Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Premiums rise but market still delivers an underwriting loss
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- Figure 1: Forecast of motor insurance GWP (personal lines), 2005-15
- Market factors
- Premiums increases to combat growing claims costs
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- Figure 2: Total motor insurance market NWP and net claims (personal lines), 2004-09
- ECJ ruling on gender will have major implications for motor insurers
- Motoring costs hit the headlines
- The number of cars on the road remains flat
- Company activity
- RBS leads the way…for now
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- Figure 3: Personal motor underwriter share, by gross written premiums, 2009 (UK insurers only)
- Motor insurance adspend declines
- Direct Line leads on trust and differentiation
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- Figure 4: Attitudes towards and usage of motor insurance brands, January 2011
- The consumer
- Comprehensive cover dominates
- More than 70% of policyholders shopped around at renewal
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- Figure 5: Car insurance renewal behaviour, January 2011
- 60% of policyholders have seen their premiums rise
- Limited appetite for trading down on cover
- What we think
Issues in the Market
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- When will the personal motor insurance sector return to underwriting profitability?
- How will the ECJ’s ruling on gender impact the motor insurance market?
- To what extent have consumers noticed the increase in premium rates?
- Are higher premiums leading people to compromise on cover?
- What proportion of people look for a better deal at renewal?
Future Opportunities
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- Confronting a lack of loyalty
- Can insurers sell telematics as a way of delivering fairness?
Internal Market Environment
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- Key points
- Car insurance premiums soar through 2010
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- Figure 6: AA British Premium Index market average trends, 1994-2010
- Premium hike attracts attention of policymakers
- Rising claims undermine profitability…
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- Figure 7: Total motor insurance market NWP and net claims (personal lines), 2004-09
- ...despite a drop in claims volume
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- Figure 8: Total number of private car insurance claims notified and claims frequency, 2003-10
- Figure 9: Number of notified motor insurance claims, by type, 2005-09
- Claims farming activities drive up personal injury claims
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- Figure 10: Average motor claims payment amount, by type, 2005-09
- Insurers call for implementation of Jackson Review
- Insurance fraud on the rise
- Online purchasing contributes to rise in fraud
- High cost of young driver insurance leads to increase in fronting
- Uninsured driving claims on a downward trend
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- Figure 11: Volume of new claims made to MIB, 2004-09
- Introduction of continuous insurance enforcement scheme
- ECJ ruling on gender has major implications
- OFT investigation into premium comparisons
Broader Market Environment
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- Key points
- Consumers remain cautious about the economic outlook
- Motoring costs rise in 2010
- Growth in the UK car parc levels off
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- Figure 12: UK car parc, 2000-10
- Number of GB driving licence holders continues to increase
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- Figure 13: Full GB driving licence holders, by gender, 1975/76-2009
- New car registration figures increase…
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- Figure 14: New car registrations, by sector, 2002-10
- …but private car registrations fall
- Number of multi-car households in decline
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- Figure 15: Number of cars in household, 2006-10
SWOT Analysis
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- Figure 16: SWOT analysis for personal lines motor insurance, 2011
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Who’s Innovating?
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- Key points
- Telematics help to lower insurance costs for young drivers
- Telematics – the future of the market?
- Insurers look to improve anti-fraud measures
- Design your own policy
- Mobile apps to assist the claims process
Market Size and Forecast
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- Key points
- Motor insurers continue to generate an underwriting loss…
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- Figure 17: Breakdown of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2005-10
- …but sector expects to deliver an improved performance in 2011
- Forecast
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- Figure 18: Forecast of motor insurance GWP (personal lines), 2005-15
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- Figure 19: Forecast of motor insurance GWP (personal lines), 2005-15
- Forecast methodology
Market Share
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- Key points
- RBS Insurance dominates the market…
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- Figure 20: Top 15 personal motor underwriters, by gross written premiums, 2008 and 2009 (UK insurers only)
- …but only until 2012
- Rate rises impact underwriter share
- A note about Admiral and Zurich
- Notable market developments
Companies and Products
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- Admiral Group
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- Figure 21: Admiral Financials, 2008-10
- Aviva
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- Figure 22: Aviva General Insurance Financials, 2009 and 2010
- LV=
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- Figure 23: LV= General Insurance Financials, 2009 and 2010
- RBS
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- Figure 24: RBS Insurance Financials, 2009 and 2010
- RSA
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- Figure 25: RSA Financials, 2009 and 2010
- Zurich
Channels to Market
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- Key points
- Direct channels and intermediaries account for 80% of motor premiums
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- Figure 26: Proportional distribution for personal lines motor insurance, by value, 2004-09
- Most people would opt to arrange cover online
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- Figure 27: Preferred channel to arrange car insurance, August 2010
- 50% have used price-comparison sites for car insurance arrangements
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- Figure 28: Proportion of consumers that have purchased car insurance online or used price-comparison site to arrange cover, August 2010
- The online advance
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- Figure 29: Method used to arrange car insurance, 2001-09
Brand Communication and Promotion
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- Key points
- Motor insurance adspend on a downward trend
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- Figure 30: Annual advertising expenditure on car insurance products, 2006-10
- Direct Line continues to lead the way
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- Figure 31: Top 20 advertisers of car insurance, 2008-10
- TV and direct mail are main methods of advertising car insurance
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- Figure 32: Distribution of total adspend on car insurance products, by media type, 2008-10
- Note on adspend data
Brand Research
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- Brand map
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- Figure 33: Attitudes towards and usage of motor insurance brands, January 2011
- Brand attitudes
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- Figure 34: Attitudes, by motor insurance brand, January 2011
- Brand personality
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- Figure 35: Motor insurance brand personality – macro image, January 2011
- Brand personality
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- Figure 36: Motor insurance brand personality – micro image, January 2011
- Correspondence analysis
- Brand experience
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- Figure 37: Motor insurance brand usage, January 2011
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- Figure 38: Satisfaction with various motor insurance brands, January 2011
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- Figure 39: Consideration of motor insurance brands, January 2011
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- Figure 40: Consumer perceptions of current motor insurance brand performance, January 2011
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- Figure 41: Motor insurance brand recommendation – Net Promoter Score, January 2011
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- Figure 42: Motor insurance brand index, January 2011
- Figure 43: Motor insurance brand index vs. recommendation, January 2011
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- Figure 44: Target groups, January 2011
- Figure 45: Motor insurance brand usage, by target groups, January 2011
Motor Insurance Ownership
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- Key points
- A note about Mintel’s consumer research
- Legal requirement means car insurance is widely held
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- Figure 46: Ownership of car insurance, by type, January 2011
- Comprehensive cover dominates market
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- Figure 47: Proportional split of comprehensive and third party cover among motor insurance policyholders, January 2011
- Car insurance ownership on an upward trend
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- Figure 48: Trends in car insurance ownership, 2004-11
- Two thirds of 17-24-year-olds do not have car insurance
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- Figure 49: People without car insurance, by age, January 2011
- Potential for growth among over-70s
- Car insurance ownership peaks among 35-64-year-olds
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- Figure 50: Ownership of car insurance, by age, January 2011
- Only 50% of women are main policyholders
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- Figure 51: Ownership of car insurance, by gender, January 2011
Renewal Behaviour
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- Key points
- 30% of policyholders switched providers at last renewal
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- Figure 52: Car insurance renewal behaviour, January 2011
- Unconscious switchers
- Third party policyholders switch to drive down costs
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- Figure 53: Car insurance renewal behaviour, by ownership of car insurance, January 2011
- Women are more likely than men to switch providers
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- Figure 54: Car insurance renewal behaviour, by gender, January 2011
- Switching activity reduces with age...
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- Figure 55: Car insurance renewal behaviour, by age, January 2011
- ...but shoparound activity spikes when people reach 65-74
Renewal Premium Experience
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- Key points
- Six out of ten policyholders saw their renewal premiums increase
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- Figure 56: Renewal premium experience, January 2011
- Nearly two thirds of switchers saw their renewal premiums rise
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- Figure 57: Renewal premium experience, by car insurance renewal behaviour, January 2011
- Enough difference to switch?
- A quarter of switchers actually saw a fall in premiums
- Younger adults are more likely to see premiums fall
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- Figure 58: Renewal premium experience, by age, January 2011
- ABC1s are more likely to perceive premium increases
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- Figure 59: Renewal premium experience, by socio-economic group, January 2011
Consumer Approach Towards Rising Premiums
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- Key points
- A quarter would opt to increase their excess to combat a major rate hike...
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- Figure 60: Approaches taken to reduce car insurance premiums, January 2011
- ...but 35% are not prepared to compromise on the quality of cover
- Loyal policyholders are the least likely to compromise on cover
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- Figure 61: Approaches taken to reduce car insurance premiums, by car insurance renewal behaviour, January 2011
- The reality of a premium hike may alter policyholder views
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- Figure 62: Approaches taken to reduce car insurance premiums, by renewal premium experience, January 2011
- Demographic drivers of attitude
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- Figure 63: Approaches taken to reduce car insurance premiums, key demographics, January 2011
- Third party policyholders are less likely to have scope to change excess
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- Figure 64: Approaches taken to reduce car insurance premiums, by ownership of car insurance, January 2011
Appendix - Market Definitions
Appendix – Market Forecast
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- Figure 65: Best and worst case forecast for motor insurance GWPs, 2010-15
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Appendix – Motor Insurance Ownership
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- Figure 66: Ownership of car insurance, by demographics, January 2011
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Appendix – Renewal Behaviour
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- Figure 67: Motor insurance renewal behaviour, by demographics, January 2011
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Appendix – Renewal Premium Experience
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- Figure 68: Renewal premium experience, by demographics, January 2011
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Appendix – Consumer Approach Towards Rising Premiums
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- Figure 69: Approaches taken to reduce car insurance premiums, by demographics, January 2011
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- Figure 70: Approaches taken to reduce car insurance premiums, by demographics, January 2011
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