Table of Contents
Issues in the Market
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- Key issues
- Sector focus
- Definitions
- Note on consumer research
- Abbreviations
Future Opportunities
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- Insurers need to tackle a lack of trust
- A point of difference
- Improving policyholder loyalty
- Scope to expand product ownership – targeting 16-24-year-olds
Market in Brief
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- General insurance market returns to underwriting profitability in 2008
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- Figure 1: UK outgo and underwriting result for annual general insurance business, 2004-08
- Premium trends vary between different classes of business
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- Figure 2: Share of total premium income (UK annual business), by sector, 2008
- Challenging conditions during 2009
- Aviva and RBS are leading general insurance underwriters
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- Figure 3: Top five general insurers/reinsuers – total market (direct and facultative business), 2008
- Online channels revolutionise general insurance distribution
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- Figure 4: Preferred methods of arranging insurance for the listed general insurance products, September 2009
- General insurance product ownership
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- Figure 5: Ownership of general insurance products, September 2009
- Banks take a greater role in the home insurance market
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- Figure 6: Type of provider used for main insurance policies, by different types of product held, September 2009
- Two thirds shop around at renewal time
- The issue of trust
Market Environment
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- Key points
- Challenging conditions for the general insurance market
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- Figure 7: GDP quarterly percentage change, 2004-09
- Consumer priorities have changed during 2009
- Shoparound activity increases but policy cancellations are overstated
- Consumers continue to move online…
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- Figure 8: British internet penetration at home/work/place of study or elsewhere, 2003-09
- …but online channels do have consequences for profitability
- General insurance fraud is on an upward trend
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- Figure 9: Estimated value of undetected fraudulent general insurance claims, 2008
- Regulation – a change in approach
- Law Commission proposals could boost consumer protection
- Solvency II – a new regulatory regime
- PPI continues to be placed under the spotlight
- Extension of travel insurance regulations creates a level playing field
SWOT Analysis – General Insurance
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- Figure 10: SWOT analysis for the general insurance market (personal lines), 2009
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Trade Perspective
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- Participating companies
- Impact of the recession
- What are the key challenges facing insurers?
- Customer acquisition vs. customer retention
- Aggregators – weathering the economic storm
- How important is brand strength and loyalty in the current market?
- Looking to the future
Market Size
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- Key points
- Mixed fortunes across the general insurance market
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- Figure 11: Summary of annual general insurance business – UK risks, by sector, 2004-08
- UK general insurance market records an underwriting profit in 2008…
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- Figure 12: UK outgo and underwriting result for annual general insurance business, 2004-08
- …but results vary across different sectors
- Personal lines business totalled around £23.5 billion in 2008
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- Figure 13: Split of general insurance gross written premiums, by personal, commercial and MAT sectors, 2008
Sector Performance
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- Key points
- Private motor and domestic property represents 40% of all premium income
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- Figure 14: Share of total premium income (UK annual business), by sector, 2008
- Premium income trends by business class
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- Figure 15: Detailed premium analysis – UK, by selected class of business, 2003/04-2007/08
- Premiums start to creep up in the private motor insurance market
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- Figure 16: UK private motor – GWP, 2004-09
- Premium growth is limited in the home insurance market
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- Figure 17: UK domestic property – GWP, 2004-09
- Accident and health sector is more susceptible to economic conditions
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- Figure 18: UK accident and health – GWP, 2004-09
- Lower demand for travel insurance due to difficult economic conditions
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- Figure 19: UK travel insurance – GWP, 2004-09
Claims Experience
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- Key points
- Claims costs increase in most general insurance markets
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- Figure 20: Net claims incurred – UK annual general insurance business, by sector, 2004-08
- Claims ratios worsen during 2009
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- Figure 21: Claims ratio – UK annual general insurance business, by sector, 1999-2008
- Almost three in ten don’t trust insurers to pay out for claims…
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- Figure 22: Consumer findings regarding claims experience, September 2009
- …but negative views are not necessarily borne out of experience
- Improving trust is an important consideration for industry
- Law Commission proposals should improve consumer confidence
Underwriter Market Share
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- Key points
- Aviva and RBS head the list of general insurance underwriters
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- Figure 23: Largest general insurers/reinsuers – total market (direct and facultative business), 2006-08
- RBS is dominant in the private motor market
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- Figure 24: Top ten underwriters in the private motor sector, 2008
- Aviva is leading provider of domestic property insurance
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- Figure 25: Top ten underwriters in the personal property insurance sector, 2008
Companies and Products
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- Major players
- Aviva UK Insurance
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- Figure 26: Aviva – UK general insurance (including health) financial key performance indicators, 2007-09
- Royal Bank of Scotland Insurance
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- Figure 27: RBS Insurance – key performance indicators, 2007-09
- Royal & SunAlliance
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- Figure 28: RSA – Key performance indicators, 2007-09
- AIG
- AXA Insurance
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- Figure 29: AXA – UK and Ireland general insurance financial key performance indicators, 2007-09
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- Figure 30: Gross revenues for property and casualty insurance in the UK, by channel, 2007 and 2008
- Zurich Insurance
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- Figure 31: Zurich Financial Services General Insurance financials, 2007-09
- Major insurance brokers
- Acromas Holding Ltd (Saga/AA)
- BGL Group
- Swinton Group
Channels to Market
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- Key points
- Intermediaries hold share but direct channels continue to expand
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- Figure 32: Proportional distribution for personal lines general insurance, by value, 1999-2008
- Direct channels dominate in the motor insurance sector
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- Figure 33: Proportional distribution for personal lines motor insurance, by value, 2004-08
- Intermediaries and banks are the main channels for home insurance
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- Figure 34: Proportional distribution for personal lines property insurance, by value, 2004-08
- Online channels are the preferred way to arrange insurance products
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- Figure 35: Preferred methods of arranging insurance for the listed general insurance products, September 2009
- Aggregator influence continues to spread
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- Figure 36: Products purchased online or through price-comparison sites, September 2009
Brand Communication and Promotion
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- Key points
- General insurance attracts the largest adspend in financial services
- Brand awareness remains a key issue for consumers
- General insurance adspend is falling…
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- Figure 37: Topline adspend for general insurance products, 2006/07-2008/09
- …but not all insurance sectors experience a fall in adspend
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- Figure 38: Adspend, by general insurance category, 2006/07-2008/09
- Direct mail and TV advertising account for 80% of total spent
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- Figure 39: General insurance advertiisng, by media type, 2006/07-2008/09
- Aggregator brands up their adspend significantly
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- Figure 40: Top 20 general insurance advertisers, 2006/07-2008/09
The Consumer – Insurance Product Ownership
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- Key points
- Overview of product ownership
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- Figure 41: Ownership of general insurance products, September 2009
- Product ownership target groups
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- Figure 42: Target groups identified for selected general insurance products, September 2009
- Above and beyond the essentials
- Cross-holding analysis reveals associations between products
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- Figure 43: Cross-holdings of the most popular general insurance products, September 2009
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- Figure 44: Cross-holdings of the next most popular general insurance products, September 2009, September 2009
- More than 18 million have three or more general insurance products
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- Figure 45: Repertoire analysis of the number of insurance products held, September 2009
- Scope to expand optional cover among insurance novices
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- Figure 46: Types of insurance products have, by repertoire of types of insurance products have, September 2009
The Consumer – Insurance Providers
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- Key points
- Car insurance is dominated by insurance brands…
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- Figure 47: Type of provider used for main insurance policies, by different types of product held, September 2009
- …but banks have greater presence in home and travel sectors
- Banks are more likely to attract a slightly older insurance customer
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- Figure 48: Key demographics for type of provider used for main types of insurance cover, September 2009
- Brands have strengths in different sectors
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- Figure 49: Providers used for main types of insurance cover, by different types of product held, September 2009
- Brand cross-sale opportunities
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- Figure 50: Product ownership, by users of different insurance brands, September 2009
- Insurance firms tend to be first port of call for insurance novices
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- Figure 51: Providers and brands used for buildings/contents/car/annual travel insurance, by repertoire of the number of insurance products held, September 2009
The Consumer – Channel Preferences and Switching Activity
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- Key points
- Price-comparison sites are the favoured channel for arranging general insurance policies
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- Figure 52: Preferred methods of arranging insurance for the listed general insurance products, September 2009
- Online is generally the starting point for most insurance arrangements
- Under-45s opt for online channels
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- Figure 53: Key demogrpahics for channels most likely to be used to arrange car/contents/buildings/travel insurance, September 2009
- Preferred channels have influence on brands chosen
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- Figure 54: Providers and brands used for buildings/contents/car/annual travel insurance, by channels most likely to be used to arrange general insurance products, September 2009
- Two thirds of people advocate shopping around at renewal
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- Figure 55: Agreement with statements regarding attitudes towards switching insurance policies, September 2009
- Consumer attitudes towards switching insurers
- Insurance switchers are more likely to be affluent
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- Figure 56: Key demographics for agreement with statements about switching insurers, September 2009
- Not all online channels undermine customer loyalty
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- Figure 57: Preferred method of arranging general insurance products, by agreement with statements regarding switching insurers, September 2009
- Switching levels vary between products
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- Figure 58: Agreement with statements about switching insurers, by general insurance product ownership, September 2009
- How important is brand in the likelihood to switch?
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- Figure 59: Renewal behaviour, by type of insurance provider used, September 2009
The Consumer – Attitudes towards Buying General Insurance
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- Key points
- Policy considerations differ between insurance products
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- Figure 60: Most important considerations when buying insurance, by holders of buildings, contents, car and travel insurance, September 2009
- Cost vs. the level of cover
- Cost is the main consideration for under-45s
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- Figure 61: Key demographics for most important considerations when buying insurance, September 2009
- Price is the main but not only concern for online insurance shoppers
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- Figure 62: Most important considerations when buying different insurance policies, by ways of arranging insurance most likely to use, September 2009
- Majority don’t see the point in paying extra for general insurance
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- Figure 63: Attitudes towards general insurance products, September 2009
- A lack of trust continues to undermine the industry
- Offline purchasers are more likely to pay for quality products
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- Figure 64: Attitudes towards insurance products, by net of ways of arranging insurance most likely to use, September 2009
- Brand is more important for those with optional insurance products
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- Figure 65: Attitudes towards general insurance products, by most popular general insurance products held, September 2009
- A perceived lack of differentiation encourages greater focus on price
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- Figure 66: Most important considerations when buying insurance, by attitudes towards general insurance products, September 2009
The Consumer – Target Group Analysis
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- Key points
- Who are the key targets for insurance providers?
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- Figure 67: Target groups based on attitudes towards buying general insurance products, September 2009
- Disengaged and ambivalent
- Price is everything
- Cautious quality seekers
- Discerning and demanding
- Price is not a concern for every target group
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- Figure 68: Most important things look for when buying different insurance policies, by target groups, September 2009
- Moving beyond price will require improvements in trust and differentiation
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- Figure 69: Attitudes towards insurance products, by target groups, September 2009
Appendix – The Consumer – Insurance Product Ownership
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- Figure 70: Ownership of general insurance products, by demographics, September 2009
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- Figure 71: Ownership of general insurance products, by demographics, September 2009
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- Figure 72: Repertoire of the number of insurance products owned, by demographics, September 2009
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Appendix – The Consumer – Insurance Providers
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- Figure 73: Providers most likely to be used for buildings/contents/car/annual travel insurance, by demographics, September 2009
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- Figure 74: Next most popular providers used for buildings/contents/car/annual travel insurance, by demographics, September 2009
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- Figure 75: Other brands used for buildings/contents/car/annual travel insurance, by demographics, September 2009
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Appendix – The Consumer – Channel Preferences and Switching Activity
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- Figure 76: Channels most likely to be used to arrange insurance (net of car, contents, buildings and travel insurance), by demographics, September 2009
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- Figure 77: Attitudes towards switching insurance policies, by demographics, September 2009
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Appendix – The Consumer – Attitudes towards Buying General Insurance
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- Figure 78: Most important insurance policy considerations, by type of policy, September 2009
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- Figure 79: Most important insurance policy considerations, by demographics, September 2009
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- Figure 80: Next most important insurance policy considerations, by demographics, September 2009
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- Figure 81: Most popular attitudes towards insurance products, by demographics, September 2009
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- Figure 82: Next most popular attitudes towards insurance products, by demographics, September 2009
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Appendix – The Consumer – Target Group Analysis
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- Figure 83: Target groups, by demographics, September 2009
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- Figure 84: Types of insurance products have, by target groups, September 2009
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- Figure 85: Net of ways of arranging insurance most likely to use, by target groups, September 2009
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- Figure 86: Attitudes towards insurance policy, by target groups, September 2009
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