Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- Home Insurance gross premiums shrink by 6%
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- Figure 1: Gross home insurance premiums (UK business only), FAN CHART 2010-20
- The majority of policies are purchased online
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- Figure 2: Home insurance purchase methods, April 2015
- Summer Budget reveals 3.5% insurance premium tax increase
- Companies and brands
- Direct Line Group is the UK’s biggest home insurance underwriter
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- Figure 3: Domestic property insurance market share, by GWP, 2014
- The consumer
- Nearly two thirds have a home insurance policy
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- Figure 4: Home insurance ownership, by type of policy, September 2015
- Nearly a third switched at last renewal
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- Figure 5: Actions taken at last home insurance renewal, September 2015
- 40% use price comparison websites to check competitiveness of renewal
- Only a fifth will certainly renew with existing provider
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- Figure 6: Expected renewal plans for next home insurance policy, September 2015
- Widespread support for greater renewal transparency
- What it means
Issues and Insights
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- Efforts to improve transparency are welcomed by consumers
- The facts
- The implications
- Longer term products could tackle churn but will not end price sensitivity
- The facts
- The implications
- The ‘Connected Home’ will transform insurance
- The facts
- The implications
The Market – What You Need to Know
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- Market devalues by 6%
- Consumers are most likely to purchase a policy online
- Price competition drives down premiums
- Fraud costs halve since 2010
Market Size and Forecast
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- Gross Written Premiums down by 6%
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- Figure 7: Gross and net written premiums – domestic home insurance, 2004-15
- Underwriting ratios maintain profitability
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- Figure 8: Domestic property insurance underwriting ratio, 2005-14
- Market forecast
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- Figure 9: Gross written premium – domestic home insurance, fan chart 2010-20
- Figure 10: Gross written premium – domestic home insurance, 2010-20
- Forecast methodology
Channels to Market
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- The majority of policies are purchased online
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- Figure 11: Home contents insurance purchase methods, April 2015
- Direct sales improved in 2014
- Intermediary sales drop by 10% over past five years
- Policies sold via bancassurance declined
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- Figure 12: Domestic Property Insurance, by GWP, by distribution channel, 2010-14
Market Drivers
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- Premium prices have continued to fall
- Summer Budget reveals 3.5% insurance premium tax increase
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- Figure 13: Average home insurance market premiums (quarterly basis) January 2010-October 2015
- Claims costs drop by 5%
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- Figure 14: Gross domestic claims incurred, 2005 - 14
- Claims fraud drops by 22%
- Weather related claims grow by 69%
- Accidental damage
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- Figure 15: Distribution of domestic home insurance claims, by gross value, by type of peril, 2010-15
- FCA review presentation of add-ons to consumers
- Flood RE details confirmed
Key Players – What You Need to Know
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- Direct Line Group is the UK’s biggest home insurance underwriter
- Insurers continue to focus on digital…
- …and look for ways of building trust
- Advertising spend drops by 13%
Market Share
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- Direct Line Group claims the biggest underwriter share
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- Figure 16: Top 15 domestic property insurance parent groups, by GWP, 2014
- Top 10 insurers have nearly four fifths of the market
- RSA close the gap
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- Figure 17: Top 10 domestic property insurance parent groups, by GWP, 2012-14
Competitive Strategies
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- Improving digital services
- Lloyds Banking Group
- Aviva
- L&G
- Product development in the name of fairness
- RBS and NatWest
- AXA
- Insurance gets social
- TSB offers modular insurance in new partnership with Aviva
- PCWs compete for business
Advertising and Marketing Activity
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- Overall advertising spend down 13%
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- Figure 18: Total above-the-line, online display and direct mail adspend in the home insurance market, 2010/11 – 2014/15
- Significant reductions in spend on direct mail
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- Figure 19: Total above-the-line, online display and direct mail adspend in the home insurance market, by media type, 2010/11– 2014/15
- Direct Line tops adspend list
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- Figure 20: Top 20 above-the-line, online display and direct mail advertisers of home insurance, 2012/13–2014/15
- Specialist providers increase advertising spend
- Insurers compete for online presence
- Nielsen Media Research coverage
The Consumer – What You Need to Know
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- Two thirds have a home insurance policy
- Majority stayed with existing provider but not without shopping around
- 40% use price comparison websites to check competitiveness of renewal
- Lack of loyalty towards home insurers
- Widespread support for greater renewal transparency
Home Insurance Ownership
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- Nearly two thirds have a home insurance policy
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- Figure 21: Ownership of home insurance and other general insurance products, September 2015
- Most people opt for combined cover
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- Figure 22: Home insurance ownership, by policy type, September 2015
- Less than half of those renting have home contents insurance
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- Figure 23: Home insurance ownership, by housing situation, September 2015
- Students are in danger of being underinsured
- Equal ownership across the income scale
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- Figure 24: Home ownership by household income, September 2015
Most Recent Policy Renewal Outcome
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- Nearly two thirds stayed with their existing provider
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- Figure 25: Actions taken at last home insurance renewal, September 2015
- Higher premium costs incentivises switching
Factors Influencing Most Recent Policy Renewal
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- Pricing is the key reason to stay
- A fifth of consumers were offered a price match
- Good service is a stronger deterrent to switching
- Active approach at renewal
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- Figure 26: Reasons for staying with existing provider, September 2015
Most Recent Renewal Behaviour
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- Price comparison websites as an information source
- Bargaining for a better deal
- Only 15% check the value of their personal belongings
- A quarter pay their premiums annually
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- Figure 27: Actions at last purchase or renewal of home insurance policy, September 2015
Expected Plan at Next Renewal
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- One in five is planning to renew with existing provider
- Only one in twenty will switch
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- Figure 28: Expected renewal plans for next home insurance policy, September 2015
- Those who stayed, are more likely to renew again
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- Figure 29: Expected renewal plans for next home insurance policy, by actions taken at last renewal, September 2015
Factors Affecting Choice of Home Insurance Provider
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- Renewal premium transparency is valued by consumers
- Ability to access an advisor over the phone is important for all ages
- Comparisons are important
- Discounts for home security measures
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- Figure 30: Factors influencing choice of provider, September 2015
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Additional market forecast data
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- Figure 31: Best and worst case scenario forecast - Gross written premium – domestic home insurance, 2015-2020
- Forecast Methodology
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