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Motor Insurance - UK - March 2018

OVERVIEW
What you need to know
Scope of this Report
EXECUTIVE SUMMARY
The market
Premiums reach record highs in 2017
Figure 1: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2012-22
Companies and brands
Direct Line Group holds the top spot by GWP
Figure 2: Type of car insurance provider, December 2017
Traditional heavy-hitting insurance brands boast solid trust and good reputation
Figure 3: Attitudes towards and usage of selected brands, November 2017
The consumer
81% of people have a driving licence, and most drivers have fully comprehensive cover
Figure 4: Motor insurance ownership, December 2017
Seven in 10 insurance holders shopped around
Figure 5: Behaviour at last car insurance policy arrangement or renewal, December 2017
Nine in 10 used at least one price comparison site as a research tool
Figure 6: Price comparison sites used when researching current car insurance policy, December 2017
A third of policyholders used insurer websites for research
Figure 7: Other sources of information when researching current car insurance policy, December 2017
The short-term market is still dominated by traditional insurers
Figure 8: Most likely short-term car access and insurance arrangement methods, December 2017
Insurance could be set for a key role in selling cars of the future
Figure 9: Attitudes towards car insurance and car technology, December 2017
What we think
ISSUES AND INSIGHTS
Using multiple price comparison sites is seen as logical, but not always worthwhile
The facts
The implications
Apps target change in driving habits with straightforward flexible services
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Premiums reach record highs in 2017
The car parc is growing and average premiums are at record levels
Government reviewing Ogden discount rate change in insurers’ favour
MARKET SIZE AND FORECAST
Premiums reach record highs in 2017
Figure 10: Gross written personal motor insurance premiums (UK domestic business only), 2013-17
Premium growth to soften in response to Ogden rate changes
Figure 11: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2012-22
Figure 12: Forecast of the value of gross written personal motor insurance premiums (UK business only), current and constant prices, 2012-22
Forecast methodology
MARKET ENVIRONMENT
Growth in the car parc has accelerated
Figure 13: Licenced cars, Great Britain, Q1 2010-Q1 2017*
Figure 14: Car ownership, February 2016-17
Average premium reaches record level high despite shopping around
Figure 15: Average premium and claim values, by age, 2016
Average claim cost increased again in 2017
Figure 16: Gross claims paid and total number of claims settled for private cars, 2013-17
Figure 17: Average cost of claims for private cars, 2013-17
REGULATORY AND LEGISLATIVE CHANGES
Government reviewing Ogden discount rate change
Government to tackle insurance fraud with changes to claims process
Concerns over implementation of renewal letter changes
BIBA manifesto sets sights on IPT fairness
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Direct Line Group remained market leader in 2016
Car manufacturers and Insurtech app show promise as distribution channels
Adspend recovers as competition hots up
Traditional heavy-hitting insurance brands boast solid trust and good reputation
MARKET SHARE
Direct Line Group retained number one spot in 2016
Figure 17: Top 20 domestic motor underwriters – UK, by share of total market GWP – ABI members only, 2016
Seven in 10 people say they have car insurance with a traditional insurer
Figure 18: Type of car insurance provider, December 2017
COMPETITIVE STRATEGIES
Manufacturers stake a bigger claim to insurance distribution
Vauxhall (underwritten by Ageas)
Tesla and Direct Line (underwritten by UK Insurance Limited)
New apps set sights on disrupting distribution
honcho
Wrisk
ADVERTISING AND MARKETING ACTIVITY
Adspend recovers as competition hots up
Figure 19: Total above-the line, online display and direct mail advertising expenditure on car insurance, 2017
More than half of spending goes on TV advertising
Figure 20: Total above-the line, online display and direct mail advertising expenditure on car insurance, by media type, 2017
Confused.com pursues aggressive advertising expansion
Figure 21: Total above-the line, online display and direct mail advertising expenditure on car insurance, 2015-2017
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 22: Attitudes towards and usage of selected brands, November 2017
Key brand metrics
Figure 23: Key metrics for selected brands, November 2017
Brand attitudes: Traditional brands benefit from reputational positives
Figure 24: Attitudes, by brand, November 2017
Brand personality: Saga’s exclusivity marks it out among over-50s
Figure 25: Brand personality – macro image, November 2017
esure suffers under the spotlight
Figure 26: Brand personality – micro image, November 2017
Brand analysis
Traditional heavy-hitting insurance brands boast solid trust and good reputation
Co-op Insurance and esure are held back by some less favourable brand associations
RAC picks up some outstanding brand attributes from breakdown cover heritage
Saga uses exclusivity to appeal to over-50s
THE CONSUMER – WHAT YOU NEED TO KNOW
81% of people have a driving licence
Non-insurance brands struggle to make headway with motorists
Seven in 10 insurance holders shopped around
Nine in 10 used at least one price comparison site as a research tool
Insurer websites and friends/family prove popular for research
The short-term market is still dominated by traditional insurers
Insurance could be set for a key role in selling cars of the future
MOTOR INSURANCE OWNERSHIP
81% of people have a driving licence
Positive news for insurers, but driving behaviours are changing
Figure 27: Motor insurance ownership, December 2017
Figure 28: Motor insurance ownership, insurance holders only (rebase), December 2017
Price puts pressure on quality of younger drivers’ cover
Figure 29: Motor insurance ownership, December 2017
MOTOR INSURANCE PROVIDERS
Non-insurance brands struggle to make headway with motorists
Figure 30: Current car insurance provider, December 2017
RENEWAL AND ARRANGEMENT BEHAVIOUR
Seven in 10 insurance holders shopped around
Figure 31: Behaviour at last car insurance policy arrangement or renewal, December 2017
17-24s are most likely to stick with their provider at renewal
Figure 32: Behaviour at last car insurance policy arrangement or renewal, by age, December 2017
RESEARCHING WITH PRICE COMPARISON SITES
Nine in 10 used at least one price comparison site as a research tool
Figure 33: Price comparison sites used when researching current car insurance policy, December 2017
Younger people driven to pursue best possible price
Figure 34: Price comparison sites used when researching current car insurance policy, by gender and age, December 2017
Switchers more likely to use many different price comparison sites
Figure 35: Number of price comparison sites used when researching last car insurance policy, December 2017
Figure 36: Number of price comparison sites used when researching current car insurance policy, by behaviour at last renewal, December 2017
OTHER RESEARCH SOURCES
A third of policyholders used insurer websites for research
16% turn to their Influentials for guidance
Figure 37: Other sources of information when researching current car insurance policy, December 2017
Younger drivers keener to check in with a bank or building society
Figure 38: Other sources of information when researching current car insurance policy, by age, December 2017
SHORT-TERM INSURANCE PREFERENCES
The short-term market is still dominated by traditional insurers …
… but challengers are making headway
Figure 39: Most likely short-term car access and insurance arrangement methods, December 2017
Urban areas are driving the trend towards short-termism
Figure 40: Most likely short-term car access and insurance arrangement methods, by area type, December 2017
Traditional car rental is front-of-mind for the carless
Figure 41: Most likely short-term car access and insurance arrangement methods, by insurance ownership, December 2017
ATTITUDES TOWARDS CAR INSURANCE AND TECHNOLOGY
Insurance could be set for a key role in selling cars of the future
Figure 42: Attitudes towards car insurance and car technology, December 2017
More than half of Millennials show interest in chatbot management
Figure 43: Agreement with the statement ‘I would be interested in using an automated online service (eg chatbot) to manage my insurance needs’, by age, December 2017
Benefits of using more than one price comparison site are widely recognised
Figure 44: Agreement with the statement ‘You can only be sure you are getting the best car insurance deal by using more than one price comparison site’, by number of price comparison sites used when researching last car insurance policy, December 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 45: Best- and worst-case forecast for the value of gross written premiums for personal motor insurance (UK business only), 2017-22
Forecast methodology

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