Mass Affluent/HNW Consumers and Insurance - UK - November 2015

OVERVIEW
What you need to know
EXECUTIVE SUMMARY
The market
Personal lines business stalls under competitive conditions
Figure 1: Personal lines gross written premiums, 2010-14
Physical wealth ramps up as people amass household contents
Figure 2: Breakdown of household gross physical wealth: Great Britain, 2006/08-2010/12
The consumer
Home and car cover are the foundation for HNW business
Figure 3: Product ownership, August 2015
Wealthier people still see value in comparing on price
Figure 4: Research activities in the last 12 months, August 2015
Renewal outweighed switching in the last 12 months
Figure 5: People’s insurance experiences and management behaviour in the last 12 months, August 2015
Price is still a key differentiator for wealthier clients
Figure 6: Reasons given for switching insurer in the last 12 months, August 2015
UK-based customer service helps steer choice of insurer
Figure 7: Proportion ranking “UK-based customer service staff” as one of three most influential factors on choice of home insurers, by age and rank, August 2015
Loyalty is being weakened by price motivations …
Figure 8: Attitudes towards arranging insurance, August 2015
…but transparency could help to increase loyalty
Figure 9: Attitudes towards cover and value, August 2015
What we think
ISSUES AND INSIGHTS
Dedicated, UK-based client services can add value across all wealth levels
The facts
The implications
Migration and foreign asset ownership demand a global insurance proposition
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Intense competition suppresses total market premiums
Household wealth and second homeownership are increasing
The distribution of wealth and the population of wealthy people is changing
INSURANCE MARKET OVERVIEW
General insurance
Personal lines business stalls under competitive conditions
Figure 10: Personal lines gross written premiums, 2010-14
Direct-dominated motor market presents opportunities for high value car insurance
Figure 11: Personal motor insurance business (GWP), by distribution channel, 2014
Private or premium banking product partnerships could deliver growth
Figure 12: Personal property insurance business (GWP), by distribution channel, 2014
Life insurance
Life insurance has stabilised following a period of decline
Figure 13: Life insurance (GWP), 2010-14
Life insurance distribution is dominated by advice
Figure 14: Total regular protection premiums, by distribution channel, 2014
TRENDS IN HOUSEHOLD WEALTH AND HOME OWNERSHIP
Physical wealth ramps up as people amass household contents
Figure 15: Breakdown of household gross physical wealth: Great Britain, 2006/08-2010/12
The distribution of physical wealth is skewing towards the highest bands
Figure 16: Distribution of household goods in main residence, by banded values: Great Britain, 2006/08 - 2010/12
1 in 10 people has collectibles or valuables
Figure 17: Percentage of households with collectibles or valuables (including antiques, artwork and stamps): Great Britain, 2006/08-2010/12
Identifying second homes is key to growing income from existing clients
Figure 18: Proportion of second homes abroad, by location, 2013-14
Migrants are likely to be protective about properties they leave behind
Figure 19: Reasons for having a second home, of households who own a second home in England, 2013-14
POPULATION OF MASS AFFLUENT/HIGH NET WORTH CONSUMERS
The UK is the top destination for super-rich migrants…
Figure 20: Countries ranked by inflows of HNWIs*, 2000-14
…and the popularity of the UK is likely to drive further inflows
Figure 21: Overseas-born population in the United Kingdom, excluding some residents in communal establishments, by top ten countries of birth, January 2014-December 2014
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Product development is key in the battle to stand out
COMPETITIVE STRATEGIES
Competing on client experience
Oak Underwriting
Dual International
To split or not to split?
Chubb
Zurich
Pioneering cyber and data protection for individuals
PURE Insurance (US)
THE CONSUMER – WHAT YOU NEED TO KNOW
High home and motor insurance ownership can be converted into cross-sales
Wealthier people are still sensitive to price as an indicator for value
Communicating product quality has never been more important
PRODUCT OWNERSHIP AND CHANNEL PREFERENCE
Home and car cover are the foundation for HNW business
Figure 22: Product ownership, August 2015
The direct channel remains important for many
Figure 23: Product ownership, by channel, August 2015
Figure 24: Home contents insurance ownership, by channel and value of investable assets, August 2015
Wealthier people are open to multiple insurance products
Figure 25: Number of different insurance products owned, August 2015
RESEARCH METHODS FOR INSURANCE PRODUCTS
Wealthier people still see value in comparing on price…
Figure 26: Research activities in the last 12 months, August 2015
…but price comparison site use tails off as income rises
Figure 27: Research activities in the last 12 months, by household income, August 2015
RECENT INSURANCE-RELATED ACTIVITIES
Renewal outweighed switching in the last 12 months
Wealthier people are making mid-term adjustments
Figure 28: People’s insurance experiences and management behaviour  in the last 12 months, August 2015
Loyalty increases as people age
Figure 29: People’s behaviour and experiences with insurance in the last 12 months, by age, August 2015
REASONS FOR SWITCHING INSURER
Price is still a key differentiator for wealthier clients …
…and specialists are being challenged to accept clients from the middleground
Figure 30: Reasons given for switching insurer in the last 12 months, August 2015
FACTORS INFLUENCING CHOICE OF INSURER
Price is still the most important consideration….
…although UK-based customer service helps steer choice of insurer
Figure 31: Factors influencing choice of home insurer, August 2015
Figure 32: Proportion ranking “UK-based customer service staff” as one of three most influential factors on choice of home insurers, by age and rank, August 2015
The mass affluent put emphasis on lowest price
Figure 33: Proportion choosing ‘Rank 1’ for selected factors affecting choice of home insurer, by value of investable assets, August 2015
ATTITUDES TOWARDS ARRANGING INSURANCE
Loyalty is being weakened by price motivations
Previous brand experience is important to nearly one in two
Figure 34: Attitudes towards arranging insurance, August 2015
ATTITUDES TOWARDS COVER AND VALUE
Transparency could help to increase loyalty
Technology will help to lessen insurable risks
Figure 35: Attitudes towards cover and value, August 2015
Cover may be falling short of expectations
Figure 36: Agreement with the statement ‘I am confident that every insurance policy I have covers what I intended to insure in full’, by gross annual household income, August 2015
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology