Consumers and General Insurance - UK - December 2011

INTRODUCTION
Market definitions
Note on consumer research
Abbreviations
EXECUTIVE SUMMARY
The market
Nine in ten have some type of general insurance product
Figure 1: General insurance product ownership, August 2011
Gross written premiums increased by 4% in 2010
Figure 2: NWPs, total outgoings and underwriting result for annual general insurance business, 2006-10
Market factors
Appetite for insurance declines
Figure 3: Agreement with the statement “it is important to be well insured for everything”, 2007-11
Companies, brands and innovation
RBS continues to lead the way, but competitor brands gain ground
Low levels of trust and differentiation
Figure 4: Attitudes towards and usage of general insurance brands, October 2011
The consumer
Consumers prioritise saving and debt repayment activity over insurance matters
Figure 5: Consumer financial priorities, August 2011
Most policyholders shop around at renewal but few are prepared to cancel cover
Figure 6: Shoparound and cancellation behaviour, by product, August 2011
Two fifths believe insurance is even more important when things are tough financially
Figure 7: Attitudes towards general insurance, August 2011
Only 50% are confident that they have sufficient insurance cover in place
Figure 8: Buying behaviours and approach to cover, August 2011
Policyholders seek good value for money
Figure 9: Purchasing considerations among policyholders, August 2011
What we think
ISSUES IN THE MARKET
Where does general insurance rank in the list of consumer financial priorities?
How has the challenging economy affected the demand for general insurance products?
Is there any customer loyalty left in the general insurance market?
To what extent do consumers trust the insurance sector?
What do consumers look for when arranging general insurance policies?
FUTURE OPPORTUNITIES
Providing a helping hand to uncertain consumers
Reassurance in an challenging economy
MARKET ENVIRONMENT
Key points
Economic backdrop creates difficult conditions for insurers
Figure 10: UK GDP growth – percentage change, latest quarter on previous quarter, Q2 2008-Q3 2011
Motor insurance premiums are starting to level off
Figure 11: AA British Insurance Premium Index market average trends, April 2008-October 2011
Property premiums threatened by weather-related costs
Detected fraudulent claims continue to rise
Figure 12: Detected general insurance fraud rates, by volume and value, 2004-10
Regulatory and legislative changes pose challenge for insurers
Solvency II delayed to January 2014
Change to supervisory structure
Consumer Insurance (Disclosure and Representations) Bill
Ban on referral fees
CONSUMER ENVIRONMENT
Key points
The appetite for insurance has declined
Figure 13: Agreement with the statement “it is important to be well insured for everything”, 2007-11
Consumers lack trust in the insurance sector…
Figure 14: Consumer attitudes towards insurance providers, May 2011
… although attitudes tend to be based on perception and not experience
Figure 15: Consumer attitudes towards insurance providers, by insurance claimants, May 2011
Consumer confidence remains weak…
Figure 16: Monthly, 3-monthly and 12-monthly UK consumer confidence indices, January 1997 to October 2011
… although most people are getting by
Figure 17: Current financial situation, April 2009-August 2011
One in four are nervous about the next 12 months
Figure 18: Financial confidence for the next 12 months, April 2009-August 2011
SWOT ANALYSIS
Figure 19: SWOT analysis for personal lines general insurance business, 2011
GENERAL INSURANCE MARKET SIZE
Key points
Premiums increase by 4% in 2010…
Figure 20: Summary of annual general insurance business – UK risks, by sector NWPs, 2006-10
… but market still delivers a substantial underwriting loss
Figure 21: UK outgo and underwriting result for annual general insurance business, 2006-10
Motor insurance performance continues to deteriorate
Figure 22: Underwriting ratio – UK annual general insurance business, by sector, 2006-10
Figure 23: Claims ratio – UK annual general insurance business, by sector, 2006-10
MARKET SEGMENTATION
Key points
Private motor insurance is largest general insurance sector
Figure 24: Share of premium income (UK annual business), by sector, 2010
Premium income experience varies between sectors
Figure 25: Premium analysis of UK general insurance business – 2005-06 to 2009-10
Personal lines business accounts for 60% of GWP
Figure 26: Split of general insurance GWP, by personal, commercial and MAT sectors, 2010
UNDERWRITER SHARE
Key points
RBS remains the leading UK general insurance underwriter
Figure 27: Largest general insurers/reinsurers – total market (direct and facultative business), based on GWP, 2008-10
Underwriters gaining ground
COMPANIES AND PRODUCTS
Aviva
Figure 28: Key financial data for Aviva UK General Insurance business, H1 2010-H1 2011
Figure 29: Key financial data for Aviva UK General Insurance business, 2009-10
AXA Insurance
Chartis Insurance
Figure 30: Key financial data for Chartis UK, 2009-10
RBS Insurance
Figure 31: Key financial data for RBS Insurance, H1 2010-H1 2011
Figure 32: Key financial data for RBS Insurance, 2009-10
RSA Insurance
Figure 33: Key financial data for RSA UK Insurance, H1 2010-H1 2011
Figure 34: Key financial data for RSA UK Insurance, 2009-10
BRAND RESEARCH
Brand map
Figure 35: Attitudes towards and usage of general insurance brands, October 2011
Correspondence analysis
Brand attitudes
Figure 36: Attitudes, by general insurance brand, October 2011
Brand personality
Figure 37: General insurance brand personality – macro image, October 2011
Figure 38: General insurance brand personality – micro image, October 2011
Brand experience
Figure 39: General insurance brand usage, October 2011
Figure 40: Satisfaction with general insurance brands, October 2011
Figure 41: Consideration of general insurance brands, October 2011
Figure 42: Consumer perceptions of current general insurance brand performance, October 2011
Figure 43: General insurance brand recommendation – Net Promoter Score, October 2011
Brand index
Figure 44: General insurance brand index, October 2011
Figure 45: General insurance brand index vs. recommendation, October 2011
Target group analysis
Figure 46: Target groups, October 2011
Figure 47: General insurance brand usage, by target groups, October 2011
Group One – Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – Individualists
BRAND COMMUNICATION AND PROMOTION
Key points
Adspend continues on a downward trend
Figure 48: Topline adspend for general insurance products, 2008/09-2010/11
Adspend on major insurance products declines…
Figure 49: Adspend, by general insurance category, 2008/09-2010/11
… but there is growth in smaller insurance markets
TV advertising becomes main channel for adspend
Figure 50: General insurance adspend, by media type, 2008/09-2010/11
Most insurers reduce adspend over the last 12 months
Figure 51: Top 20 general insurance advertisers, 2008/09-2010/11
A note on adspend
CHANNELS TO MARKET
Key points
Intermediary channel fights back
Figure 52: Proportional distribution for personal lines general insurance, by value, 2001-10
Relative stability in distribution of motor insurance
Figure 53: Proportional distribution for personal lines motor insurance, by value, 2001-10
Intermediaries are growing share in personal property market
Figure 54: Proportional distribution for personal lines property insurance, by value, 2001-10
Aggregators play a major role in car and home insurance markets
Figure 55: Aggregator usage, by insurance product, April 2011
Distribution channel has direct impact on customer loyalty
Figure 56: Car insurance loyalty, by preferred channel for arranging cover, October 2011
CONSUMER FINANCIAL PRIORITIES
Key points
Bolstering savings is the main priority for consumers
Figure 57: Consumer financial priorities, August 2011
Being well insured is a priority for one in five
Insurance tops list of financial priorities among 65+ age group
Figure 58: Consumer financial priorities, by age group, August 2011
Some people have a greater inclination for insurance
Figure 59: Consumer financial priorities, by consumer financial priorities, August 2011
Appetite for insurance is not entirely determined by financial health
Figure 60: Consumer financial priorities, by current financial situation, August 2011
Financial confidence has little bearing on desire to be fully insured
Figure 61: Consumer financial priorities, by financial confidence for the next 12 months, August 2011
GENERAL INSURANCE PRODUCT OWNERSHIP
Key points
Almost 90% of internet users have some type of general insurance cover
Figure 62: General insurance product ownership, August 2011
Bundled products and policy add-ons boost ownership of some products
Over-35s and more affluent consumers are more likely to have cover
Figure 63: Demographic overview of general insurance product ownership, by product, August 2011
Almost two fifths have at least five types of general insurance cover
Figure 64: Repertoire of general insurance product ownership, August 2011
Figure 65: General insurance product ownership, by repertoire of products owned, August 2011
Financial health is generally reflected in insurance product ownership…
Figure 66: General insurance product ownership, by current financial situation, August 2011
… but there are some exceptions
SHOPAROUND AND CANCELLATION BEHAVIOUR
Key points
Consumers are shopping around at renewal…
Figure 67: Shoparound and cancellation behaviour, by product, August 2011
… but few are willing to cut back or cancel their cover
Consumers seek reassurance rather than reduced cover
Older consumers are more likely to appreciate the value of insurance
Figure 68: Cancellation behaviour, by age group, August 2011
Aversion to risk increases with age
Figure 69: Responses to statements about insurance and risk, by age group, 2011
Likelihood to shop around for insurance increases with affluence
Figure 70: Responses to the statement ‘I shopped around when I last renewed this type of cover’, by gross annual household income, August 2011
ATTITUDES TOWARDS GENERAL INSURANCE
Key points
Almost two thirds believe that some insurances are a waste of money
Figure 71: Attitudes towards general insurance, August 2011
Lack of consumer trust undermines insurance market
40% believe insurance is more important in a tough economic climate
Figure 72: Responses to statement ‘Insurance is even more important when things are tough financially’, by gender, age group and annual household income, August 2011
Financial strugglers are more sceptical about the insurance industry
Figure 73: Attitudes towards general insurance, by current financial situation, August 2011
Demonstrating value and greater differentiation could help to build trust
Figure 74: Cross-analysis of attitudes towards general insurance, August 2011
BUYING BEHAVIOUR AND APPROACH TO COVER
Key points
Only 50% are confident that they have sufficient insurance cover
Figure 75: Buying behaviours and approach to cover, August 2011
Figure 76: Cross-analysis of buying behaviours and approach to cover, August 2011
An opportunity to provide consumers with real peace of mind
Time-pressed adults need a helping hand to get the right level of cover
Figure 77: Buying behaviours and approach to cover, by gender, age group and working status, August 2011
Financially healthy are more confident about their insurance coverage
Figure 78: Buying behaviours and approach to cover, by current financial situation, August 2011
PURCHASING CONSIDERATIONS
Key points
Consumers opt for good value rather than the cheapest price
Figure 79: Purchasing considerations among policyholders, August 2011
Price-sensitivity is more evident in the car insurance market
Appreciation of getting value for money increases with age
Figure 80: Good value for money vs. cheapest available price (total of responses across all categories), by age group, August 2011
Lack of trust is more likely to drive price-driven purchasing behaviour
Figure 81: Purchasing considerations, by attitudes towards general insurance, August 2011
Extensive policy coverage appeals across the financial health spectrum
Figure 82: Purchasing considerations, by current financial situation, August 2011
TARGETING OPPORTUNITIES
Key points
Figure 83: Target groups based on attitudes towards buying general insurance products, August 2011
Price sensitive
Taking the middle ground
Discerning quality seekers
It’s all about value
Figure 84: Purchasing considerations, by target groups, August 2011
APPENDIX – CONSUMER SENTIMENT
Figure 85: Current financial situation, by demographics, August 2011
Figure 86: Financial confidence for the next 12 months, by demographics, August 2011
APPENDIX – BRAND RESEARCH
Figure 87: Brand usage, October 2011
Figure 88: Brand commitment, October 2011
Figure 89: Brand momentum, October 2011
Figure 90: Brand diversity, October 2011
Figure 91: Brand satisfaction, October 2011
Figure 92: Brand recommendation, October 2011
Figure 93: Brand attitude, October 2011
Figure 94: Brand image – macro image, October 2011
Figure 95: Brand image – micro image, October 2011
Figure 96: Profile of target groups, by demographics, October 2011
Figure 97: Psychographic segmentation by target group, October 2011
Figure 98: Brand usage by target groups, October 2011
Figure 99: Brand index, October 2011
APPENDIX –CONSUMER FINANCIAL PRIORITIES
Figure 100: Consumer financial priorities, by demographics, August 2011
Figure 101: Consumer financial priorities (continued), by demographics, August 2011
APPENDIX – GENERAL INSURANCE PRODUCT OWNERSHIP
Figure 102: Most popular general insurance product ownership, by demographics, August 2011
Figure 103: Next most popular general insurance product ownership, by demographics, August 2011
Figure 104: Other general insurance product ownership, by demographics, August 2011
Figure 105: General insurance product ownership repertoire, by demographics, August 2011
APPENDIX – SHOPAROUND AND CANCELLATION BEHAVIOUR
Figure 106: Renewal behaviour and attitudes, by demographics, August 2011
APPENDIX – ATTITUDES TOWARDS GENERAL INSURANCE
Figure 107: Attitudes towards general insurance, by demographics, August 2011
APPENDIX –BUYING BEHAVIOUR AND APPROACH TO COVER
Figure 108: Buying behaviours and approach to cover, by demographics, August 2011
Figure 109: Buying behaviours and approach to cover (continued), by demographics, August 2011
APPENDIX – PURCHASING CONSIDERATIONS
Figure 110: Purchasing considerations (total across all featured categories), by demographics, August 2011
Figure 111: Purchasing considerations continued (total across all categories), by demographics, August 2011
APPENDIX – TARGETING OPPORTUNITIES
Figure 112: Target groups, by demographics, August 2011
Figure 113: General insurance product ownership, by target groups, August 2011
Figure 114: Current financial situation, by target groups August 2011
Figure 115: Financial confidence for the next 12 months, by target groups, August 2011
Figure 116: Consumer financial priorities, by target groups, August 2011
Figure 117: Attitudes towards general insurance, by target groups, August 2011
Figure 118: Buying behaviours and approach to cover, by target groups, August 2011