Table of Contents
Issues in the Market
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- Key issues
- Market definitions
- Abbreviations
Insights and Opportunities
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- Selling the benefits of niche insurance products
- Raising awareness of the issue of underinsurance
- Online communities provide useful market insight
- Brand building
- Younger adults provide new opportunities
- Tackling the economic slowdown
Market in Brief
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- Niche insurance markets help to sustain margins and increase innovation
- Economic slowdown will lead to re-evaluation of spending priorities
- Developing niche insurance products
- Personal accident cover – premium income falls sharply
- High net worth cover – major insurers move into MNW sector
- Landlord and tenant cover – BTL boom attracts new entrants
- Motorcycle insurance – premium income up slightly in 2007
- Other vehicle insurance – classic cars, vans and cycle cover
- Wedding insurance – retailers and online products boost sales
- Islamic insurance (Takaful) – a developing niche
- Other niche insurance products – musical instrument and camera cover
- Key consumer findings
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- Figure 1: Ownership of selected niche insurance products, August 2008
Fast Forward Trends
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- Trend: Non-Standard Society
- Increased segmentation in financial services
- Lack of differentiation provides opportunity for niche products
- Niche insurance taps into consumer sentiment
- Trend: Trading Up, Trading Down, Trading Over
- Households feeling the pinch will reconsider their priorities
- Apathy will reduce during economic downturn
- Economic slowdown could make people more risk-averse
Why Niche Insurance?
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- Key points
- The end of one size fits all
- The long-tail theory – an opportunity for improved profitability?
- Providing much-needed brand differentiation
Internal Market Environment
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- Key points
- Apathy towards insurance products
- Developing niches
- The burden of regulation
- NEWICOB – simplifying the rules?
Broader Market Environment
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- Key points
- More financial caution is expected…
- …but economic concerns are likely to undermine growth
- Economic downturn – the impact on niche insurance
- Fraud could increase
- An ageing population is creating opportunities
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- Figure 2: UK adult population trends, 1993-2013
- Increased diversity as traditional household structure changes
- Two thirds of adults have internet access
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- Figure 3: British internet penetration at home/work/place of study or elsewhere, 2001-08
- Online communities could help to target specific groups
Who’s Innovating?
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- Key points
- Responding to emerging trends
- Medical tourists provide new niche
- The advent of security delays insurance
- Independent travellers require additional cover
- Responding to concerns and confusion
- Insuring the excess
- Overseas students present opportunity
- Insuring against loss of driving licence
- Digital data create a potential gap market
Personal Accident Cover
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- Key points
- Product background
- Market factors
- The number of accidents
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- Figure 4: Number of accidents resulting in loss of limb(s), 1998-2002
- Market issues
- Standalone or packaged?
- Niches within personal accident cover
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- Figure 5: Overview of specialist/niche types of personal accident cover, 2008
- Competitor products create confusion
- State support and no-win, no-fee compensation culture
- Market size
- Personal accident premiums totalled £1.4 billion in 2007
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- Figure 6: GWP, NWP, total outgoings and underwriting result for accident insurance, 2002-07
- Market share
- ACE and AIG are major players in personal accident market
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- Figure 7: Market share for personal accident and sickness cover, 2007 based on FSA returns
High Net Worth Cover
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- Key points
- Market background
- HNW cover helps to tackle issue of underinsurance
- Market factors
- UK population has become more wealthy
- Sizing the HNW population
- Around 3.7 million have more than £100,000 of investible assets
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- Figure 8: Distribution of investible assets among UK population, 2008
- Housing market trends
- HNW cover – market size
- Some 6% of adults with home insurance have high-value contents cover
- HNW market is increasingly attractive for insurers
- Major players and new entrants
- Large insurers creep into MNW market
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- Figure 9: Overview of HNW market, selected providers, products and distribution, October 2008
- Direct policies enter MNW market, but brokers control HNW sector
- Product developments
- Looking to the future
Landlord and Tenant Insurance
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- Key points
- Market background
- Private rental sector has experienced strong growth
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- Figure 10: Total number of UK private rented dwellings and the share of all dwellings accounted for by private rentals, 1981-2007*
- BTL lending accounted for 10% of the mortgage market in 2007
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- Figure 11: BTL mortgages outstanding, by volume and value, 2000-07
- Landlord liabilities
- Premium pricing
- Market conditions
- Market size
- Sizeable gap in the market
- Distribution and providers
- Growth in direct business
- Insurance for tenants
- Market developments and providers
Motorcycle Insurance
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- Key points
- Market factors
- Motorcycle stock continues to grow…
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- Figure 12: Licensed motorcycle stock in Great Britain, by engine size, 2000-07
- …and new registrations increased in 2007
- The motorcycling population
- Market size
- Competition limiting premium growth
- Premium pricing and claims
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- Figure 13: Motorcycle road accidents resulting in death or serious injury, 1998-2006
- Main players
- Equity Red Star is the leading underwriter in the motorcycle insurance market
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- Figure 14: Top underwriters of motorcycle insurance, 2007
- Main players – the brokers
- Channels to market
- Price-comparison sites grow in influence
- Direct cover rare
- Market developments
- Motorcycle insurance innovation takes lead from motor insurers
Other Vehicle Insurance
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- Key points
- Classic car/specialist vehicle insurance
- Market background
- Specialist car cover includes additional features
- Market drivers
- Increased demand for specialist car insurance
- Market size
- Specialist car insurance could top £200 million in premiums
- Awareness is a barrier to market expansion
- Main players
- Specialist providers dominate the market
- Market developments
- Online quotes and product innovation
- Van insurance
- Market background
- Market drivers
- The number of vans continues to increase
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- Figure 15: Number of licensed light goods vehicles, 1998-2007
- Commercial vehicle insurance sector makes an underwriting profit
- Market size
- Sector estimated to be worth £900 million in premiums
- Main players
- Major insurers dominate market
- Cycle insurance
- Market background
- Around 15 million people own a cycle
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- Figure 16: Ownership of cycles among UK population, 2001-08
- Greater investment in cycling is promised
- Cycle sales remain flat
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- Figure 17: Spend on bicycles in the last 12 months, 2008
- Innovations to reduce cycle theft
- Market size
- Main players and products
- Market is dominated by niche providers
Wedding Insurance
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- Key points
- Number of weddings continues to fall
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- Figure 18: Number of UK marriages and divorces, 1996-2012
- Cost of weddings continues to rise
- Market background
- Company collapse may increase awareness
- Market size
- Main players and products
- Retailers are playing an important role
Islamic Insurance (Takaful)
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- Key points
- Market drivers
- Young Muslim population creates opportunities
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- Figure 19: The number of Muslims in Great Britain (million), 1996-2007
- Market background
- Market for Shari’a-compliant products has increased significantly
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- Figure 20: The number of holders of Shari’a-compliant financial products, June 2006
- The principle of Takaful
- Companies and products
- Takaful insurance products are beginning to emerge
- Looking to the future
Other Insurance
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- Key points
- Musical instrument cover
- Market background
- Market size
- Market is worth around £20-25 million
- Main players
- Allianz and Musicguard are top providers
- Camera cover
- Product ownership and camera usage
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- Figure 21: Camera usage, February 2008
- Market background
- Market size
- Estimates suggest market is worth £25 million
- Main players
- Brokers play a major role
- Summary of other niche insurance products
Brand Communication and Promotion
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- Key points
- Insurance adspend totalled £520 million in 2007/08
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- Figure 22: Overview of adspend on general insurance products, 2003/04-2007/08
- Adspend is dependent on overall appeal
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- Figure 23: Adspend on selected niche insurance products, 2005/06-2007/08
- Growth and decline in niche insurance adspend
- Personal accident cover
- AIG and NU are the top advertisers of personal accident insurance
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- Figure 24: Top five advertisers of personal accident cover, 2007/08
- Direct mail is the main source of personal accident insurance adspend
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- Figure 25: Adspend on personal accident insurance, by media type, 2007/08
- Motorcycle insurance
- Bennetts and Hastings top motorcycle insurance adspend
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- Figure 26: Top five advertisers of motorcycle insurance, 2007/08
- Press is the main channel for advertising motorcycle insurance
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- Figure 27: Adspend on motorcycle insurance, by media type, 2007/08
- Van insurance
- Direct Line leads the way
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- Figure 28: Top five advertisers of van insurance, 2007/08
- Tabloids and talkSPORT get the message across
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- Figure 29: Adspend on van insurance, by media type, 2007/08
The Consumer – Niche Insurance Product Ownership
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- Key points
- Personal accident and mobile phone insurance are top niche products
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- Figure 30: Ownership of selected niche insurance products, August 2008
- Age and children are key factors in likelihood to own niche insurance
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- Figure 31: Ownership of selected niche insurance products, by gender, age, lifestage, age of children in household and marital status, August 2008
- Affluence impacts need for and affordability of insurance products
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- Figure 32: Ownership of selected niche insurance products, by socio-economic group, Mintel’s Special Groups, working status, gross annual household income and household tenure, August 2008
- Do different groups have different motivations?
- Heavy internet usage is linked to likelihood to own niche insurance
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- Figure 33: Ownership of selected niche insurance products, by technology users, internet usage, newspaper readership and supermarket used, August 2008
- Examining different niches
- Retirees are among the least likely to own niche insurance products
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- Figure 34: Ownership of niche home insurance, niche vehicle insurance and other niche insurance products, by gender, age, lifestage, age of children in household and marital status, August 2008
- Mortgage holders are more likely to opt for niche insurance products
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- Figure 35: Ownership of niche home insurance, niche vehicle insurance and other niche insurance products, by socio-economic group, Mintel’s Special Groups, working status, gross annual household income and household tenure, August 2008
- Half of broadsheet readers have a type of niche insurance
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- Figure 36: Ownership of niche home insurance, niche vehicle insurance and other niche insurance products, by technology users, internet usage, newspaper readership and supermarket used, August 2008
- Home insurance provides an important cross-selling platform
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- Figure 37: Ownership of selected niche insurance products, by ownership of home insurance, August 2008
- Cross-selling opportunities
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- Figure 38: Correlation analysis of ownership of niche insurance products, August 2008
- Target penetration analysis
- The main target groups identified
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- Figure 39: Target penetration analysis on selected niche insurance products, August 2008
The Consumer – Attitudes towards Niche Insurance
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- Key points
- Around a quarter of adults would use internet to find niche insurance
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- Figure 40: Attitudes and buying behaviours towards niche insurance products, August 2008
- 45-54-year-olds are more interested in niche insurance products
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- Figure 41: Attitudes and buying behaviours towards niche insurance products, by gender and age, August 2008
- ABs need to be convinced of benefits
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- Figure 42: Attitudes and buying behaviours towards niche insurance products, by socio-economic group and household tenure, August 2008
- Renters could provide opportunities
- Who considers niche insurance but doesn’t buy?
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- Figure 43: Ownership of niche insurance products among people who stated ‘I have considered purchasing specialist insurance in the past’, August 2008
- Brand is important for niche home insurance holders
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- Figure 44: Attitudes and buying behaviour towards niche insurance products, by holders of niche home insurance, niche vehicle insurance and other niche insurance products, August 2008
- More than two fifths of adults are interested in ID theft/credit card cover
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- Figure 45: Items/events people would want to be compensated for in the event of loss, August 2008
- Who is most likely to be interested in different types of cover?
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- Figure 46: Demographic profile of respondents who wish to be compensated in the event of loss for selected items/events, August 2008
- Is there room for growth with gadget insurance?
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- Figure 47: Items/events people would want to be compensated for in the event of loss, by attitudes towards niche insurance products, August 2008
- The internet is crucial but is there still a role for brokers?
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- Figure 48: Items/events people would want to be compensated for in the event of loss, by attitudes towards niche insurance products, August 2008
The Consumer – Niche Insurance Targeting Opportunities
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- Key points
- Less than 40% of adults are unsure if their insurance cover is adequate
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- Figure 49: General attitudes towards insurance products, by holders of niche home insurance, niche vehicle insurance and other niche insurance products, August 2008
- Individually tailored products could be a growing niche
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- Figure 50: General attitudes towards insurance products, by attitudes and buying behaviour towards niche insurance products, August 2008
- Appealing to the over-50s
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- Figure 51: General attitudes towards insurance products, by attitudes and buying behaviour towards niche insurance products, August 2008
- Target group analysis
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- Figure 52: Segmentation on attitudes towards specialist insurance products, August 2008
- Super Targets (12% of adults aged 18+, equivalent to around 6 million UK adults)
- Insurances held:
- In what additional cover are they interested?
- Typical demographic profile:
- Online but Underinsured (20% of adults aged 18+, equivalent to around 10 million UK adults)
- Insurances held:
- In what additional cover are they interested?
- Demographic profile:
- Traditionalists (22% of adults aged 18+, equivalent to around 11 million UK adults)
- Insurances held:
- In what additional cover are they interested?
- Demographic profile:
- Not Interested (46% of adults aged 18+, equivalent to around 22 million UK adults)
- Ownership of niche insurance products among target groups
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- Figure 53: Attitudinal target groups, by niche insurance products owned, August 2008
- Potential insurance opportunities for target groups
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- Figure 54: Attitudinal target groups, by items/events that people would want to be compensated for in the event of loss, August 2008
Forecast – The Consumer Market for Niche Insurance
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- Key points
- Target group analysis overview
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- Figure 55: Summary of target group analysis, August 2008
- Some 20 million adults currently hold a niche insurance product
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- Figure 56: Overview of the current consumer universe for niche insurance products, August 2008
- Scenario One – The impact of demographic changes (Static scenario)
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- Figure 57: Forecast of niche insurance target groups, 2008 and 2013 (based solely on demographic changes)
- Market set to grow by 1 million
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- Figure 58: Overview of forecast consumer universe, based on demographic changes, to 2013
- Scenario two – The impact of the economic downturn
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- Figure 59: Forecast of niche insurance target groups, scenario to consider the impact of an economic downturn, 2008 and 2013
- Super Targets will become Online but Underinsured
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- Figure 60: Overview of forecast consumer universe, based on demographic changes, to 2013
Appendix – The Consumer – Attitudes towards Niche Insurance
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- Figure 61: Items/events that people would want to be compensated for in the event of loss, by gender, age, lifestage, age of children in household and marital status, August 2008
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- Figure 62: Items/events that people would want to be compensated for in the event of loss, by socio-economic group, Mintel’s Special Groups, working status, gross annual household income and household tenure, August 2008
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- Figure 63: Items/events that people would want to be compensated for in the event of loss, by technology users, internet usage, newspaper readership and supermarket used, August 2008
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- Figure 64: Items/events that people would want to be compensated for in the event of loss, by gender, age, lifestage, age of children in household and marital status, August 2008
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- Figure 65: Items/events that people would want to be compensated for in the event of loss, by socio-economic group, Mintel’s Special Groups, working status, gross annual household income and household tenure, August 2008
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- Figure 66: Items/events that people would want to be compensated for in the event of loss, by technology users, internet usage, newspaper readership and supermarket used, August 2008
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