Table of Contents
Issues in the Market
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- Key issues in the market
- Definitions
- Abbreviations
Insights and Opportunities
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- Is switching satisfying?
- Converting aggregator business into loyal business
- Appealing to older drivers
- Providing a human touch
- Distinctive brand – the key to success?
Market in Brief
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- Underwriting deficit continues to plague industry
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- Figure 1: Illustration of NWP, outgoing payments and underwriting result for the domestic private motor insurance market, 1994-2007
- Claims costs up by a third since 2000
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- Figure 2: Value of claims in the domestic motor insurance sector, 1999-2006
- Underlying market factors drive demand…
- … however, economic uncertainty creates difficult conditions
- RBS Insurance tops market share
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- Figure 3: Market share for personal motor insurance, based on NWP, 2006
- Distribution changes continue to shape market landscape
- More than 23 million adults have comprehensive policy
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- Figure 4: Estimate of the number of live motor insurance policies, 2008
- Switching activity continues to increase
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- Figure 5: Length of time with current motor insurance provider, February 2008
Fast Forward Trends
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- Trend: Over-Optioned Consumers
- How do people decide?
- Aggregators inform and empower…
- … but is too much choice a good thing?
- Trend: Play Ethic
- Making things easier
- Promoting happiness
- Improving reputations and profitability
Internal Market Environment
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- Key points
- Over 31 million cars in use
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- Figure 6: UK car parc, 2000-13
- Private car registrations have fallen
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- Figure 7: Trends in private, business and fleet new car registrations, 2001-07
- Around 7.5 million used cars sold each year
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- Figure 8: Sales of used cars, 2002-06
- More than 33 million driving licence holders
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- Figure 9: Full GB driving licence holders, by gender 1975-2006
- Steady growth in multi-car ownership
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- Figure 10: Household ownership of cars, 1998-2007
- Electronic motor certificates introduced
- ABI demand action on third party costs
- Greater emphasis placed on tackling fraud
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- Figure 11: Percentage of personal motor claims repudiated due to detected fraud, 2004-06
- Insurers clamp down on fronting
Broader Market Environment
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- Key points
- Consumer expenditure expected to slow
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- Figure 12: Trends in PDI, consumer expenditure and savings, 2000-13
- Saving rather than spending to become a priority
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- Figure 13: Intentions to spend and save in the next 12 months, January 2001-December 2007
- Bank rate cuts may increase appeal of car finance
- Changing population profile will impact demand for insurance
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- Figure 14: UK adult population trends, 1993-2013
- Internet penetration has reached 64%
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- Figure 15: British Internet penetration, at home/work/place of study or elsewhere, 2002-08
- Rising costs of motoring
- Many policies are not car friendly
Competitive Context
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- Key points
- Legal obligation – so no competition
- Battle waged against uninsured drivers
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- Figure 16: MIB claims, 2005-07
Strengths and Weaknesses in the Market
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- Figure 17: Strengths and weaknesses in the motor insurance market, 2008
- Strengths of the motor insurance market
- Weaknesses of the motor insurance market
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Who’s Innovating?
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- Key points
- ‘Black box’ technology enables pay-as-you-go insurance
- Other insurers may consider similar schemes
- Telematics could spark further innovation
- Going carbon neutral
- Green issue puts recycled parts back on agenda
- Sheila’s Wheels
Trade Perspective
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- Participating companies
- Premium hikes fail to materialise
- Underwriting losses to continue in the short-term
- The shift online
- Aggregators are here to stay but fewer new entrants expected
- Industry views vary on extent of innovation
- Future challenges and developments
Market Size and Forecast
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- Key points
- Private motor insurance continues to suffer underwriting deficit
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- Figure 18: Illustration of NWP and outgoing payments and underwriting result for the domestic private motor insurance market, 1994-2007
- Premiums are rising, but so are outgoings
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- Figure 19: UK motor insurance revenue account for domestic market, 1994-2007
- Premiums rose by almost 6% in 2007…
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- Figure 20: AA British Insurance Premium Index, Motor risks, July 1994-April 2008
- …but rates are falling in real terms
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- Figure 21: Domestic motor insurance exposure, GWP and average premium rates, at current amd constant prices, 2000-07
- Number of policies in force approaches around 27 million
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- Figure 22: Estimate of the number of live private motor insurance policies, 2008
- Almost nine in ten policyholders has comprehensive cover
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- Figure 23: Proportion of cars with comprehensive and non-comprehensive cover, 1998-2007
- Forecast
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- Figure 24: Forecast of private motor insurance market, 2003-13
- Figure 25: Forecast of UK motor insurance revenue account for domestic market, 2003-13
- Factors used in the forecast
Claims Experience
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- Key points
- Claims frequency on downward trend…
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- Figure 26: Total number of private motor insurance claims and claims frequency, 1996-2007
- …but claims costs have risen by 36% since 1999
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- Figure 27: Value of claims in the domestic motor insurance sector, 1999-2006
- Theft claims fall, but average claim rises
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- Figure 28: Private car theft claims, by volume, cost and average claim, 1996-2007
- Personal injury claims have rocketed
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- Figure 29: Number and average cost of bodily injury claims, 2000-06
- Claims service is a key retention issue
- Bilateral agreements aim to lower costs
Market Share
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- Key points
- Top five insurers account for almost 70% of market
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- Figure 30: Market share for personal motor insurance, based on NWP, 2006
- RBS Insurance dominates motor insurance market
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- Figure 31: NWP for top 15 insurers for personal motor insurance, 2006
Companies and Products
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- Market overview
- Fluctuations in number of motor insurers
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- Figure 32: Number of ABI members writing motor business, 1996-2006
- Developments in aggregator market
- Insurer profiles
- RBS Insurance
- Aviva
- Royal & SunAlliance (RSA)
- Zurich
- Fortis
Brand Elements
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- Brand map
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- Figure 33: Attitudes towards and usage of motor insurance brands, January 2008
- AA
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 34: Attitudes towards the AA brand, January 2008
- More Th>n
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 35: Attitudes towards the More Th>n brand, January 2008
- Direct Line
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 36: Attitudes towards the Direct Line brand, January 2008
- Esure
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 37: Attitudes towards the Esure brand, January 2008
- Sheila’s Wheels
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 38: Attitudes towards the Sheila’s Wheels brand, January 2008
- Lloyds TSB
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 39: Attitudes towards the Lloyds TSB brand, January 2008
- Brand qualities of motor insurance brands
- AA leads the way on competence, authority and reliability
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- Figure 40: Consumer usage of various motor insurance brands, January 2008
- Experience of motor insurance brands
- More established brands are preferred
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- Figure 41: Consumer usage of various motor insurance brands, January 2008
- Brand intentions for motor insurance brands
- Sheila’s Wheels is least likely to be considered
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- Figure 42: Consideration of various motor insurance brands, January 2008
- Brand momentum for motor insurance brands
- Sheila’s Wheels and Direct Line are gaining most ground
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- Figure 43: Momentum of various motor insurance brands, January 2008
- Brand satisfaction for motor insurance brands
- AA satisfaction is most likely to be rated as excellent
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- Figure 44: Satisfaction of various motor insurance brands, January 2008
- Brand commitment to motor insurance brands
- AA heads table for brand loyalty
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- Figure 45: Commitment to various motor insurance brands, January 2008
- Round-up
Brand Communication and Promotion
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- Key points
- Motor insurance tops financial adspend
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- Figure 46: Annual advertising expenditure on general insurance products, 2003-08
- Adspend on motor insurance products tops £250 million per year
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- Figure 47: Annual expenditure on motor insurance products, 2003-08
- TV dominates motor insurance adspend
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- Figure 48: Motor insurance advertising expenditure, by media type, 2008
- Direct line and Confused.com top adspend in 2007/08
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- Figure 49: Top motor insurance advertisers, 2003-08
Channels to Market
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- Key points
- The direct revolution continues…
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- Figure 50: Motor insurance distribution trends, 1999-2006
- …although intermediaries are taking battle online
- More than half of all policyholders go direct
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- Figure 51: Distribution channel used to purchase motor insurance, February 2008
- Telephone remains preferred arrangement method…
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- Figure 52: Method used to arrange most recent motor insurance policy, 2007
- …but aggregator sites are drawing people online
- FSA turns attention to aggregators
The Consumer – Product Ownership
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- Key points
- More than three-fifths have motor insurance cover
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- Figure 53: Ownership of motor insurance, February 2008
- Comprehensive cover has increased in popularity
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- Figure 54: Trends in motor insurance ownership, 2004-08
- Over-35s more likely to have comprehensive cover
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- Figure 55: Motor insurance ownserhip by gender, age, lifestage and marital status, February 2008
- Three-fifths of ABs have comprehensive cover
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- Figure 56: Motor insurance ownership by socio-economic group, gross annual household income, household tenure and working status, February 2008
- Internet users more likely opt for full cover
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- Figure 57: Motor insurance ownership, by TV region, technology users, Internet usage, newspaper readership and supermarket used, February 2008
The Consumer – Purchasing Car Insurance
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- Key points
- More than half of policyholders go direct to insurer
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- Figure 58: Distribution channel used to purchase last motor insurance policy, February 2008
- Influence of direct insurers grows, at the expense of brokers
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- Figure 59: Distribution channel used to purchase motor insurance, 2001-08
- Women more likely to use a price comparison site
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- Figure 60: Distribution channel used to purchase most recent motor insurance policy, by gender, age, lifestage and marital status, February 2008
- C1s are more likely to use brokers
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- Figure 61: Distribution channel used to purchase most recent motor insurance policy, by socio-economic group, gross annual household income, household tenure and working status, February 2008
- Price comparison sites attract heavy Internet users
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- Figure 62: Distribution channel used to purchase most recent motor insurance policy, by TV region, technology users, Internet usage, newspaper readership and supermarket used, February 2008
- More than half use the telephone to arrange cover
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- Figure 63: Method used to arrange most recent motor insurance policy, February 2008
- The rise of the Internet is detrimental to other channels
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- Figure 64: Method used to arrange most recent motor insurance policy, 2001-08
- Age is a major influence in the channel used
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- Figure 65: Method used to arrange most recent motor insurance policy, by gender, age, lifestage and marital status, February 2008
- Price comparison sites have wide appeal
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- Figure 66: Method used to arrange most recent motor insurance policy, by socio-economic group, gross annual household income, household tenure and working status, February 2008
- Broadsheet readers more likely to turn to the Internet
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- Figure 67: Method used to arrange most recent motor insurance policy, by TV region, technology users, Internet usage, newspaper readership and supermarket used, February 2008
- Most direct policies are arranged over the phone
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- Figure 68: Method used to arrange most recent motor insurance policy, by distribution channel used, February 2008
The Consumer – Quotation Activity
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- Key points
- 28% obtained four or more quotes
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- Figure 69: Number of motor insurance quotes obtained on last renewal, February 2008
- Renewal activity is changing
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- Figure 70: Number of motor insurance quotes obtained on last renewal, 2001-08
- A third of over-65s just renew their policy
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- Figure 71: Number of motor insurance quotes obtained at last renewal, by gender, age, lifestage and marital status, February 2008
- Mortgage holders more likely to shop around
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- Figure 72: Number of motor insurance quotes obtained at last renewal, by socio-economic group, gross annual household income, household tenure and working status, February 2008
- Heavy Internet users are more likely to obtain multiple quotes
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- Figure 73: Number of motor insurance quotes obtained at last renewal, by TV region, technology users, Internet usage, newspaper readership and supermarket used, February 2008
- Third party policyholders are more likely to shop around
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- Figure 74: Number of quotes obtained, by type of cover in place, February 2008
- Price comparison sites are behind multiple quotes
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- Figure 75: Number of motor insurance quotes obtained at last renewal, by distribution channel used for most recent policy, February 2008
- Internet enables multiple quotes
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- Figure 76: Number of motor insurance quotes obtained at last renewal, by method used to purchase most recent policy, February 2008
The Consumer – Switching Behaviour and Loyalty
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- Key points
- Two-fifths have been with their current insurer less than two years
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- Figure 77: Length of time with current motor insurance provider, February 2008
- Loyalty is in decline
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- Figure 78: Length of time with current motor insurance provider, 2001-08
- Loyalty increases with age
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- Figure 79: Length of time with current motor insurance provider, by gender, age, lifestage and marital status, February 2008
- DEs more likely to be recent switchers
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- Figure 80: Length of time with current motor insurance provider, by socio-economic group, gross annual household income, household tenure and working status, February 2008
- Scottish drivers are the most loyal
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- Figure 81: Length of time with current motor insurance provider, by TV region, technology users, Internet usage, newspaper readership and supermarket used, February 2008
- Third party policyholders are frequent switchers
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- Figure 82: Length of time with current motor insurance provider, by type of cover, February 2008
- 50% of price comparison users have moved insurers in last year
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- Figure 83: Length of time with current motor insurance provider, by distribution channel, February 2008
- Telephone customer more likely to be loyal
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- Figure 84: Length of time with current motor insurance provider, by method used to arrange cover, February 2008
- Switchers obtain more quotes
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- Figure 85: Length of time with current motor insurance provider, by number of quotes obtained, February 2008
The Consumer – Attitudes and Targeting Opportunities
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- Key points
- Target group analysis
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- Figure 86: Attitudinal target groups based on adults aged 15+ with at least one car in their household
- ‘Online advocates’
- ‘Contented quality seekers’
- ‘Risk-averse traditionalists’
- ‘Risk-taking spend-thrifts’
- ‘Disinterested’
Appendix – The Consumer – Attitudes and Targeting Opportunities
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- Figure 87: Motor insurace target groups based on attitudinal and lifetsytle statements
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- Figure 88: Detailed demographics of motor insurance target groups, based on attitudinal and lifetsytle statements
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