found on Google, 24 May 2006
Consumer Financial Activity
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- Consumers looking to save and invest
- Relationship with the main financial services providers
- Overall activity levels will fall slightly
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- Figure 33: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2004-March 2006
- C2s will display higher than average financial activity levels
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- Figure 34: Expected financial activity, by socio-demographic and income groups, March 2006 and average for the last 17 quarters
- ISA season will be fruitful for providers
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- Figure 35: Leading financial activities planned in the next six months, March 2005-March 2006
- Slower activity ahead for the property market
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- Figure 36: Intended mortgage and property purchase activity, March 2004-March 2006
- Lloyds TSB sees its position weaken slightly
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- Figure 37: Leading main financial services providers: market shares, March 2005-March 2006
- RBS will feature strongly in the savings/deposits sector
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- Figure 38: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), March 2006
- Bank of Scotland and RBS will have the most active customer bases
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- Figure 39: Activity levels of main financial services providers’ customer bases, March 2006
- HSBC and Halifax customers looking to borrow more
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- Figure 40: Activity intentions and current household financial situation, by MFSP, March 2006
The Consumer and Product Ownership
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- More than three in five adults have a home contents policy
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- Figure 41: Ownership of selected insurance products, 2004-06
- Implications
- Four in five ABs have either a contents or a buildings policy
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- Figure 42: Home insurance ownership, by gender, age, socio-economic group and region, April 2006
- Implications
- Homeowners are much more likely to have home insurance
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- Figure 43: Home insurance ownership, by working status, gross annual household income and tenure, April 2006
- Implications
- Married consumers are the most likely to be protected
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- Figure 44: Home insurance ownership, by marital status and detailed lifestage, April 2006
- Implications
- The profile of the average home insurance policyholder
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- Figure 45: Profile of average home insurance policyholder, by type of policy, April 2006
- Implications
- Policyholders are more lucrative than the average consumer
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- Figure 46: Number of financial products owned, April 2006
- Implications
- What other products do policyholders have?
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- Figure 47: Top five financial products owned by home insurance policyholders, April 2006
- Implications
- One in four arrange buildings policy through mortgage provider
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- Figure 48: Distribution of home insurance policies, by type of policy, April 2006
- Implications
- Does a consumer’s experience dictate where they buy their policy?
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- Figure 49: Where last home contents policy was arranged, by gender, age, socio-economic group and region, April 2006
- Implications
- Renters are drawn to local banks and building societies for their home insurance needs
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- Figure 50: Where last home contents policy was arranged, by working status, gross annual household income, area and tenure, April 2006
- Implications
- Women are less likely than men to buy their buildings policy direct from an insurer
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- Figure 51: Where last buildings insurance policy was arranged, by gender, age, socio-economic group and region, April 2006
- One in three mortgagees buy buildings insurance from mortgage provider
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- Figure 52: Where last buildings insurance policy was arranged, by working status, gross annual household income, area and tenure, April 2006
- Implications
- The phone and branches are ‘in’
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- Figure 53: Method of arranging last home contents policy, April 2006
- Implications
- Bank branches draw in customers
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- Figure 54: Where last home contents policy was arranged, by how it was arranged, April 2006
- Implications
- ABs are less likely than average to call into a branch to arrange a policy
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- Figure 55: Method of arranging last home contents policy, by gender, age, socio-economic group and region, April 2006
- Implications
- One in three renters arranged their policy at a branch
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- Figure 56: Method used to arrange home contents policy, by working status, gross annual household income, area and tenure, April 2006
- Implications
Consumer Attitudes and Targeting Opportunities
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- Is it loyalty…or laziness?
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- Figure 57: Length of time with current home contents insurance provider, April 2006
- Implications
- Older consumers tend to be the most ‘loyal’
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- Figure 58: Length of time with current home contents provider, by gender, age, socio-economic group and region, April 2006
- Implications
- Retirees tend to stick with their contents provider
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- Figure 59: Length of time with current home contents provider, by working status, gross annual household income, area and tenure, April 2006
- Implications
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- Figure 60: Method of arranging home contents cover, by length of time with home contents provider, April 2006
- Implications
- Home sweet home
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- Figure 61: Home insurance attitudes and behaviour, April 2006
- Implications
- Internet purchasers most likely to obtain quotes
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- Figure 62: Method of arranging most recent home contents policy, by attitudes towards home insurance, April 2006
- Implications
- The early years are the most critical
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- Figure 63: Length of time with current home contents provider, by attitudinal statements, April 2006
- Implications
- Who tends to shop around?
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- Figure 64: Shopping around activity, by gender, age, socio-economic group and region, April 2006
- Implications
- As household affluence increases, so does the likelihood of shopping around
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- Figure 65: Shopping around activity, by working status, gross annual household income, tenure and area, April 2006
- Implications
- Does time create a bond with one’s insurer?
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- Figure 66: Shopping around activity, by length of time with current home contents provider, April 2006
- Implications
- Those who go direct are deal seekers
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- Figure 67: Shopping around activity, by where last contents policy was arranged, April 2006
- Implications
- CHAID analysis identifies the most ‘loyal’ policyholders
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- Figure 68: CHAID analysis, April 2006
Industry Views
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- Premium pricing
- Customer churn
- Online insurance
- The future
The Future
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- Will home insurance follow in footsteps of motor insurance?
- What of the intermediaries?
- Climate change will have serious implications for insurers
- Turning to the Internet for insurance
Forecast
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- Figure 69: Forecast of the UK home insurance market, by gross written premiums, 2005-11
- Factors incorporated
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