Table of Contents
Executive Summary
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- The market
- Market fails to achieve real growth in premium income…
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- Figure 1: Gross written domestic property insurance premiums – Fan chart, 2014-24
- …and barely managed to stay in the black in 2018
- Escape of water and the weather are the two costliest perils
- 34% of home insurance premiums generated by brokers
- The complex issue of the ‘loyalty penalty’
- Companies and brands
- The market is fairly consolidated on the supply-side
- Aviva is the largest domestic property insurer
- Allianz is set to challenge the current market leaders
- Insurers are investing in digital and smart technologies to create new opportunities
- The consumer
- Two thirds of UK adults have a home insurance policy
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- Figure 2: Ownership of contents, buildings and home emergency cover, by age group, September 2019
- Almost a fifth have been with their current insurer for at least six years
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- Figure 3: Length of time been a customer of current home insurance provider, September 2019
- Premium rises drive switching behaviour
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- Figure 4: Stayed with provider or switched at last renewal, by what happened to premium at last renewal, September 2019
- Customers with a contents-only policy are more likely to auto-renew
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- Figure 5: Intentions at next policy renewal, September 2019
- A fifth of adults plan to move home
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- Figure 6: Plans for the coming year that could change home insurance needs, September 2019
- Significant interest in cybercrime cover as home insurance add-on
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- Figure 7: Interest in cybercrime cover as an optional extra to home insurance, September 2019
- What we think
Issues and Insights
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- Extend cover to address people’s fear of cybercrime
- The facts
- The implications
- Sustainable pricing could reduce churn and encourage loyalty
- The facts
- The implications
The Market – What You Need to Know
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- Market fails to achieve real growth in premium income…
- …but has been largely profitable over the past 10 years
- Escape of water and the weather are the two costliest perils
- Web aggregators contribute to sales made via all the main channels
- Solving the ‘loyalty penalty’ may not be straightforward
Market Size and Forecast
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- The market has seen a lack of real premium growth over the past decade
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- Figure 8: Domestic property gross and net written premium, 2009-19
- Standard model forecast: market will continue to contract in real terms
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- Figure 9: Gross written domestic property insurance premiums – Fan chart, 2014-24
- Figure 10: Forecast of gross written domestic property insurance premiums, 2014-24
- Forecast methodology
Claims Incurred and Underwriting Result
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- Volume of claims has fallen over the past decade…
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- Figure 11: Number of domestic property claims notified, 2009-18
- …although the average claim value has grown faster than inflation
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- Figure 12: Average value of a domestic property claim notified, 2009-18
- Burst pipes and leaks account for the largest share of the claims bill…
- …although accidental damage has a higher claims frequency
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- Figure 13: Proportional distribution of gross domestic property claims incurred, by type of peril, 2013-18
- Acquisition costs up by 12% in 2018
- Domestic household market barely managed to make a profit in 2018
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- Figure 14: Domestic property outgoings and underwriting result, 2013-18
- Underwriting ratio varies year on year, due to the unpredictable nature of the underlying risks
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- Figure 15: Domestic property underwriting ratio, 2007-18
Channels to Market
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- Direct insurers increases share, but brokers still account for the largest proportion of premiums
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- Figure 16: Proportional distribution of gross domestic property premiums, by sales channel, 2013-18
- Price comparisons are hugely influential
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- Figure 17: Consumer behaviours when arranging home insurance policy with a new provider, September 2019
Market Drivers
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- Two thirds of policyholders have a combined policy
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- Figure 18: Proportional distribution of home insurance sales, by product type, 2018
- Regulator considers remedies to tackle ‘loyalty penalty’
- Some insurers have already adopted new pricing policies
- Lower claims volumes have helped to keep average premiums stable
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- Figure 19: Average domestic property insurance premiums, at current prices, by policy type, 2014-19
- Climate change set to increase the number of homes at risk of flooding
Companies and Brands – What You Need to Know
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- A consolidated market
- Movement in the top-five rankings
- Merger and acquisition activity
- Digital and smart technologies continue to fuel innovation
Market Share
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- Small players increased their share of the market in 2018
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- Figure 20: Top 20 domestic property underwriters – UK, by share of total market GWP, 2018
- Market-leader, Aviva holds on to top spot
- A drop in DLG’s home premium income sees the group fall to fourth place…
- …while RSA Group moves up to second off the back of a strong performance
- LBG increases net household premiums by just over a quarter
- Admiral grows household customer base by nearly a third
- Allianz set to become second-largest general insurer as a result of two key acquisitions
- Co-op agrees sale of underwriting business to Markerstudy
Competitive Strategies and Innovation
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- Aviva separates the management of life and general insurance business…
- … and invests in smart technology
- RSA Group implements new digital service platform
- DLG looks to improve the customer experience and offer a fast response
- LBG seeks to become the “Go to Provider” for home insurance
Launch Activity
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- AvivaPlus – an “industry-first” subscription service
- Saga introduces pricing promise
- HSBC’s launches ‘Select and Cover’ monthly subscription deal
- Azur launches a new home insurance product for wealthy homeowners
- Insurance disruptor, Buzzvault enters the fray with new personalised policy
- Other InsureTech firms to watch out for
Advertising and Marketing Activity
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- Home insurance industry spends around £100 million a year on above-the-line advertising
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- Figure 21: Total above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by sub-category, 2014/15-18/19
- Advertisers cut back on direct mail
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- Figure 22: Above-the-line, online display and direct mail advertising expenditure on home insurance and related products, by media type, 2016/17-18/19
- Figure 23: Adspend split by media type, 2018/19
- Direct Line and Aviva more than double their adspend
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- Figure 24: Top 15 above-the-line advertisers of home insurance and related products, 2016/17-18/19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- 65% of UK adults have a home insurance policy
- Around a fifth have been with their current provider for six years or more
- Premium rises drive switching
- 10% of contents policyholders plan to start paying monthly at next renewal
- A fifth of adults plan to move within the next 12 months
- Two thirds of adults are worried about cybercrime
Product Ownership
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- 43% of UK adults have both buildings and contents insurance
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- Figure 25: Ownership of home and other general insurance policies, September 2019
- Take-up of home insurance increases sharply with age
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- Figure 26: Ownership of contents, buildings and home emergency cover, by age group, September 2019
- 25% of mortgage holders do not have buildings cover
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- Figure 27: Ownership of home insurance and home emergency cover, by housing tenure, September 2019
- Nearly a quarter of outright owners have home emergency cover
- 90% with both types of household cover have a combined policy
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- Figure 28: Proportion of policyholders with both contents and buildings insurance who have a combined policy, September 2019
Length of Tenure with Current Provider
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- A fifth of policyholders have been with their insurer for six or more years
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- Figure 29: Length of time been a customer of current home insurance provider, September 2019
- Measures to tackle the “loyalty penalty” could ultimately increase loyalty
Renewal Behaviour
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- Half of all combined household policyholders saw their premium increase at renewal
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- Figure 30: What happened to premium at last renewal, September 2019
- 45% of combined policyholders chose to stay with their insurer after shopping around
- Behaviour differs according to whether people have a combined or contents-only policy
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- Figure 31: Stayed with provider or switched at last renewal, September 2019
- Increasing premiums at renewal encourages more customers to switch
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- Figure 32: Stayed with provider or switched at last renewal, by what happened to premium at last renewal, September 2019
- A significant minority of customers ignore prompts to shop around at renewal
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- Figure 33: Stayed with provider or switched at last renewal – combined policyholders only, September 2016 and September 2019
- Two thirds expect to shop around at their next renewal
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- Figure 34: Intentions at next policy renewal, September 2019
- 6% of customers plan to start paying monthly
Forthcoming Plans Relevant to Home Insurance
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- One in five adults expects to move over the coming year…
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- Figure 35: Plans for the coming year that could change home insurance needs, September 2019
- A quarter of potential movers plan to live in a flood-risk area
- Starting a family and acquiring more valuable possessions prompts the need to review cover
- 12% of policyholders plan to improve home security
Assessing Demand for Cybercrime Cover
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- Two thirds of UK adults are concerned about experiencing cybercrime
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- Figure 36: Level of concern about cybercrime, September 2019
- 44% of policyholders are interested in optional cyber cover add-on
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- Figure 37: Interest in cybercrime cover as an optional extra to home insurance, September 2019
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Key sources
- Consumer research methodology
Appendix – Market Size and Forecast
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- Total market sales forecast – best- and worst-case scenarios
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- Figure 38: Forecast of home insurance premiums – best- and worst-case scenarios, 2019-24
- Forecast methodology
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