Table of Contents
Issues in the Market
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- Report coverage
- Sector focus
- Definitions
- Abbreviations
Insights and Opportunities
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- Brand assurance
- When to switch and when to stay
- It’s all about the timing
- Target retention schemes at younger policyholders
- A multi-channel approach
Market in Brief
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- General insurance premiums totalled £42 billion in 2007
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- Figure 1: Illustration of gross annual written general insurance business, UK risks, by sector, 2003-07
- Sectors experience a mixed performance in 2007
- Implications of the economic slowdown
- Aviva and RBS top underwriter share…
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- Figure 2: Largest general insurers/reinsurers – total share of market (direct & facultative business) 2007
- … but landscape is set to change
- Distribution continues to evolve
- General insurance accounts for a third of all financial advertising
- Overview of general insurance product ownership
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- Figure 3: Ownership of insurance products, September 2008
- Shop-around activity
- Policy selling points and attitudes towards arranging insurance
Fast Forward Trends
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- Trend 1: Over-Optioned Consumers
- A plethora of choice
- Consumer as detective
- The rise of the aggregator
- Trend 2: The Rise of Behavioural Economics
- What people want – or at least what they say they want
- But are people happy with so much choice?
- Reducing the burden of choice
Market Issues and Drivers
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- Key points
- Implications for general insurance sectors
- A changing population
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- Figure 4: UK population trends, 1993-2013
- The shift online
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- Figure 5: British internet penetration at home/work/study or elsewhere, 2001-08
- The rise of the aggregators
- Moving away from price?
- The environmental agenda
- Green insurance – the next big thing?
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- Figure 6: Agreement with statements regarding green and ethical finance, November 2007
- The regulatory burden
- TCF to be fully integrated into mainstream supervision
Market Overview– Motor Insurance
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- Figure 7: Motor insurance overview– market drivers and market restraints, 2008
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Market Overview – Home Insurance
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- Figure 8: Home insurance overview - market drivers and market restraints, 2008
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Market Overview – Health Insurance
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- Figure 9: Health insurance overview - market drivers and market restraints, 2008
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Market Overview–Travel Insurance
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- Figure 10: Travel insurance overview - market drivers and market restraints, 2008
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Trade Perspective
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- Participating companies
- Personal lines insurance will see increased price competition
- Cancellations and shop-around activity expected to rise in 2009
- Retention strategies move up the agenda
- Consolidation and diversification expected in aggregator market
Market Size and Forecast
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- Key points
- General insurance premiums show little growth
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- Figure 11: Illustration of gross annual written general insurance business, UK risks, by sector, 2003-08
- Motor and property sectors dominate general insurance market
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- Figure 12: Share of total premium income (UK annual business), by sector, 2007
- UK general insurance premium income totals £42 billion in 2007
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- Figure 13: Summary of annual general insurance business – UK risks, by sector, 2003-07
- Hike in claims costs leads to negative underwriting result
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- Figure 14: UK outgo and underwriting result for annual general insurance business, 2003-07
- Forecast
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- Figure 15: Forecast of the value of the general insurance market at current prices, 2003-13
- Figure 16: Forecast of the value of the general insurance market at constant 2008 prices, 2003-13
- Factors used in the forecast
- Motor insurance
- Property insurance
- Accident and health, Pecuniary loss and General liability insurance
Sector Performance
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- Key points
- Detailed sector analysis
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- Figure 17: Detailed premium analysis – UK, by selected class of business, 2003-07
- Motor insurance continues to produce an underwriting loss
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- Figure 18: UK private motor – underwriting result, 2003-07
- Weather losses lead to a major underwriting deficit
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- Figure 19: UK domestic property – underwriting result, 2003-07
- Motor and home insurance premium trends
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- Figure 20: AA British insurance premium index – market average trends, July 1994-July 2008
- A mixed result for accident and health sector in 2007
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- Figure 21: UK accident & health – underwriting result, 2003-07
- Travel insurance sector continues to experience strong growth
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- Figure 22: UK travel insurance – volume and value of policies written, by type, 2004-07
Claims Experience
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- Key points
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- Figure 23: Index of value of net claims incurred – UK Annual general insurance business, 1997-2007
- Property claims soar in 2007
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- Figure 24: Net claims incurred – UK annual general insurance business, by sector, 2003-07
- Motor is the only sector to see an improvement in claims ratio
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- Figure 25: Claims ratio – UK annual general insurance business, by sector, 1997-2007
- Only around one in ten consumers have recent claims experience
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- Figure 26: Proportion of motor and home insurance policyholders who have made a claim in the last three years, by type of policy, September 2008
- Undetected fraudulent claims totals around 5% of all premiums
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- Figure 27: Estimated value of undetected fraudulent general insurance claims, 2006
Underwriter Market Share
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- Key points
- Aviva and RBS top underwriter share
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- Figure 28: Largest general insurers/reinsurers – total market (direct & facultative business), 2005-07
- Top underwriters by sector
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- Figure 29: Top ten general insurers (parent companies), by sector based on share of gross written premium, 2007
Market Developments and Main Players
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- Key points
- Market background
- Financial crisis is set to alter insurer landscape
- UK insurers feel impact of global financial crisis
- Further mergers likely
- Company profiles of top underwriters
- Aviva
- RBS Insurance
- RSA
- AXA
- Overview of intermediary market
- Overview of aggregator market
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- Figure 30: Overview of main players in the aggregator market, 2008
Brand Communication and Promotion
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- Key points
- General insurance accounts for a third of all financial advertising
- Car and home insurance dominate adspend
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- Figure 31: Total general insurance advertising expenditure, by product category, 2005/06-2007/08
- Direct mail is favoured channel for general insurance adspend
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- Figure 32: General insurance advertising expenditure by media type, 2007/08
- RBS brands are top general insurance advertisers
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- Figure 33: Top 20 general insurance advertisers, by advertising expenditure, 2005/06-2007/08
Channels to Market
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- Key points
- Aggregator sites help brokers to hold their share
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- Figure 34: Proportional distribution for personal lines general insurance, by value 1998-2007
- Direct providers are main channel in personal motor sector…
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- Figure 35: Proportional distribution of UK personal lines motor insurance, by channel, 2007
- …but intermediaries lead the way in the household sector
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- Figure 36: Proportional distribution of UK personal lines property insurance, by channel, 2007
- Motor insurance policyholders more likely to switch online
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- Figure 37: Attitudes towards distribution channels among motor and home insurance policyholders, September 2008
- A changing distribution balance
- Two in five adults have used a price comparison site
The Consumer – Insurance Product Ownership
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- Key points
- More than eight in ten adults have at least one insurance product
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- Figure 38: Ownership of insurance products, September 2008
- Scope to engage more with younger adults?
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- Figure 39: Ownership of selected insurance products, by gender, age, lifestage, age of children in household, and marital status, September 2008
- Mortgage holders are more likely to purchase insurance
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- Figure 40: Ownership of selected insurance products, by socio-economic group, working status, gross annual household income and household tenure, September 2008
- Does the internet improve product awareness?
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- Figure 41: Ownership of selected insurance products, by technology users, internet usage, TV region, newspaper readership, September 2008
- Product associations highlight cross-selling potential
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- Figure 42: Cross analysis – ownership of insurance products, September 2008
- Mortgages and investments provide cross-selling platforms
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- Figure 43: Ownership of different selected financial products, by ownership of different insurance products, September 2008
The Consumer – Motor Insurance
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- Key points
- Three in ten policyholders always shop around at renewal
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- Figure 44: Attitudes and behaviours towards motor insurance renewal process, September 2008
- When to switch and when to stay
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- Figure 45: Attitudes and behaviours towards motor insurance renewal process, by those who always shop around at renewal, September 2008
- Response groups
- Retirees are the most loyal
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- Figure 46: Attitudes and behaviours towards motor insurance renewal process, by gender, age, lifestage, age of children in household, and marital status, September 2008
- Affluence increases the likelihood to shop around
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- Figure 47: Attitudes and behaviours towards motor insurance renewal process, by socio-economic group, working status, gross annual household income, and household tenure, September 2008
- Online access encourages shop-around activity
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- Figure 48: Attitudes and behaviours towards motor insurance renewal process, by technology users, internet usage, TV region, and newspaper readership, September 2008
- Switching and claims behaviour
- When consumers make the decision to renew or to switch
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- Figure 49: Statements about motor insurance, switching providers and claims history, September 2008
- Who is planning to switch at renewal?
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- Figure 50: Statements about motor insurance, switching providers and claims history, by gender and age, September 2008
- Renewal remains the key time to target potential switchers
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- Figure 51: Statements about motor insurance, switching providers and claims history, by socio-economic group and internet usage, September 2008
- Does shopping around always lead people to switch providers?
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- Figure 52: Statements about motor insurance, switching providers and claims history, by attitudes and behaviours towards motor insurance renewal process, September 2008
The Consumer – Home Insurance
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- Key points
- Home insurance secures greater customer loyalty than motor insurance
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- Figure 53: Attitudes and behaviours towards home insurance renewal process, September 2008
- Home insurance policyholders appear reluctant to switch providers
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- Figure 54: Attitudes and behaviours towards home insurance renewal process, by those who always shop around at renewal, September 2008
- Response groups
- Lifestage determines approach to renewal process
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- Figure 55: Attitudes and behaviours towards home insurance renewal process, by gender, age, lifestage, age of children in household and marital status, September 2008
- Lower income groups are more likely to remain with existing insurer
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- Figure 56: Attitudes and behaviours towards home insurance renewal process, by socio-economic group, working status, gross annual household income and household tenure, September 2008
- Level of internet usage determines the likelihood to switch
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- Figure 57: Attitudes and behaviours towards home insurance renewal process, by technology users, internet usage, TV region, and newspaper readership, September 2008
- Only one in ten look for home insurance deals all year round
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- Figure 58: Statements about home insurance, switching providers and claims history, September 2008
- Approach to renewal process is not dependent on age
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- Figure 59: Statements about home insurance, switching providers and claims history, by gender and age, September 2008
- Light internet users are more likely to look for deals all year round
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- Figure 60: Statements about home insurance, switching providers and claims history, by socio-economic group and internet usage, September 2008
- Online advertising is most effective at renewal
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- Figure 61: Statements about home insurance, switching providers and claims history, by attitudes and behaviours towards home insurance renewal process, September 2008
The Consumer – Policy Selling Points
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- Key points
- More than half of all adults consider price when buying insurance
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- Figure 62: Most important considerations when purchasing home and/or motor insurance, September 2008
- Policyholders rank cover above cost
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- Figure 63: Most important considerations when purchasing home and/or motor insurance, by those with any insurance policy and home and motor insurance policyholders, September 2008
- Comprehensive cover is a priority for those shopping around
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- Figure 64: Most important considerations when purchasing home and/or motor insurance, by attitudes and behaviours towards motor insurance renewal process, September 2008
- Brand can improve level of customer loyalty
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- Figure 65: Most important considerations when purchasing home and/or motor insurance, by attitudes and behaviours towards home insurance renewal process, September 2008
The Consumer – Experience of Buying Insurance and Targeting Opportunities
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- Key points
- Purchasing insurance – a necessary task
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- Figure 66: Responses to words associated with buying and renewing insurance policies, September 2008
- Target group analysis
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- Figure 67: Purchasing and renewing insurance target groups, based on word associations, September 2008
- ‘Confused and bored’
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- Figure 68: Overview of word associations, among ‘confused and bored’ target group, September 2008
- Annoying, boring and frustrating
- Insurance profile
- Demographic profile
- Marketing insight
- ‘Enthusiasts’
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- Figure 69: Overview of word associations, among ‘Enthusiasts’ target group, September 2008
- A satisfying and worthwhile process
- Insurance profile
- Demographic profile
- Marketing insight
- ‘Dutiful’
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- Figure 70: Overview of word associations, among ‘Dutiful’ target group, September 2008
- An important task
- Insurance profile
- Demographic profile
- Marketing insight
- ‘Apathetics’
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- Figure 71: Overview of word associations, among ‘apathetics’ target group, September 2008
- Fairly uninterested
- Insurance profile
- Demographic profile
- Marketing insight
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- Figure 72: General insurance target groups, by insurance product ownership, September 2008
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- Figure 73: General insurance target groups, by most important considerations when purchasing home and/or motor insurance, September 2008
Appendix – The Consumer – Policy Selling Points
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- Figure 74: Most important considerations when purchasing home and/or motor insurance, by gender, age, lifestage, age of children in household and marital status, September 2008
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- Figure 75: Most important considerations when purchasing home and/or motor insurance, by socio-economic group, working status, gross annual household income and household tenure, September 2008
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- Figure 76: Most important considerations when purchasing home and/or motor insurance, by technology users, internet usage, TV region, and newspaper readership, September 2008
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