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Consumers and General Insurance - UK - December 2015

OVERVIEW
What you need to know
Report scope and market definitions
EXECUTIVE SUMMARY
The market
The general insurance market is shrinking under price pressure
Figure 1: General insurance revenue – Retail products – UK risks, by GWP, 2010-14
Home and motor dominate general insurance business
Figure 2: Share of premium income, by sector, UK general insurance retail products, 2013
Key players
Aviva held off Direct Line to remain the largest underwriter in 2014
Figure 3: Largest personal lines underwriters, by proportion of GWP, 2014
TV has grown to host half of all advertising efforts
The consumer
Two thirds have car or home contents insurance
Figure 4: Product ownership, September 2015
Ease of understanding and arrangement remain important
Figure 5: Attitudes towards products and cover, September 2015
The cost burden is a dominant concern for insurance customers
Figure 6: Attitudes towards cost and value, September 2015
Commoditised products see strongest switching activity
Figure 7: Agreement with the statement 'I would be more interested in what I can get for free with an insurance policy than in the insurance itself (eg toys, vouchers, subscriptions)', by switching behaviour of car insurance owners, September 2015
A third spend between £21 and £50 per month on insurance
Figure 8: Amount spent on general insurance products, 2014 and 2015
Beyond price, UK-based customer service sways purchasing decisions
Figure 9: Factors influencing car insurance purchases, by age, September 2015
Having a claim refused is the strongest internal driver for switching
Figure 10: Events that insurance customers say would definitely lead them to change insurance provider(s), September 2015
What we think
ISSUES AND INSIGHTS
Peer-to-peer insurance is calling the role of the traditional insurer into question
The facts
The implications
Tumbling premiums spell trouble for product quality
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
The general insurance market is shrinking under price pressure
Home and motor dominate general insurance business
MARKET SIZE
The general insurance market is shrinking under price pressure
Figure 11: General insurance revenue – Retail products – UK risks, by GWP, 2010-14
Net Written Premiums have fallen but claims are under control
Figure 12: General insurance – Retail products – UK outgo and underwriting result, 2010-14
MARKET SEGMENTATION
Home and motor dominate general insurance business
Figure 13: Share of premium income, by sector, UK general insurance retail products, 2013
Motor business is a headache for insurers…
Figure 14: Underwriting ratio – UK general insurance retail products, 2010-14
…but falling claims have kept most insurers clear of losses
Figure 15: Claims ratio – UK general insurance retail products, 2010-14
KEY PLAYERS – WHAT YOU NEED TO KNOW
Aviva held off Direct Line to remain the largest underwriter in 2014
Channel innovation and new technologies are shaping strategies
Insurers take their messages to TV in the battle to stand out
UNDERWRITER SHARE
Aviva held off Direct Line to remain the largest underwriter in 2014
Figure 16: Largest personal lines underwriters, by GWP, 2012-14
COMPETITIVE STRATEGIES
Finding new ways to reach the market
Columbus Direct
Cuvva
Bought By Many
Consumer-driven technology with a commercial focus
Telematics and black box technology
Wearable and video technology
ADVERTISING AND MARKETING ACTIVITY
TV has grown to host half of all advertising efforts
Figure 17: Recorded above-the-line, online display and direct mail advertising expenditure on general insurance, by media type, 2012/13/2014/15
Direct Line invests heavily to compete with price comparison sites
Figure 18: Top 20 brands for recorded above-the-line, online display and direct mail advertising expenditure on general insurance, 2012/13-2014/15*
Insurers get competitive over paid and organic search
Note on NMR data
THE CONSUMER – WHAT YOU NEED TO KNOW
Two thirds have car or home contents insurance
The pursuit of free gifts drives switching and can undermine product quality
17% don’t know their total monthly insurance spend
UK-based customer service is a draw for customers
The impact of mis-selling should not be underestimated
PRODUCT OWNERSHIP
Two thirds have car or home contents insurance
Figure 19: Product ownership, September 2015
Ageing enforces higher home and car insurance ownership
Figure 20: Ownership of most commonly held general insurance products, by age, September 2015
Opportunities for cross-selling to older car and home insurance customers
Figure 21: Number of insurance products held, September 2015
ATTITUDES TOWARDS PRODUCTS AND COVER
Data tracking technology needs a boost to achieve mass-market appeal
Employing photo and video surveillance should result in rewards for customers
Ease of understanding and arrangement remain important
Figure 22: Attitudes towards products and cover, September 2015
ATTITUDES TOWARDS COST AND VALUE
The cost burden is a dominant concern
Figure 23: Attitudes towards cost and value, September 2015
SWITCHING BEHAVIOUR
Commoditised products see strongest switching activity
Figure 24: Switching behaviour, September 2015
The pursuit of free gifts drives switching and undermines product quality
Figure 25: Agreement with the statement 'I would be more interested in what I can get for free with an insurance policy than in the insurance itself (eg toys, vouchers, subscriptions)', by switching behaviour of car insurance owners, September 2015
Figure 26: Agreement with the statement 'I would be more interested in what I can get for free with an insurance policy than in the insurance itself (eg toys, vouchers, subscriptions)', by switching behaviour of home contents insurance owners, September 2015
AMOUNT SPENT ON GENERAL INSURANCE PRODUCTS
A third spend between £21 and £50 per month on insurance
Figure 27: Amount spent on general insurance products, 2014 and 2015
Almost one in five don’t know how much they pay for insurance each month…
…and women are more likely to be uncertain
Figure 28: Amount spent on general insurance products, by gender, September 2015
FACTORS INFLUENCING INSURANCE PURCHASES
Beyond price, UK-based customer service sways purchasing decisions
Figure 29: Factors influencing insurance purchases, September 2015
Younger, inexperienced customers seek support
Figure 30: Factors influencing car insurance purchases, by age, September 2015
MOTIVATION TO SWITCH OR CONSIDER SWITCHING
Having a claim refused is the strongest internal driver for switching
Product admin fees are less likely to prompt switching
Figure 31: Events that would lead to changing/considering changing current insurance provider(s), September 2015
Most customers are sensitive to the perceived negatives about the service they receive
Figure 32: Number of events that would lead to changing/considering changing current insurance provider(s), September 2015
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

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