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Home Insurance - UK - November 2013

INTRODUCTION
Abbreviations
EXECUTIVE SUMMARY
The market
Steady rise in gross written premiums set to resume
Figure 1: Gross written domestic property insurance premiums – fan chart, 2008-18
Sector segmentation
Three-fifths of policies sold via intermediaries and bancassurance
Market factors
Improvement in economic performance and housing market
Home insurance premiums have softened but remain susceptible to sudden rises
Figure 2: Average home insurance market and shoparound* premiums (quarterly basis), October 2009-October 2013
Number of claims continues to fall but average values have risen by 9% since 2007
Companies, brands and innovation
Direct Line Group, LBG and Aviva in a close battle for the top spot in the market
Figure 3: Top five domestic property insurance parent groups, by GWP, 2012
Aviva and Direct Line are the most trusted brands
Figure 4: Attitudes towards and usage of brands in the home insurance sector, July 2013
Home insurance adspend down by 21% in 2013
Provider innovations and developments
The consumer
Three in four adults own a home insurance product
Figure 5: Ownership of home insurance and other types of general insurance, September 2013
More use price comparison sites for researching than for purchasing
Figure 6: Channels used to research and arrange a home insurance policy, September 2013
Most choose providers based upon which can provide the cheapest quote
Figure 7: Important factors when choosing a home insurance provider, September 2013
The vast proportion of consumers prefer contents cover for all their belongings
Figure 8: Home insurance policy preferences, September 2013
Three in 10 switched providers at last renewal
Figure 9: Action taken at last home insurance policy renewal, September 2013
Switching less likely if customers feel they’re getting a fair deal
Figure 10: Reasons for staying with existing provider after shopping around, September 2013
What we think
ISSUES IN THE MARKET
What’s behind the softening in home insurance premiums and will it last?
How can contents insurance ownership among renters be expanded?
Which channels give providers the best chance of a sale?
What can providers do to reduce switching activity?
TREND APPLICATION
When spending a little bit more gets you a lot more
One provider is better than many
The home insurance claims process is going mobile
MARKET DRIVERS
Key points
Signs of life in the economy and housing market
Buildings and contents premiums softening…
Figure 11: Average home insurance market and shoparound* premiums (quarterly basis), October 2009-October 2013
…but how long will this last?
Contents policy pricing is more consistent but demand is variable
Figure 12: RPI and consumer durables index, 2000-12
Subsidised insurance for high flood risk areas set to push up premiums
Number of claims continues to fall
Figure 13: Total number of domestic property claims and cost incurred, 2007-12
Weather-related claims increase in 2012
Figure 14: Proportional distribution of domestic property claims, by type of peril, 2009-H1 2013
St Jude’s storm will push up weather related claims in H2 2013
Figure 15: Detected general insurance fraud, by claims value, 2007-12
Fraud detection on the rise
WHO’S INNOVATING?
Key points
L&G joins ‘Bought by Many’ to offer discount premiums to customers
L&G launches home insurance for mid- and high-net-worth customers
British Gas enters the home insurance market
Zurich launches app for home insurance customers
MARKET SIZE AND FORECAST
Key points
Gross premiums stagnate in 2012
Figure 16: Gross and net written premiums – domestic property insurance, 2002-13
A modest rise in gross premiums expected for 2013
Sector split
Industry generates a 3.5% underwriting profit in 2012…
Figure 17: Domestic property insurance underwriting ratio, 2002-12
…despite a 5% rise in net claims costs
Figure 18: Gross and net written premiums – domestic property insurance, 2007-12
Market forecast
Figure 19: Gross written domestic property insurance premiums – fan chart, 2008-18
Figure 20: Forecast of gross written premiums – domestic property insurance, 2008-18
Forecast methodology
Fan chart explanation
MARKET SHARE
Key points
Direct Line Group the top home insurance provider
Figure 21: Largest 15 parent groups active in the domestic property market, by GWP, 2012
AXA and L&G gain market share in 2012
Figure 22: Top eight domestic property insurance parent groups, by GWP, 2011-12
COMPANIES AND PRODUCTS
Direct Line Group
Company description
2012 position in the domestic home market
Home insurance product range
Distribution
Recent financial performance
Figure 23: Key financial data for Direct Line Group (Home), 2011 and 2012
Figure 24: Key financial data for Direct Line Group (Home), H1 2012 and H1 2013
Recent activity
Lloyds Banking Group
Company description
2012 position in the domestic home market
Home insurance product range
Distribution
Recent financial performance
Figure 25: Key financial data for Lloyds Banking Group (General Insurance), 2011 and 2012
Figure 26: Key financial data for Lloyds Banking Group (General Insurance), H1 2012 and H2 2013
Recent activity
Aviva
Company description
2012 position in the domestic home market
Home insurance product range
Distribution
Recent financial performance
Figure 27: Key financial data for Aviva (UK and Ireland general insurance), 2011 and 2012
Figure 28: Key financial data for Aviva (UK and Ireland general insurance), H1 2012 and H1 2013
Recent activity
RSA Group
Company description
2012 position in the domestic home market
Home insurance product range
Distribution
Recent financial performance
Figure 29: Key financial data for RSA (UK personal, household), 2011 and 2012
Figure 30: Key financial data for RSA (UK personal, household), H1 2012 and H1 2013
Recent activity
AXA UK
Company description
2012 position in the domestic home market
Home insurance product range
Distribution
Recent financial performance
Figure 31: Key financial data for AXA (UK and Ireland, property and casualty), 2011 and 2012
Figure 32: Key financial data for AXA (UK and Ireland, property and casualty), H1 2012 and H1 2013
Recent activity
BRAND RESEARCH
Brand map
Figure 33: Attitudes towards and usage of brands in the home insurance sector, July 2013
Correspondence analysis
Brand attitudes
Figure 34: Attitudes, by home insurance brand, July 2013
Brand personality
Figure 35: Home insurance brand personality – macro image, July 2013
Figure 36: Home insurance brand personality – micro image, July 2013
Brand experience
Figure 37: Home insurance brand usage, July 2013
Figure 38: Satisfaction with various home insurance brands, July 2013
Figure 39: Consideration of home insurance brands, July 2013
Figure 40: Consumer perceptions of current home insurance brand performance, July 2013
Brand index
Figure 41: Home insurance brand index, July 2013
Target group analysis
Figure 42: Target groups, July 2013
Figure 43: Home insurance brand usage, by target groups, July 2013
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
Home insurance adspend declines in 2013
Figure 44: Topline advertising expenditure on home insurance, 2009-13
TV advertising has been cut in half
Figure 45: Advertising expenditure on home insurance, by media type, 2011-13
Direct Line reduces adspend by £10 million but remains the top advertiser
Figure 46: Top 15 advertisers of home insurance, 2011-13
Note about NMR data
CHANNELS TO MARKET
Key points
Price comparison websites the most popular way to arrange a policy
Figure 47: Channels used to arrange a home insurance policy, September 2013
Providers taking a varied approach to price comparison sites
A third of policies sold via intermediaries
Figure 48: Domestic property insurance sales (GWP), by distribution channel, 2008-12
HOME INSURANCE OWNERSHIP
Key points
Three quarters of adults own a home insurance product
Figure 49: Ownership of home insurance and other types of general insurance, September 2013
Home contents insurance ownership directly tied to tenure
Figure 50: Ownership of home insurance and related products, by tenure, September 2013
Raising home contents insurance ownership among renters
Room to expand home insurance ownership among under-35s
Figure 51: Home insurance ownership, by gender, age, socio-economic group and gross annual household income, September 2013
RESEARCHING AND PURCHASING HOME INSURANCE
Key points
Three in four use the internet to research home insurance
Figure 52: Channels used to research home insurance, September 2013
Nearly three in five policies arranged via an online channel
Figure 53: Channels used to arrange a home insurance policy, September 2013
Offline channels provide the best chance for a sale
Figure 54: Comparison of channels used to research and purchase home insurance, September 2013
The case for staying off price comparison websites
Three in 10 who use a price comparison site for research buy direct
Figure 55: Channels used to arrange home insurance, by channels used to research home insurance, September 2013
IMPORTANT FACTORS WHEN CHOOSING A HOME INSURANCE PROVIDER
Key points
The cheapest quote the deciding factor for two thirds of customers
Figure 56: Important factors when choosing a home insurance provider, September 2013
Younger consumers more likely to be influenced by the cheapest quote...
…while older customers are more heavily tied to well-known brands
Those buying direct more likely to consider other factors than just price
Figure 57: Important factors when choosing a home insurance provider, by channel used to arrange home insurance, September 2013
Overwhelming preference for contents policies that provide full coverage
Figure 58: Home contents insurance policy preferences, September 2013
Technological innovations will help to ensure proper levels of coverage
POLICY RENEWAL AND SWITCHING ACTIVITY
Key points
Three in 10 switched providers at renewal
Figure 59: Action taken at last home insurance policy renewal, September 2013
Homeowners more likely than renters to have switched
Few consumers are loyal to just one brand
Figure 60: Provider loyalty, September 2013
If the price is right customers are likely to stick around
Figure 61: Reasons for staying with existing provider after shopping around, September 2013
APPENDIX – MARKET SIZE AND FORECAST
Figure 62: Best case/worse case forecast of gross written premiums – domestic property insurance, 2013-18
APPENDIX – BRAND RESEARCH
Figure 63: Brand usage, July 2013
Figure 64: Brand commitment, July 2013
Figure 65: Brand momentum, July 2013
Figure 66: Brand diversity, July 2013
Figure 67: Brand satisfaction, July 2013
Figure 68: Brand attitude, June 2013
Figure 69: Brand image – macro image, July 2013
Figure 70: Brand image – micro image, July 2013
Figure 71: Profile of target groups, by demographics, July 2013
Figure 72: Psychographic segmentation by target groups, July 2013
Figure 73: Brand usage, by target groups, July 2013
Brand index
Figure 74: Brand index, July 2013
APPENDIX – HOME INSURANCE OWNERSHIP
Figure 75: Ownership of home insurance and related products, by demographics, September 2013
APPENDIX – RESEARCHING AND PURCHASING HOME INSURANCE
Figure 76: Most popular channels used to research home insurance, by demographics, September 2013
Figure 77: Next most popular channels used to research home insurance, by demographics, September 2013
Figure 78: Most popular channels used to arrange a home insurance policy, by demographics, September 2013
Figure 79: Next most popular channels used to arrange a home insurance policy, by demographics, September 2013
APPENDIX – IMPORTANT FACTORS WHEN CHOOSING A HOME INSURANCE PROVIDER
Figure 80: Important factors when choosing a home insurance provider, by demographics, September 2013
Figure 81: Important factors when choosing a home insurance provider, by demographics, September 2013 (continued)
Figure 82: Home insurance policy preferences, by demographics, September 2013
APPENDIX – POLICY RENEWAL AND SWITCHING ACTIVITY
Figure 83: Action taken at last home insurance policy renewal, by demographics, September 2013
Figure 84: Action taken at last home insurance policy renewal, by demographics, September 2013 (continued)
Figure 85: Most popular reasons for staying with existing provider after shopping around, by demographics, September 2013
Figure 86: Next most popular reasons for staying with existing provider after shopping around, by demographics, September 2013
Figure 87: Provider loyalty, by demographics, September 2013

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