UK Consumers and General Insurance Market Report 2020
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Description
“Overall the general insurance market is well placed to weather the COVID-19 storm, although some sectors like travel and health insurance are particularly exposed to the ongoing disruption. However, consumers remain unconvinced about the industry’s response to the crisis and looking ahead are likely to scrutinise policy terms more closely and seek out providers who have demonstrated support for their customers. An increased regulatory emphasis on rewarding loyalty will force providers to address pricing inconsistencies. It offers the opportunity for providers to move away from the traditional focus on price towards a more rounded assessment of value and quality, with consumers increasingly likely to be seeking reassurance during a time of heightened uncertainty.”
– Douglas Kitchen, Financial Services Analyst
This report covers the following issues:
- The impact of COVID-19 on the general insurance market, including consumer attitudes towards the sector’s handling of the crisis.
- The key economic, societal and regulatory factors affecting change in the general insurance market.
- Ownership of different insurance products, switching and cancellation of general insurance products.
- Expectations and plans for the next 12 months in relation to general insurance.
- Interest in general insurance features, and attitudes toward the changing general insurance environment.
Table of Contents
-
Overview
- Key issues covered in this Report
- COVID-19: Market context
- Impact of the January lockdown and the vaccination rollout
- Economic and other assumptions
- Products covered in this Report
-
Executive Summary
- Impact of COVID-19 on the general insurance market
- Figure 1: Short, medium and long-term impact of COVID-19 on general insurance, January 2020
- The market
- Premium income is expected to decline by 3% in 2020
- Figure 2: General insurance revenue – retail products – UK risks, by gross written premiums, 2016-20
- Car insurance premiums fall…
- …while there is an increase in interest and ownership of PMI
- Home improvements have increased since the outbreak
- Figure 3: Trends in activities done over the last three months, January-November 2020
- Insurers will be forced to review how they are charging existing customers
- Companies and brands
- Personal premiums suffer in the first half of 2020
- LV= adds greater flexibility to the marker
- Travel insurers take a varied approach to offering cover for COVID-19
- Advertising expenditure on general insurance falls in 2019/20
- Figure 4: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2015/16-2019/20
- The consumer
- Car and home insurance are the most widely held products
- Figure 5: Types of insurance owned, September 2020
- Only car and home insurance are switched regularly
- Figure 6: Insurance account switching and opening activity, September 2020
- Increasing premiums is the key driver for switchers
- Figure 7: Reason for switching or opening a new insurance product, September 2020
- A lack of need is the key driver behind insurance cancellations
- Figure 8: Reason for insurance policy cancellation, September 2020
- Over 50% intend to shop around in the next 12 months
- Figure 9: Planned insurance activities over the next 12 months, September 2020
- A quarter would pay for more for greater convenience
- Figure 10: Interest in general insurance innovations, September 2020
- Providers face reputational difficulties due to COVID-19 response
- Figure 11: Attitudes towards general insurance, September 2020
- Impact of COVID-19 on the general insurance market
-
Issues and Insights
- Policies and providers will face greater scrutiny post-COVID-19
- Even the promise of a fair deal will not convince regular switchers
- Subscription style policies can add value and convenience to the younger market
-
The Market – Key Takeaways
- A marginal decline in the general insurance market is expected in 2020
- Covid-19 will transform the travel insurance market
- Regulatory scrutiny will force a change to market dynamics
-
Market Size
- Impact of COVID-19 on general insurance market
- Figure 12: Short, medium and long-term impact of COVID-19 on general insurance, January 2020
- Gross written premiums estimated to fall by 3% in 2020
- Figure 13: General insurance revenue – retail products – UK risks, by gross written premiums, 2016-20
- Learnings from the last recession
- Figure 14: Value general insurance revenue – retail products – UK risks, by gross written premiums, 2007-11
- Market Segmentation The motor insurance market is expected to have grown in 2020…
- …while home and health insurance markets declined
- Figure 15: Gross written premiums for general insurance, by insurance type, 2016-20
- Underwriting result improved in the property market…
- …but falls for motor insurance in 2019
- Figure 16: Underwriting result, 2015-19
- Figure 17: Claims ratio, 2015-19
- COVID-19 transforms the travel insurance market
- Impact of COVID-19 on general insurance market
-
Market Drivers
- Fast recovery in GDP would see a strong return to growth
- Figure 18: Annual GDP, 2015-25 (central forecast)
- A fall in unemployment may lead to people cutting costs
- Figure 19: Annual unemployment rate, 2015-25
- Brexit changes will impact the market in 2021
- Overview of Brexit changes for specific sectors
- Motor insurance premiums fall in 2020
- Figure 20: Average motor insurance premium, Q4 2019-Q3 2020
- Dramatic rise in interest in private medical insurance
- Spending priorities have changed in 2020
- Figure 21: Trends in activities done over the last three months, January-November 2020
- Consumers remain reluctant to book a holiday
- Figure 22: Trends in activities planned over the next three months, January-November 2020
- Fast recovery in GDP would see a strong return to growth
-
Regulatory and Legislative Changes
- Final proposals on the loyalty penalty are set out
- FCA demands firms review the value of their products following the impact of COVID-19
- Test case on business interruption could cause reputational issues
-
Companies and Brands – Key Takeaways
- The largest insurers see their income decline in 2020
- More emphasis on flexibility will add value to customers
- Travel insurers adapt to the COVID-19 outbreak
-
Summary of Impact of COVID-19 on Leading General Insurers
- Ageas
- Allianz
- Aviva
- AXA
- Direct Line
- RSA
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Competitive Strategies and Innovation
- Greater emphasis on flexibility and efficiency
- LV=’s new subscription-based ‘Flow’ service
- And further pay-as-you-go motor insurance solutions
- GoCompare partners with Snoop to help people save on their home and motor insurance
- A greater focus on mental health within the health insurance market
- Travel insurance adapts to the new COVID-19 environment
- Providers take a varied approach
- While Skyscanner and COVER Genius offer a COVID-19 specific policy
-
Advertising and Marketing Activity
- Total advertising spend falls sharply in 2019/2020
- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2015/16-2019/20
-
- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on general insurance, by product category, 2018/19-2019/20
- Direct Line is the largest spender…
- …while PCWs increase their spending
- Figure 25: Leading spenders on above-the-line, online display and direct mail advertising expenditure on general insurance, 2018/19-2019/20
- Providers respond to the COVID-19 outbreak
- Ad Intel coverage
- Total advertising spend falls sharply in 2019/2020
-
The Consumer – Key Takeaways
- Policyholders will continue to shop around despite regulatory changes
- Subscription style policies could replace insurance as part of packaged accounts
- COVID-19 challenges will increase consumer scrutiny
-
Impact of COVID-19 on Consumer Behaviour
- Consumers maintain a cautious approach to expenditure
-
- Figure 26: Expected expenditure over the next month 26 March-19 November
- 30% are worse off compared to 12 months ago
-
- Figure 27: Trends in financial situation compared to a year ago, January-November 2020
- Concern about the impact of COVID-19 on lifestyle increases during second wave
-
- Figure 28: Level of concern about COVID-19 effecting lifestyle, 26 March-19 November
-
Insurance Ownership
- Car and home insurance are the most widely held
- Figure 29: Types of insurance owned, September 2020
- Travel and mobile phone insurance top list of packaged account insurance products
- Figure 30: Packaged insurance ownership, September 2020
- Most only hold one type of insurance as part of a packaged account
- Figure 31: Repertoire of types of insurance policies held as part of a packaged insurance product, September 2020
- Car and home insurance are the most widely held
-
Insurance Switching Activity
- Outside or home or motor insurance, people are unlikely to switch
- Just 27% of home insurance owners have switched
- Figure 32: Insurance account switching and opening activity, September 2020
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Reasons for Switching
- Increased premiums are main driver of switching
- Figure 33: Reason for switching or opening a new insurance product, September 2020
- Greater flexibility will help retain younger policyholders
- Figure 34: Reason for switching or opening a new insurance product, September 2020
- Increased premiums are main driver of switching
-
Insurance Policy Cancellations
- Despite economic uncertainty, relatively few have cancelled policies
- Figure 35: Insurance policy cancellation, September 2020
- A lack of need is the key driver behind travel insurance cancellations…
- …while increasing premiums and a lack of affordability are factors in the health insurance market
- Figure 36: Reason for insurance policy cancellation, September 2020
- Despite economic uncertainty, relatively few have cancelled policies
-
General Insurance Plans over the Next Year
- Shopping around is an integral part of the general insurance market…
- …but less than a quarter intend to switch providers
- Figure 37: Planned insurance activities over the next 12 months, September 2020
- Travel insurance owners are the most likely to say they will switch to a new provider
- Figure 38: Planned insurance activities over the next 12 months, by ownership, September 2020
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Interest in General Insurance features
- Offering greater flexibility can prevent cancellations
- Almost a third are interested in a COVID specific policy
- Figure 39: Interest in general insurance innovations, September 2020
- One in four would pay more for a greater level of convenience…
- …particularly more well-off Millennials
- Figure 40: Consumers and general insurance – CHAID – Tree output, October 2020
- Those who plan to switch provider are unlikely to change their behaviour
- Figure 41: Interest in general insurance innovations, by plans over the next year, September 2020
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Attitudes towards General Insurance
- Providers must take steps to repair their reputations…
- …while policies will be subject to increased scrutiny
- Figure 42: Attitudes towards general insurance, September 2020
- Subscription style policies can act as an alternative to packaged accounts
- Figure 43: Response to the statement, ‘Insurance policies which come as part of a packaged account rarely offer value for money’, September 2020
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
- CHAID methodology
- Figure 44: Consumers and general insurance – CHAID – Table output, October 2020
About the report
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
Market
Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.
Consumer
Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.
Brand/Company
Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.
Data
Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.
*databooks not available with UK B2B Industry reports.
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