Table of Contents
Executive Summary
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- The market
- Premiums up in 2015 after a period of decline
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- Figure 1: Gross written personal motor insurance premiums (UK business only), fan chart, 2010-2020
- Cost of average claims up despite fall in total claim costs
- Online channels dominate policy purchasing
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- Figure 2: Methods of purchasing motor insurance, December 2015
- Companies, brands and innovation
- Car insurance market is highly consolidated
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- Figure 3: Top 10 personal motor insurance underwriters, by gross written premiums, 2014 (UK business only)
- AA and RAC brands are most trusted
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- Figure 4: Attitudes towards and usage of selected finance brands, November 2015
- Advertising expenditure in decline
- The consumer
- Seven out of 10 adults hold some form of car insurance
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- Figure 5: Ownership of motor insurance, December 2015
- Laptops are the preferred method to buy insurance online
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- Figure 6: Ways of purchasing motor insurance online, December 2015
- Majority of customers ultimately stay with their insurer at renewal
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- Figure 7: Statements associated with purchasing motor insurance, December 2015
- Provider websites preferred for cover information, while PCWs lead on price information
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- Figure 8: Sources of information for motor insurance, December 2015
- Over a third have an interest in a telematics policy
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- Figure 9: Interest in telematics-based motor insurance policies, December 2015
- What it means
Issues and Insights
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- Operating in a market of higher premiums
- The facts
- The implications
- Competing in an increasingly fragmented market
- The facts
- The implications
- Telematics policies set to benefit from further growth in target market
- The facts
- The implications
The Market – What You Need to Know
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- Period of falling premiums appears to be at an end …
- … with average premium costs set to rise significantly during 2015
- Cars remain a popular purchase
- Average claim value trebles in 10 years
- Online channels increase dominance in market
- Sizeable niche interest in self-driving cars
Market Size and Forecast
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- Gross written premium up in 2015
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- Figure 10: Gross written personal motor insurance premiums (UK business only), 2010-15
- Market forecast
- Further increases in GWP forecast beyond 2015
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- Figure 11: Gross written personal motor insurance premiums (UK business only), fan chart, 2010-2020
- Figure 12: Gross written personal motor insurance premiums (UK business only), fan chart, 2010-2020
- Forecast methodology
Market Drivers
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- UK licensed car parc approaches 30 million
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- Figure 13: Licensed vehicles (cars), million vehicles, 1994-2014
- New car sales record especially strong growth
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- Figure 14: New and used car market volumes, 2010-15
- Age of car parc is broadening
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- Figure 15: Age structure of the car parc in years, 2012, 2013 and 2014
- Premiums rise strongly in 2015
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- Figure 16: AA BIPI motor comprehensive and third party whole market and shoparound premium trends, Q1 2010-Q4 2015
- Claim value up while total cost of claims is down
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- Figure 17: Cost of claims settled and average claim value, private car, 2004-14
- Market edges closer to breakeven in underwriting performance
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- Figure 18: Personal motor insurance underwriting result, 2010-15
- Detected fraud records an upward trend
- Popularity of telematics continue to grow
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- Figure 19: Volume of live telematics policies, 2009-14
- Rise in IPT set increase shoparound behaviour
Channels to Market
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- Online dominates as the preferred channel for purchasing
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- Figure 20: Methods of purchasing motor insurance, December 2015
- Different age groups have preferences for different channels
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- Figure 21: Methods used to purchase motor insurance, by age, December 2015
- Income and socio economic status also impact channel choices
Autonomous and Driverless Cars
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- Figure 22: Attitudes towards car purchasing and ownership, December 2015
- Young adults and city dwellers are more likely to see the appeal
- Wide ranging implication for motor insurance industry
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- Figure 23: Statements associated with car insurance, December 2015
- Partnerships with manufacturers and technology providers will be crucial for insurers
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Companies and Brands – What You Need to Know
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- Market dominated by a small number of companies
- Falling premiums impact on company performance
- Launch of new initiatives and extending partnerships
- Total advertising expenditure in decline
Market Share
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- Dominance of large players shows sign of weakening
- Mixed fortunes for individual insurers
- Admiral – the largest player in the market overall
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- Figure 24: Top 10 personal motor insurance underwriters, by gross written premiums, 2012-14 (UK business only)
Competitive Strategies
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- Falling premiums signal activity within the market
- Consolidation is the route for some
- Customer transparency pursued by AXA
- Partnerships continue to be used to grow share …
- … and to make the most of new opportunities
- New initiatives also being pursued
- AA Underwriting – a new player enters the underwriting market
Advertising and Marketing Activity
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- Investment in advertising and marketing in decline
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- Figure 25: Total above-the line, online display and direct mail advertising expenditure on car insurance, 2010/11-2014/15
- Mixed messages with regards to individual expenditure
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- Figure 26: Above-the line, online display and direct mail advertising expenditure for top 20 car insurance advertisers, 2012/13-2014/15
- Television holds dominant position in the market
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- Figure 27: Total above-the line, online display and direct mail advertising expenditure on car insurance by media type, 2014/15
- Nielsen Media Research coverage
Brand Research
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- Brand map
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- Figure 28: Attitudes towards and usage of selected finance brands, November 2015
- Key brand metrics
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- Figure 29: Key metrics for selected finance brands, November 2015
- Brand attitudes: Customer service, fairness, trust, quality and reputation are typical of many brands
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- Figure 30: Attitudes, by brand, November 2015
- Brand personality: Views on brand image are more variable
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- Figure 31: Brand personality – macro image, November 2015
- Many brands are viewed as performing similarly against specific issues
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- Figure 32: Brand personality – micro image, November 2015
The Consumer – What You Need to Know
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- Comprehensive insurance is preferred by most drivers
- Online is popular with laptops accounting for a half of purchases
- One in three switched providers at last renewal
- Provider websites preferred for cover information, while PCWs lead on price information
- Interest in telematics insurance policies is split
Ownership of Motor Insurance
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- 90% of car insurance policyholders have comprehensive cover
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- Figure 33: Ownership of motor insurance, December 2015
- Younger drivers seek ways to lower their premium costs
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- Figure 34: Motor insurance ownership by age, December 2015
Purchasing Motor Insurance
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- Online increasingly dominates the market
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- Figure 35: Methods of purchasing motor insurance, December 2014 and December 2015
- Laptops lead as the main way to access websites for car insurance
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- Figure 36: Ways of purchasing motor insurance online, December 2015
- Different age groups prefer different devices
Motor Insurance Providers
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- Traditional insurance companies dominate market
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- Figure 37: Type of company providing car insurance, December 2015
- Insurance companies hold sway with older adults
- … and also wealthier adults
Motor Insurance Renewal Behaviour
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- The majority shop around at renewal
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- Figure 38: Motor insurance renewal behaviour, December 2015
- Mixed messages from older drivers
- Scots are less likely to switch
- Price comparison site activity drives switching
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- Figure 39: Motor insurance renewal behaviour, by methods of purchasing car insurance, December 2015
Sources of Information about Motor Insurance
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- Vast majority access motor insurance information online
- Opportunities for insurance providers to compete with PCWs on cover information
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- Figure 40: Sources of Information, December 2015
- Price comparison websites are popular with men
- Online forums have most influence among under-35s
- ABC1s and wealthy individuals attracted to provider websites
- Around half of drivers rely on a single source for information
Statements Associated with Car Insurance
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- Focus is on keeping premiums down
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- Figure 41: Statements associated with car insurance, December 2015
- Young and old drivers have polarised views towards certain statements
- Parents and urban drivers are amongst the most demanding
Interest in Telematics
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- Mixed interest towards telematics
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- Figure 42: Interest in telematics, December 2015
- Men, parents and those in urban areas show a stronger interest in telematics
- Concerns about use of telematics data dominate worries
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- Figure 43: No interest in telematics, December 2015
- Data privacy most likely to polarise opinions towards acceptance of telematics
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 44: Best- and worst-case forecast of gross written personal motor insurance premiums (UK business only), 2015-20
- Forecast Methodology
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