Table of Contents
Overview
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- What you need to know
Executive Summary
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- Home insurance GWPs contract by 6%...
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- Figure 1: Forecast of GWP, for domestic home insurance, fan chart 2011-21
- …but are expected to have grown in 2016
- Home insurance premiums see first increases since 2011
- Claims costs remained flat in 2015
- Companies and brands
- Lloyds Banking Group and Direct Line Group lead the way
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- Figure 2: Underwriting share for domestic property market, by GWP, 2015
- Purposeful partnerships
- Insurtech disruption start-ups descend on the home insurance market
- The consumer
- Almost two thirds have a home insurance policy
- Nearly two thirds of consumers renewed with existing provider
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- Figure 3: Action taken at last home insurance renewal, 2013-16
- Figure 4: Factors influencing most recent policy renewal, September 2016
- Over half of consumers want more information on connected home devices
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- Figure 5: Attitudes towards connected home products, September 2016
- What we think
Issues and Insights
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- Insurtech firms are starting an app-based revolution with ‘on-demand’ cover
- The facts
- The implications
- Insurers can leverage digital platforms to drive customer service renaissance
- The facts
- The implications
- Connected home systems must heed consumer concerns to maximise potential
- The facts
- The implications
The Market – What You Need to Know
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- Home insurance GWPs contract by 6%...
- …but are expected to have grown in 2016
- Home insurance premiums see first increases since 2011
- Claims costs remained flat in 2015
- Bancassurance remains a key channel
Market Size and Forecast
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- Gross written premiums decline by 6%
- Underwriting ratio signals a period of adjustment for home insurance
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- Figure 6: Gross and net written premiums – Domestic home insurance, 2005-16
- Figure 7: Domestic property insurance underwriting ratio, 2005-16
- Market forecast and possible impact of Brexit
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- Figure 8: Forecast of GWP, for domestic home insurance, fan chart 2011-21
- Figure 9: Forecast of GWP, for domestic home insurance, 2011-21
- Forecast methodology
- The impact of the EU referendum vote
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- Figure 10: Alternative market scenarios for the post-Brexit domestic home insurance GWP, at current prices, 2016-21
- Premiums bounced back quickly after 2009 slump
- Brexit – A source of uncertainty
Channels to Market
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- Online remains the dominant sales channel
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- Figure 11: Home insurance purchase method, September 2016
- Direct sales grew in 2015, while broker sales continued to fall
- Bancassurance now accounts for less than a quarter of sales
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- Figure 12: Domestic property insurance, by GWP, by distribution channel, 2011-15
Market Drivers
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- Premium prices on the up for the first time since 2011
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- Figure 13: Average home insurance market premiums, Q1 2012-Q3 2016
- Claims costs remained flat in 2015
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- Figure 14: Gross domestic claims incurred 2006-15
- Figure 15: Distribution of domestic home insurance claims, by gross value, by type of peril 2011-16
- Flood claims peaked in Q4 2015 due to major storms
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- Figure 16: Volume and value of flood claims for domestic property insurance, Q1 2013-Q2 2016
- Flood Re backs 53,000 policies in its first six months
- Property insurance fraud is on the rise
- Heavy PCW use is inflating premiums
Regulatory and Legislative Changes
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- FCA finalises rules for transparency in general insurance
- IPT doubles in 18 months
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- Figure 17: Insurance premium tax, 1994-2017
- CMA launched study into Digital Comparison Tools
- FCA drops investigation on social media data harvesting
Companies and Brands – What You Need to Know
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- Lloyds Banking Group is UK’s biggest home insurance underwriter
- Insurtech moves up the agenda
- Purposeful partnerships
- Insurtech disruption start-ups descend on the home insurance market
Underwriter Share
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- Lloyds Banking Group takes over as UK’s biggest home insurance underwriter
- Direct Line loses two distribution partners
- Top 10 insurers hold over 80% of market
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- Figure 18: Top 10 domestic property insurance parent groups, by GWP, 2013-15
Competitive Strategies
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- Pursuing purposeful partnerships
- L&G and Prestige
- AXA link with Trov
- Aviva partners with HomeServe
Launch Activity and Innovation
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- New apps are set to disrupt the market
- Neos
- so-sure launches disruptive peer-to-peer social insurance app
- Ageas brings the convenience to contents insurance
- Cocoon – Protecting with ‘subsound’ technology
- Direct Line launches new Emergency Plumber Cover
Advertising and Marketing Activity
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- Overall above-the-line advertising spend declines 11%
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- Figure 19: Total above-the-line, online display and direct mail adspend in the home insurance market, 2011/12-2015/16
- Direct mail spend reduced by a quarter
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- Figure 20: Total above-the-line, online display and direct mail adspend in the home insurance market, by media type, 2011/12-2015/16
- Direct Line tops adspend list despite cutbacks
- NFU doubles advertising spend in a single year
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- Figure 21: Top 20 above-the-line, online display and direct mail advertisers of home insurance, 2013/14-2015/16
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Almost two thirds have a home insurance policy
- Half of consumers research policies online
- Nearly two thirds of consumers renewed with existing provider
- Over half of consumers want more information on connected home devices
Home Insurance Ownership
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- Overall home insurance ownership falls below two thirds
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- Figure 22: Insurance product ownership, September 2016
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- Figure 23: Insurance product ownership, by age, September 2016
- ‘Generation rent’ leading to decrease in home insurance policies
- Vast majority of consumers prefer combined cover
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- Figure 24: Home insurance ownership, by type of policy, September 2016
- Londoners less likely to have home insurance
Home Insurance Research Methods
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- Half of consumers research policies online
- Younger consumers more likely to solicit advice from family and friends
- Telephone enquiries still common for over-65s
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- Figure 25: Home insurance research methods, September 2016
Most Recent Policy Renewal Behaviour
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- Nearly two thirds of consumers stayed with existing provider at last renewal
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- Figure 26: Actions taken at last home insurance renewal, September 2016
- Those with combined policies more likely to switch
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- Figure 27: Actions taken at last home insurance renewal, by type of policy, September 2016
- PCWs fuelling home insurance churn rates
- Switching rates have stabilised
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- Figure 28: Action taken at last home insurance renewal, 2013-16
Factors Influencing Recent Policy Renewal
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- Price remains a key determinant for policy renewal…
- …but consumers reward insurers’ good service with renewals
- Convenience and time pressure are drivers of renewals
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- Figure 29: Reasons for staying with existing provider, September 2016
- Shopping around driven by price
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- Figure 30: Factors influencing most recent policy renewal, September 2016
Factors Affecting Future Choice of Home Insurance
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- More than half of policyholders prefer to stick with established brands
- New tech start-ups could divide loyalties
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- Figure 31: Factors influencing choice of home insurance provider, September 2016
Attitudes towards Connected Home Products
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- Millennials are most interested in trialling connected home devices
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- Figure 32: Attitudes towards connected home products, September 2016
- A range of smart home devices are of interest
- Consumers expect discounts for a lowering risk profile
- Connected home providers must allay consumer fears over data
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 33: Best and worst case scenario forecast for domestic home insurance GWPs, 2016-21
- Forecast Methodology
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