Table of Contents
Introduction
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- Product definitions and report coverage
- Abbreviations
Executive Summary
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- The market
- Gross premium income continue to climb
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- Figure 1: Forecast of domestic property premiums – fan chart, 2006-16
- Market segmentation
- Key factors
- Sluggish housing market hampers new business
- Factors impacting on claims
- Recent claims experience
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- Figure 2: Number and value of claims incurred – domestic property, 2005-10
- New initiatives to tackle fraud
- Company, brands and innovation
- Home insurance is a fairly consolidated market…
- … with limited scope for product innovation
- Home insurers cut back on advertising
- Intermediaries increase their distribution share
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- Figure 3: Proportional distribution of gross domestic property insurance premiums, by channel, 2005-10
- The consumer
- More people have contents than buildings cover
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- Figure 4: Ownership of home insurance and related products, August 2011
- A significant minority of homeowners have no insurance cover
- Approaches to buying and reviewing cover
- Switching behaviour and intentions
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- Figure 5: Switching experience and intentions, August 2011
- Claims tendency
- Product selling points
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- Figure 6: Most sought-after factors when arranging home insurance, August 2011
- What we think
Issues in the Market
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- What impact are aggregators having on this market?
- How is the economic downturn affecting cover levels?
- How can the industry reduce the level of underinsurance?
- In what ways can insurers sweeten the pill of rate rises?
- Is there scope to reduce or eliminate admin fees for making minor policy changes?
Future Opportunities
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- Time to prove that there’s more to insurance than price
- Trend: declining levels of brand loyalty
Internal Market Environment
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- Key points
- Cost of buildings insurance has risen steadily since 2007
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- Figure 7: Average home insurance market and shoparound premiums (quarterly basis), January 2005-July 2011
- Higher rebuild costs exert pressure on premiums
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- Figure 8: Annual percentage change in house rebuilding cost index (HRCI) and RPI, January 2005-July 2011
- Deflated consumer durables prices help to keep contents premiums low
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- Figure 9: RPI and consumer durables index, 1999 Q1-2011 Q2
- Incidence of claims have fallen over the past four years, helping to lower the overall claims bill
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- Figure 10: Total number of domestic property claims and cost incurred, 2005-10 and 2010 H1-2011 H1
- Top household perils relate to the weather and escape of water
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- Figure 11: Proportional distribution of domestic property claims, by type of peril, 2007-10 and 2011 H1
- Domestic property fraud savings declined marginally in 2010
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- Figure 12: Detected general insurance fraud, by claims value, 2005-10
Broader Market Environment
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- Key points
- Changing social and lifestyle factors influence buying habits…
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- Figure 13: Domestic property insurance – market drivers and inhibitors, 2011
- … but housing slowdown impacts on demand from new customers…
- …while the economic downturn prompts some consumers to cut back on cover
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- Figure 14: Agreement with statements about cutting back on home insurance, August 2011
- Government cuts spending on flood defences
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- Figure 15: Total government expenditure on flood and coastal defence, 2000/01-2010/11
- Incidence of reported domestic property crime continue to fall
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- Figure 16: Recorded burglary and property crime, England and Wales, 2005/06-2010/11
- Decline in dwelling fires is a positive development
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- Figure 17: Total number of fires and proportion relating to dwellings, England and Wales, 2005/06-2010/11
Competitive Context
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- Key points
- There are no adequate alternatives to home insurance
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- Figure 18: Ownership of home insurance, by tenure, August 2011
Market SWOT Analysis
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- Figure 19: UK domestic property insurance market – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Limited scope for real product innovation
- Price and level of cover are the main differentiators
- Up-selling via additional options is rife
- Technical advances pave the way for online account management…
- … and to better assess flood risk
- ‘Green’ insurance has emerged, but remains relatively niche
Market Size and Forecast
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- Key points
- Gross premiums up by 4% in 2010
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- Figure 20: Gross and net written premiums – domestic property insurance, 2001-10
- Sector split
- Domestic household market records a small underwriting loss in 2010…
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- Figure 21: Domestic property insurance underwriting ratio, 2001-10
- … as net claims incurred increase by 14%
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- Figure 22: Gross and net written premiums – domestic property insurance, 2005-10
- Solid premium growth expected in 2011
- Five-year forecast
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- Figure 23: Gross written domestic property insurance premiums – fan chart, 2006-16
- Figure 24: Forecast of gross written premiums – domestic property insurance, 2006-16
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- RBS retains its market leader position
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- Figure 25: Largest 15 parent groups active in the domestic property market, by GWP, 2010
- Aviva moves down one place to third position after a fall in premium income
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- Figure 26: Top eight domestic property insurance parent groups, by GWP, 2009-10
Companies and Products
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- RBS Group
- Lloyds Banking Group
- Aviva
- RSA Insurance
- AXA
Brand Communication and Promotion
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- Key points
- Home insurance providers continue to cut back on advertising
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- Figure 27: Topline advertising expenditure on home insurance, 2007-11
- Direct mail typically accounts for more than half of industry adspend
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- Figure 28: Advertising expenditure on home insurance, by media type, 2009-11
- Direct Line and Churchill invest the most in advertising
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- Figure 29: Top 15 advertisers of home insurance, 2009-11
Channels to Market
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- Key points
- Independent intermediaries continue to grow their distribution share
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- Figure 30: Domestic property insurance sales (GWP), by distribution channel, 2005-10
- One in four internet users have purchased home insurance via a price comparison site
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- Figure 31: Insurance products researched or bought via price comparison sites, April 2011
- Just four brands dominate the aggregator arena
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- Figure 32: Unique visitor numbers to major aggregator sites, year to April 2011
Ownership of Home Insurance
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- Key points
- Survey background
- Home and motor are the most common types of insurance product held
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- Figure 33: Ownership of home and other types of general insurance, by age, August 2011
- Proportion of people with buildings cover has fallen slightly over the past two years
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- Figure 34: Trends in ownership of home insurance, 2009-11
- Significant opportunities to cross-sell and up-sell
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- Figure 35: Ownership of home and other common types of general insurance, by age, August 2011
Buying Behaviour and Approach to Cover
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- Key points
- More than two fifths of policyholders are not confident of being adequately covered
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- Figure 36: Agreement with statements about buying home insurance and approach to cover, August 2011
Policy Renewal and Switching Activity
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- Key points
- Customers are much more likely to shop around than accept the renewal premium offered by their existing provider
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- Figure 37: Agreement with statements about renewing home insurance, August 2011
- Men are more likely to shop around and to review their cover than women
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- Figure 38: Agreement with statements about renewing home insurance, by gender and age, August 2011
- Around half of all contents policyholders have changed providers within the past three years
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- Figure 39: Agreement with statements about switching home insurance providers, August 2011
- The pitfalls of focusing too much on price
- Switching intentions are fairly consistent across the gender and age spectrum
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- Figure 40: Agreement with statements about switching home insurance providers, by gender and age, August 2011
Claims Experience
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- Key points
- More than half of policyholders have made a claim on their buildings policy
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- Figure 41: Agreement with statements about home insurance policy access and claims experience, August 2011, August 2011
- Around one in four customers have online access to their policy
- Claims by the over-55s are more likely to be accepted
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- Figure 42: Agreement with statements about home insurance claims experience, by gender and age group, August 2011
Policy Selling Points
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- Key points
- Most people just want ‘good value for money’
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- Figure 43: Most sought-after factors when arranging home insurance, August 2011
- The under-35s are most persuaded by price
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- Figure 44: Most sought-after factors when arranging home insurance, by gender and age, August 2011
Appendix – Ownership of Home Insurance by Demographics
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- Figure 45: Ownership of home insurance, by demographics, August 2011
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Appendix – Policyholder Profile
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- Figure 46: Demographic profile of home insurance policyholders versus profile of the total sample, August 2011
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