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Consumers and General Insurance - UK - December 2013

INTRODUCTION
Report scope and market definitions
Note on consumer research
Abbreviations
EXECUTIVE SUMMARY
 THE MARKET
Personal lines GWP declined slightly in 2012
Figure 1: General insurance revenue – retail products – UK risks, by GWP, 2008-12
Private motor insurance accounts for 40% of personal lines GWP
Only one in 10 have no form of general insurance cover
Figure 2: General insurance product ownership, September 2013
Ownership of some discretionary forms of insurance is likely to fall
Companies, brands and innovation
Post office leads the way in terms of trust and differentiation
Figure 3: Attitudes towards and use of brands in the insurance sector, October 2013
Aviva was the leading personal lines general insurance underwriter in 2012
Figure 4: Largest personal lines underwriters, by GWP, 2012
Consumer purchasing patterns
Shopping around is now normal practice
Figure 5: Behaviour at last policy renewal, September 2013
Around half of policyholders shop around to check competitiveness of renewal quote
Intentions to shop around at next renewal are highest among newer policyholders
Figure 6: Proportion who are likely to shop around at next policy renewal, September 2013
Policyholders prefer rewards for how long a product is held than multi-product discounts
Figure 7: Interest in incentives to encourage loyalty to an insurance provider, September 2013
Consumer attitudes
Three in 10 find arranging insurance is a hassle
Figure 8: Attitudes towards general insurance, September 2013
Policyholders are divided over level of trust in insurers
Figure 9: Consumer trust in general insurance providers, September 2013
What we think
ISSUES AND INSIGHTS
Playing on people’s natural fear of losing out can reduce churn
The facts
The implications
Multi-product discount schemes have a limited appeal
The facts
The implications
Customer retention schemes have a short space of time to make an impact
The facts
The implications
Tackling uncertainty to improve levels of trust
The facts
The implications
TREND APPLICATION
Celebrate rather than deter shoparound behaviour
Helping people to understand their insurance needs
Insurers will need to rethink their strategy for cross-selling to the over-55s
MARKET SIZE
Key points
Gross written premiums contracted by 3% in 2012
Figure 10: General insurance revenue – retail products – UK risks, by GWP, 2008-12
Underwriting profits decline but the general insurance market is still in the black
Figure 11: General insurance – retail products – UK outgo and underwriting result, 2008-12
MARKET SEGMENTATION
Key points
Motor insurance accounts for around two fifths of total GI income
Figure 12: Share of premium income, by sector, UK general insurance retail products, 2012
Motor insurance sector closes in on underwriting profitability…
Figure 13: Underwriting ratio – UK general insurance retail products, 2008-12
…as claim costs are brought under control
Figure 14: Claims ratio – UK general insurance retail products, 2008-12
UNDERWRITER SHARE
Key points
Aviva is the top personal lines underwriter
Figure 15: Largest personal lines underwriters, by GWP, 2010-12
COMPANIES AND PRODUCTS
Aviva
Figure 16: Key financial data for Aviva UK & Ireland General Insurance business, Interim results for first nine months, 2012 and 2013
Figure 17: Key financial data for Aviva UK & Ireland General Insurance business, 2011 and 2012
Ageas
Figure 18: Key financial data for Ageas UK, Non-life insurance business, H1 2012 AND H1 2013
Figure 19: Key financial data for Ageas Insurance limited, UK business, 2011 and 2012
AXA
Figure 20: Key financial data for AXA Insurance plc, 2011 and 2012
Bupa
Figure 21: Bupa – UK market unit results, H1 2012 and H1 2013
Direct Line Group
Figure 22: Key financial data for Direct Line Group, interim results for the first nine months 2012 and 2013
Figure 23: Key financial data for Direct Line Group, 2011 and 2012
LV=
Figure 24: Key financial data for LV= Group, General Insurance business, H1 2012 AND H1 2013
Figure 25: Key financial data for LV=, 2011 and 2012
RSA Insurance
Figure 26: Key financial data for RSA UK Insurance, H1 2012 AND H1 2013
Figure 27: Key financial data for RSA UK Insurance, 2011 and 2012
BRAND RESEARCH
Brand map
Figure 28: Attitudes towards and usage of brands in the insurance sector, October 2013
Correspondence analysis
Brand attitudes
Figure 29: Attitudes, by insurance brand, October 2013
Brand personality
Figure 30: Insurance brand personality – macro image, October 2013
Figure 31: Insurance brand personality – micro image, October 2013
Brand experience
Figure 32: Insurance brand usage, October 2013
Figure 33: Satisfaction with various insurance brands, October 2013
Figure 34: Consideration of insurance brands, October 2013
Figure 35: Consumer perceptions of current insurance brand performance, October 2013
Brand index
Figure 36: Insurance brand index, October 2013
Target group analysis
Figure 37: Target groups, October 2013
Figure 38: Insurance brand usage, by target groups, October 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
Adspend on general insurance products continues its downward trend
Figure 39: Topline adspend for general insurance products, 2010/11-2012/13
Car insurance and home insurance continue to dominate the market
Figure 40: Adspend, by general insurance category, 2010/11-2012/13
TV advertising remains the most popular channel for insurance adspend
Figure 41: General insurance adspend, by media type, 2010/11-2012/13
Majority of top 10 insurers reduced adspend over the last 12 months
Figure 42: Top 20 general insurance advertisers, 2010/11-2012/13
A note on adspend
GENERAL INSURANCE PRODUCT OWNERSHIP
Key points
Only one in 10 do not have some type of general insurance cover
Figure 43: General insurance product ownership, September 2013
Car and home insurance tops the product ownership list
Regulatory scrutiny could limit sales of many forms of discretionary insurance
50% have four or more different types of general insurance cover
Figure 44: Number of different general insurance products held, September 2013
Figure 45: Number of insurance products held, by type of product owned, September 2013
RENEWAL BEHAVIOUR BY PRODUCT
Key points
Policy switching is highest in the car insurance sector
Figure 46: Behaviour at last policy renewal, September 2013
Shoparound behaviour will extend across most insurance markets
An increased focus on customer retention
 INSURANCE PRODUCT TENURE
Insurers only have a couple of years to gain customer loyalty
Figure 47: Length of time product held with existing insurer, by policy owned, September 2013
Changing perceptions of insurance as a commodity
EXPECTED BEHAVIOUR AT NEXT RENEWAL BY PRODUCT
Key points
Intentions to shop around at next renewal remain high
Figure 48: Likelihood to shop around at next policy renewal, September 2013
Detailed underwriting and employer benefits reduce the incentive to shop around for health insurance
New packaged current account rules could increase shoparound activity
Customers who remain loyal for three or more years are much less likely to shop around
Figure 49: Likelihood to shop around at next car insurance policy renewal, by length of time product held with existing insurer, September 2013
Figure 50: Likelihood to shop around at next home contents insurance policy renewal, by length of time product held with existing insurer, September 2013
REASONS FOR SHOPPING AROUND AT RENEWAL
Key points
Consumers expect to find a cheaper deal at each renewal
Figure 51: Reasons for shopping around at renewal, September 2013
Renewal price checking increases with age
Figure 52: Respondents who shopped around to check the competitiveness of their renewal quotation or to check if their provider offers lower premiums to new customers, by age, September 2013
Price checking as a bargaining tool
One in four shop around for a better level of cover
Figure 53: Reasons for shopping around at renewal, by number of general insurance products owned, September 2013
ATTITUDES TOWARDS INSURANCE LOYALTY SCHEMES
Key points
Policyholders link loyalty to lower premiums
Figure 54: Interest in incentives to encourage loyalty to an insurance provider, September 2013
Customer service assurances hold limited appeal among policyholders
Multi-product discounts appeal to one in four policyholders
Figure 55: Interest in incentives to encourage loyalty to an insurance provider, by number of general insurance products owned, September 2013
Customer reward schemes may struggle to stand out in a plethora of special offers
Giving people a reason to remain loyal
Figure 56: Interest in incentives to encourage loyalty to an insurance provider, by reasons for shopping around at renewal, September 2013
ATTITUDES TOWARDS GENERAL INSURANCE
Key points
30% admit that arranging insurance is a hassle
Figure 57: Attitudes towards general insurance, September 2013
Appealing to a sense of achievement
Over-55s are more likely to be reassured by insurance…
Figure 58: Agreement with selected attitudinal statements regarding general insurance, by age, September 2013
…but are also more likely to be overwhelmed by choice of products on offer
Consumers are unenthusiastic about multi-product deals unless they deliver a financial saving
Multi-product holders are prepared to invest time in finding the best deal
Figure 59: Attitudes towards general insurance, by number of general insurance products owned, September 2013
TRUST IN GENERAL INSURANCE PROVIDERS
Key points
Consumers are divided over perceptions of trust in insurance companies
Figure 60: Consumer trust in general insurance providers, September 2013
Consumers are most likely to distrust the approach to pricing
Over-65s are much more likely to trust insurance companies
Figure 61: Agreement with statements about trust in general insurance providers, by age, September 2013
Lack of trust can be partly linked to confusion and uncertainty
Figure 62: Attitudes towards general insurance, by consumer trust in general insurance providers, September 2013
APPENDIX – BRAND RESEARCH
Figure 63: Brand usage, October 2013
Figure 64: Brand commitment, October 2013
Figure 65: Brand usage, October 2013
Figure 66: Brand diversity, October 2013
Figure 67: Brand satisfaction, October 2013
Figure 68: Brand attitude, October 2013
Figure 69: Brand image – macro image, October 2013
Figure 70: Brand image – micro image, October 2013
Figure 71: Profile of target groups, by demographics, October 2013
Figure 72: Psychographic segmentation, by target groups, October 2013
Figure 73: Brand usage, by target groups, October 2013
Brand index
Figure 74: Brand index, October 2013
APPENDIX – GENERAL INSURANCE PRODUCT OWNERSHIP
Figure 75: Most popular general insurance product ownership, by demographics, September 2013
Figure 76: Next most popular general insurance product ownership, by demographics, September 2013
Figure 77: Other general insurance product ownership, by demographics, September 2013
Figure 78: Number of general insurance products owned, by demographics, September 2013
APPENDIX – RENEWAL BEHAVIOUR BY PRODUCT
Figure 79: Behaviour at last policy renewal – Car insurance, by demographics, September 2013
Figure 80: Behaviour at last policy renewal – Annual travel insurance, by demographics, September 2013
Figure 81: Behaviour at last policy renewal – Pet insurance, by demographics, September 2013
Figure 82: Behaviour at last policy renewal – Medical/health insurance, by demographics, September 2013
Figure 83: Behaviour at last policy renewal – Home emergency cover, by demographics, September 2013
Figure 84: Behaviour at last policy renewal – Mobile phone insurance, by demographics, September 2013
APPENDIX – EXPECTED BEHAVIOUR AT NEXT RENEWAL BY PRODUCT
Figure 85: Likelihood to shop around at next policy renewal – Car insurance, by demographics, September 2013
Figure 86: Likelihood to shop around at next policy renewal – Home contents insurance, by demographics, September 2013
Figure 87: Likelihood to shop around at next policy renewal – Buildings insurance, by demographics, September 2013
Figure 88: Likelihood to shop around at next policy renewal – Home emergency cover, by demographics, September 2013
Figure 89: Likelihood to shop around at next policy renewal – Annual travel insurance, by demographics, September 2013
Figure 90: Likelihood to shop around at next policy renewal – Medical/health insurance, by demographics, September 2013
Figure 91: Likelihood to shop around at next policy renewal – Pet insurance, by demographics, September 2013
Figure 92: Likelihood to shop around at next policy renewal – Mobile phone insurance, by demographics, September 2013
Figure 93: Likelihood to shop around at next buildings insurance policy renewal, by length of time product held with existing insurer, September 2013
Figure 94: Likelihood to shop around at next home emergency cover policy renewal, by length of time product held with existing insurer, September 2013
Figure 95: Likelihood to shop around at next annual travel insurance policy renewal, by length of time product held with existing insurer, September 2013
Figure 96: Likelihood to shop around at next medical/health insurance policy renewal, by length of time product held with existing insurer, September 2013
Figure 97: Likelihood to shop around at next pet insurance policy renewal, by length of time product held with existing insurer, September 2013
Figure 98: Likelihood to shop around at next mobile phone insurance policy renewal, by length of time product held with existing insurer, September 2013
APPENDIX – REASONS FOR SHOPPING AROUND AT RENEWAL
Figure 99: Most popular reasons for shopping around at renewal, by demographics, September 2013
Figure 100: Next most popular reasons for shopping around at renewal, by demographics, September 2013
APPENDIX – ATTITUDES TOWARDS INSURANCE LOYALTY SCHEMES
Figure 101: Interest in incentives to encourage loyalty to an insurance provider, by demographics, September 2013
Figure 102: Interest in incentives to encourage loyalty to an insurance provider, by demographics, September 2013 (continued)
APPENDIX – ATTITUDES TOWARDS GENERAL INSURANCE
Figure 103: Attitudes towards general insurance, by demographics, September 2013
Figure 104: Attitudes towards general insurance, by demographics, September 2013 (continued)
APPENDIX – TRUST IN GENERAL INSURANCE PROVIDERS
Figure 105: Agreement with the statement ‘I trust insurance companies to give me a fair deal’, by demographics, September 2013
Figure 106: Agreement with the statement ‘I trust insurance companies to handle any claims that I make fairly’, by demographics, September 2013
Figure 107: Agreement with the statement ‘I trust insurance companies to give me a product that is suitable for my needs’, by demographics, September 2013
Figure 108: Consumer trust in general insurance providers, by number of general insurance products owned, September 2013

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