Table of Contents
Issues in the Market
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- In this report Mintel asks…
- Report coverage
- Market definitions
- Abbreviations
Future Opportunities
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- A growing trend to outsource may not be a good thing
- Happy claimants make loyal customers
- First get your house in order
- Increase premiums by all means, but remember to reward loyalty
- Develop a reward scheme
- A market characterised by ‘disintermediation’
- Managing expectation
- Going green
- Huge potential
- Green motor insurance
Market in Brief
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- Recent performance
- Market outlook
- Demand drivers and inhibitors
- Market dynamics and product development
- Competitive environment
- Distribution trends
- Decline in advertising activity
- Key findings of Mintel’s consumer survey: product penetration
- Buying habits
- Most appealing policy benefits
Internal Market Environment
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- Key points
- The claims burden
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- Figure 1: Total motor insurance market GWP and gross claims incurred, 2004-08
- Claims account for over three quarters of personal sector outgoings
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- Figure 2: Value of personal motor net claims incurred and other outgoings, 2004-09
- Volume of private motor claims has fallen over the past few years
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- Figure 3: Total number of private car insurance claims notified and claims frequency, 2003-09
- Claims outlook
- Comprehensive policies have a higher claims frequency
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- Figure 4: Total number of private car insurance claims notified and claims frequency, by type of policy, 2003-09
- Theft claims fall …
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- Figure 5: Volume and value of private car theft claims settled, by type of policy, 2003-09
- …but average comprehensive claim rises
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- Figure 6: Average claim value for private car theft claims settled, by type of policy, 2003-09
- Number of road traffic accidents continues to decline
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- Figure 7: Reported road casualties, by severity – GB, 1994-98 average, 2007/08 and 2008/09
- Claims for accidental damage are the most commonly notified
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- Figure 8: Number of notified motor insurance claims, by type, 2005-08
- Personal injury payouts rise steeply
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- Figure 9: Average motor claims payment amount, by type, 2005-08
- Steps taken to tackle rising costs
- Jackson Review of Civil Litigation Costs
- Fraud detection improves
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- Figure 10: Proportion of private motor claims repudiated and total general insurance fraud savings, 2005-08
- Electronic motor certificates available from April 2010…finally!
Broader Market Environment
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- Key points
- Economic backdrop
- Impact of downturn on motor industry
- Impact on driving habits and buying behaviour
- The green agenda
- A large and expanding car parc underpins demand for motor insurance
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- Figure 11: Private motor insurance – demand drivers and supressors, 2009
- Modest growth in UK car parc
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- Figure 12: UK car parc, 2000-09
- Rise in female driver population prompted the emergence of specialist women-only brands
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- Figure 13: Full GB driving licence holders, by gender, 1975/76-2008
- The number of two-car households shrinks in 2009
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- Figure 14: Number of cars in household, 2003-09
- New private car sales in 2009 boosted by scrappage scheme…
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- Figure 15: New car registrations, by sector, 2002-09
- Outlook
- …while used car sales fell again
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- Figure 16: Sales of used cars, 2002-09
- Running costs are higher for used car owners
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- Figure 17: Average cost per mile – new and used car comparison, 2009
- Temporary respite in the cost of motoring in 2009
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- Figure 18: Average annual running costs for new cars – UK, 2005-09
- Merely a short reprieve from rising petrol prices
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- Figure 19: Average petrol prices – UK major brands, 2002-09
Competitive Context
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- Key points
- Comprehensive policies account for over 90% of all motor policies
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- Figure 20: Proportion of cars with comprehensive and non-comprehensive cover, based on exposure (vehicle years), 2000-08
- Third-party cover is mostly bought by younger drivers
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- Figure 21: Comparison of market average and shoparound motor premiums, Jul-94, Jul-09 and Oct-09
- Motor insurers start to hike up premiums
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- Figure 22: Market average motor premiums, by type of policy, Oct 1994-Oct 2009
- Significant customer churn
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- Figure 23: Length of time with current car insurance provider, 2001-09
- One in 20 drive without insurance
- Declining number of claims against uninsured drivers
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- Figure 24: Volume of new claims made to MIB, 2004-08
- Government to get even tougher on uninsured drivers
SWOT Analysis
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- Figure 25: Motor insurance market – summary of strengths, weaknesses, opportunities and threats, 2010
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Who’s Innovating?
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- Key points
- Limited scope for real product innovation…
- …with the exception of ‘green’ insurance
- Pay-as-you-drive makes a slow start
- Telematics used to offer young drivers cheaper insurance
Trade Perspective
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- About the respondents
- A market in the red – it’s simply unsustainable
- Insurers are getting better at rooting out fraud
- Rise in legal referrals of personal injury cases are driving up costs
- New compensation reforms are cautiously welcomed
- Online aggregators – weighing product features against price
- Real product innovation is rare
- Insurers get bullish on rates to counter rising claims costs
Market Size and Forecast
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- Key points
- Total UK motor insurance market worth nearly £12 billion
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- Figure 26: Key financials for the UK motor insurance market, 2004-08
- Claims ratio continues to rise in the personal sector
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- Figure 27: Motor insurance market claims ratio, expenses ratio and underwriting ratio – by sector, 2004-08
- Personal sector is expected to record another underwriting loss in 2009
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- Figure 28: Breakdown of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2004-09
- Change in approach needed
- Standard model forecast suggests pattern of underwriting losses will continue…
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- Figure 29: Standard scenario forecast of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2009-14
- …unless annual premium growth of 5% can be achieved
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- Figure 30: Alternative scenario forecast of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2009-14
- Forecast variables
Market Share
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- Key points
- RBS Insurance has the largest market share…
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- Figure 31: Top 15 personal motor underwriters, by gross written premiums, 2007 and 2008
- …and Direct Line is the leading car insurance brand
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- Figure 32: Company providing current car insurance policy, September 2009
- Movers and shakers
- RBS puts insurance business up for sale
- Buyout bid for esure
- QBE pulls personal motor line
- Legal & General mulls re-entry
- Fortis to ascend motor rankings following tie-up with Tesco
Companies and Products
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- Admiral Group
- Aviva
- Fortis
- Lloyds Banking Group
- LV=
- RBS Group
- RSA
- Zurich
Brand Communication and Promotion
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- Key points
- Total motor adspend declines in 2009
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- Figure 33: Annual advertising expenditure on motor insurance products, 2005-09
- Adspend peaks to coincide with the release of new car plates
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- Figure 34: Monthly advertising expenditure on motor insurance products, October 2007-September 2009
- Direct Line retains top spot in 2009
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- Figure 35: Top 20 advertisers of motor insurance, 2007-09
- Most adspend is concentrated on TV commercials and direct mail
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- Figure 36: Distribution of total adspend on motor insurance products, by media type, 2007-09
- The value of direct mail to motor insurers
Channels to Market
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- Key points
- Direct sales’ share of market stabilises
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- Figure 37: Proportional distribution of UK personal motor insurance GWP, by channel, 2004-08
- Increasing proportion of sales being generated online
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- Figure 38: Channel used to arrange car insurance, 2001-09
- Price-comparison sites gain share
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- Figure 39: Type of company used to arrange car insurance, 2001-09
- Confused.com tops aggregator rankings
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- Figure 40: Price-comparison sites used to obtain quotes/compare prices or buy financial product online, September 2009
- The rise of price-comparison sites
- Aggregators have dramatically altered the insurance landscape…
- …and have come under increased scrutiny
The Consumer – Product Ownership
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- Key points
- About Mintel’s consumer survey
- Two thirds of UK adults have motor insurance
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- Figure 41: Ownership of car insurance, by type, November 2009
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- Figure 42: Proportional distribution of motor policyholders, by type of policy and status, November 2009
- A small proportion of people have more than one type of insurance
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- Figure 43: Ownership of car insurance, by number of types held, November 2009
- Trends in car insurance ownership
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- Figure 44: Trends in car insurance ownership, 2004-09
- Women less likely to drive and more likely to be a named driver
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- Figure 45: Ownership of car insurance, by gender and number of cars in household, November 2009
- Take-up of motor insurance peaks in the 45-54 age group
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- Figure 46: Ownership of car insurance, by age, November 2009
- The typical comprehensive policyholder is a married male AB aged 55-64
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- Figure 47: Typical characteristics of comprehensive versus third-party policyholders, November 2009
- Identifying the core target groups
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- Figure 48: Target groups identified for the personal motor insurance market, November 2009
The Consumer – Renewal Behaviour
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- Key points
- Merely a third of motor policyholders will routinely stick with their existing insurer at renewal
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- Figure 49: Renewing car insurance, November 2009
- The potential pitfall of focusing too much on price
- Third-party policyholders are more inclined to shop around…
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- Figure 50: Renewing car insurance, by type of policy held, November 2009
- …as are households with multiple cars
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- Figure 51: Renewing car insurance, by gender and number of cars in household, November 2009
- Brand loyalty is strongest among the over-65s
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- Figure 52: Renewing car insurance, by age, November 2009
The Consumer – Switching and Claims Experience
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- Key points
- More than half of all motor policyholders have changed providers within the past three years
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- Figure 53: Switching and claims experience, November 2009
- Customer loyalty springs from good service and claims handling
- Third-party policyholders are less likely to claim
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- Figure 54: Switching and claims experience, by type of policy held, November 2009
- Those who shop around at renewal are more prone to switching
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- Figure 55: Switching and claims experience, by tendency to shop around or stick with existing insurer at renewal, November 2009
- Men are more likely to claim than women
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- Figure 56: Switching and claims experience, by gender and number of cars in household, November 2009
- Young drivers are no more liable to claim than older drivers
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- Figure 57: Switching and claims experience, by age, November 2009
The Consumer – Key Selling Points
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- Key points
- Relative attractiveness of common product features and benefits
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- Figure 58: Product features interested in, by type of policy held, November 2009
- Those who shop around at renewal are looking to be enticed
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- Figure 59: Car insurance product features and policy types interested in, by tendency to shop around or stick with existing insurer at renewal, November 2009
- Gender differences
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- Figure 60: Car insurance product features and policy types interested in, by gender and number of cars in household, November 2009
- Pay-as-you-drive policies most appeal to those aged 35-44
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- Figure 61: Car insurance product features and policy types interested in, by age, November 2009
- Further analysis
Appendix – Ownership of Car Insurance by Demographics
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- Figure 62: Ownership of car insurance, by demographics, November 2009
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Appendix – Demographic Profile of Car Insurance Policyholders
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- Figure 63: Profile of comprehensive and third-party policyholders versus the total sample, by demographics, November 2009
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