Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Developing a more sustainable aggregator relationship
- A shift is occurring in terms of customer ownership
- Fixing premiums to boost loyalty
- Increasing the appeal of green car insurance
Market in Brief
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- Underwriting profitability is a major issue…
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- Figure 1: Size of the UK domestic motor insurance market by NWP, outgoing payments and underwriting result, 2000-09
- …which is not helped by rising claims costs…
- …but the motor insurance industry is recession-resistant
- The number of cars in the UK continues to rise
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- Figure 2: UK car parc, 2000-08
- RBS is the market leader
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- Figure 3: Top 15 personal motor insurance providers, by GWP, 2006-08
- The sector lacks differentiation – price is key
- Direct sales are rising, but so too are aggregators
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- Figure 4: Personal lines motor insurance distribution trends, 2000-07
- Car insurance is a high-ownership product
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- Figure 5: Car insurance ownership, February 2009
- Drivers go direct
Internal Market Environment
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- Key points
- The number of cars in the UK continues to grow…
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- Figure 6: UK car parc, 2000-08
- …although new car registrations have fallen
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- Figure 7: Trends in private, business and fleet new car registrations, 2001-08
- Used car sales are also down
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- Figure 8: Sales of used cars, 2002-07
- The number of driving licence holders has increased
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- Figure 9: Full GB driving licence holders, by gender 1975/76-2007
- Multiple car ownership has also increased
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- Figure 10: Household ownership of cars, 2003-08
- The impact of rising personal injury claims
- Fraudulent claims are also up…
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- Figure 11: Percentage of personal motor claims repudiated due to detected fraud and total general insurance fraud savings, 2004-08
- …with the recession leading to yet more fraud?
- Premiums set to rise in 2009 as a result
- Issues around age discrimination
Broader Market Environment
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- Key points
- Disposable incomes are being squeezed
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- Figure 12: Trends in PDI, consumer expenditure and savings, 2002-12
- Changing economic circumstances changing motoring habits?
- Consumer spending falling as a result
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- Figure 13: Spending and savings intentions, Mar 2000-Mar 2009
- Internet penetration has increased
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- Figure 14: Internet penetration at home/work/place of study or elsewhere in GB, by gender, age, and socio-economic group, 2003-08
- Petrol prices have increased significantly
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- Figure 15: UK petrol price growth*, 2002-08
- The average cost of motoring increased in 2008
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- Figure 16: Average cost of motoring in the UK, 2003-08
- Low base rate may increase appeal of car finance
- Anti-car policies and public transport improvements
- Car tax changes will hit two thirds of motorists
Competitive Context
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- Key points
- Motor insurance is compulsory…
- …but uninsured drivers are a problem…
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- Figure 17: New claims submitted to the MIB for accidents involving uninsured vehicles (by year of reporting), 2005-08
- …but the police are taking a tougher stance
SWOT Analysis
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- Figure 18: Motor insurance market SWOT analysis, 2009
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Who’s Innovating?
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- Key points
- MORE TH>N launches green motor insurance policy
- Rekindling the pay-as-you-drive market
- Standalone legal cover from Fortis
- Other significant product launches
- Expanding the range of added-valuable benefits
Trade Perspective
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- Competition continues to grow
- Personal injury claims are still a big issue
- Aggregators are growing in influence
- What about brokers?
- Switching still an issue
- Innovation in the market
- Returning to profitability
- The impact of the downturn
Market Size and Forecast
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- Key points
- The overall market continues to run at a loss
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- Figure 19: Size of the UK domestic motor insurance market by NWP, outgoing payments and underwriting result, 2000-09
- GWP increased by 4% in 2007
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- Figure 20: Domestic motor insurance exposure, GWP and average premium rates, at current prices, 2000-08
- Premiums are increasing more rapidly now
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- Figure 21: Motor insurance market average premium, by type of cover, January 2003-December 2008
- Comprehensive cover continues to dominate
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- Figure 22: Proportion of cars with comprehensive and non-comprehensive cover, based on exposure (vehicle years), 2000-08
- Forecast
- A gradual return to underwriting profitability
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- Figure 23: Forecast size of the UK domestic motor insurance market by NWP, outgoing payments and underwriting result, 2004-14
- Factors used in the forecast
Claims Experience
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- Key points
- The total number of private motor claims fell by 7% in 2008
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- Figure 24: Total number of private motor insurance claims and claims frequency, 2000-08
- The value of claims incurred has steadily increased
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- Figure 25: Value of claims in the domestic motor insurance sector, 2000-07
- The number and value of theft claims continues to fall
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- Figure 26: Private car theft claims, by volume, cost and average claim, 2000-08
- Personal injury claims are still costing
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- Figure 27: Number and average cost of personal injury claims, 2000-07
- A more collaborative approach to claims management
Market Share
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- Key points
- RBS leads the market by a long way
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- Figure 28: Top 15 personal motor insurance providers, by GWP, 2006-08
- A highly fragmented marketplace
Companies and Products
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- A diverse range of products and options available
- Factors that determine the cost of the policy
- Company profiles
- The AA
- Fortis Insurance
- Norwich Union (Aviva from June 2009)
- RBS Insurance
- RSA (formerly Royal Sun Alliance)
- Zurich Insurance
Brand Communication and Promotion
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- Key points
- Motor insurance adspend remains flat in 2008
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- Figure 29: Total general and motor insurance adspend, 2004-08
- Car insurance makes up the vast majority of advertising
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- Figure 30: Motor insurance adspend, by sub-category (percentage splits*), 2004-08
- Direct Line was the biggest advertiser in 2008
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- Figure 31: Motor insurance adspend, by company (percentage splits*), 2004-08
- When it comes to advertising motor insurance, the TV is king
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- Figure 32: Motor insurance adspend, by media type (percentage splits*), 2004-08
Brand Elements
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- Brand map
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- Figure 33: Attitudes towards and usage of motor insurance brands, January 2009
- Brand qualities of motor insurance brands
- AA most genuine, but Direct Line seen as reliable
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- Figure 34: Personalities of various motor insurance brands, January 2009
- Direct Line most used, but brand experience is low
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- Figure 35: Consumer usage of various motor insurance brands, January 2009
- Brand loyalty negligible in motor insurance
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- Figure 36: Consideration of various motor insurance brands, January 2009
- A change is as good as the best
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- Figure 37: Satisfaction with various motor brands, January 2009
- Norwich Union most likely to lose custom
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- Figure 38: Commitment to various motor insurance brands, January 2009
- The AA
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 39: Attitudes towards the AA brand, January 2009
- Norwich Union
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 40: Attitudes towards the Norwich Union brand, January 2009
- MORE TH>N
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 41: Attitudes towards the MORE TH>N brand, January 2009
- Churchill
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 42: Attitudes towards the Churchill brand, January 2009
- Round up
Channels to Market
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- Key points
- Direct sales have grown significantly since 2000
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- Figure 43: Personal lines motor insurance distribution trends, 2000-07
- Aggregators have taken a more commanding position…
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- Figure 44: Distribution channels used to buy car insurance, 2001-09
- …though this does not necessarily benefit insurers
- The telephone is still crucial
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- Figure 45: Methods of arranging car insurance, February 2009
The Consumer – Product Ownership
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- Key points
- Half the population have comprehensive insurance
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- Figure 46: Car insurance ownership, February 2009
- Ownership of comprehensive cover continues to rise
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- Figure 47: Car insurance ownership, 2004-09
- Men are more likely to have a policy in their own name
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- Figure 48: Car insurance ownership, by gender, age, socio-economic group, lifestage, residential status, ACORN group, and car ownership, February 2009
- Younger drivers more likely to be ‘fronted’ or have third party cover
- ABs are more likely to have comprehensive cover
- Homeowners and multi-car households valuable targets
The Consumer – Distribution Trends
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- Key points
- Most people buy direct from an insurance company…
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- Figure 49: Distribution channels used to buy car insurance, February 2009
- …but aggregators have become increasingly influential
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- Figure 50: Distribution channels used to buy car insurance, 2001-09
- Aggregators are used more by younger people…
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- Figure 51: Distribution channels used to buy car insurance, by demographic variables, February 2009
- …and high earners
- The type of policy makes no difference
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- Figure 52: Distribution channels used to buy car insurance, by type of cover, February 2009
- The telephone is still king in motor insurance
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- Figure 53: Methods of arranging car insurance, February 2009
- Rapid growth in online sales
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- Figure 54: Methods of arranging car insurance, 2001-09
- Younger people more likely to use the internet
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- Figure 55: Methods of arranging car insurance, by gender, age, socio-economic group, children in household, car ownership and newspaper readership, February 2009
- Aggregators should target households with children…
- …and avoid advertising in popular tabloids
- Most people that arrange direct with an insurer use the telephone
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- Figure 56: Distribution channel used to purchase motor insurance, by method used to arrange policy, February 2009
The Consumer – Switching and Customer Retention
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- Key points
- Just 23% of people don’t bother shopping around
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- Figure 57: Number of motor insurance quotes obtained on last renewal, February 2009
- The number renewing with their existing provider has fallen
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- Figure 58: Number of motor insurance quotes obtained on last renewal, 2001-09
- Younger people shop around more…
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- Figure 59: Number of motor insurance quotes obtained on last renewal, by gender, age, socio-economic group, household size, residential status, and car ownership, February 2009
- …as do larger households
- Customer retention is a big issue…
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- Figure 60: Length of time with current car insurance provider, February 2009
- …and seems to be getting more difficult
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- Figure 61: Length of time with current car insurance provider, 2001-09
- Older drivers are a lot more loyal
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- Figure 62: Length of time with current car insurance provider, by gender, age, socio-economic group, lifestage, household tenure and newspaper readership, February 2009
- Little difference in switching between the social classes
- Broadsheet readers may be more loyal
- Non-comprehensive policyholders are less loyal…
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- Figure 63: Length of time with current car insurance provider, by type of cover held, February 2009
- …and more price sensitive
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- Figure 64: Number of motor insurance quotes obtained on last renewal, by type of cover held, February 2009
- Aggregators are fuelling the switching mentality
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- Figure 65: Distribution channel used to purchase motor insurance, by length of time with current car insurance provider, February 2009
- Telephone arrangers do less shopping around
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- Figure 66: Method of arranging last car insurance policy, by number of quotes obtained, February 2009
Appendix – Product Ownership
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- Figure 67: Car insurance ownership, by demographic variables, February 2009
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Appendix – Distribution Trends
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- Figure 68: Distribution channels used to buy car insurance, by demographic variables, February 2009
- Figure 69: Methods of arranging car insurance, by type of cover held, February 2009
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- Figure 70: Methods of arranging car insurance, by demographic variables, February 2009
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Appendix – Switching and Customer Retention
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- Figure 71: Number of motor insurance quotes obtained on last renewal, by demographic variables, February 2009
- Figure 72: Length of time with current car insurance provider, by demographic variables, February 2009
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