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

Gross written premiums increased by 4% in 2010

Market factors

Appetite for insurance declines

Companies, brands and innovation

RBS continues to lead the way, but competitor brands gain ground

Low levels of trust and differentiation

The consumer

Consumers prioritise saving and debt repayment activity over insurance matters

Most policyholders shop around at renewal but few are prepared to cancel cover

Two fifths believe insurance is even more important when things are tough financially

Only 50% are confident that they have sufficient insurance cover in place

Policyholders seek good value for money

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

Motor insurance premiums are starting to level off

Property premiums threatened by weather-related costs

Detected fraudulent claims continue to rise

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

Consumers lack trust in the insurance sector…

… although attitudes tend to be based on perception and not experience

Consumer confidence remains weak…

… although most people are getting by

One in four are nervous about the next 12 months

SWOT Analysis

General Insurance Market Size

Key points

Premiums increase by 4% in 2010…

… but market still delivers a substantial underwriting loss

Motor insurance performance continues to deteriorate

Market Segmentation

Key points

Private motor insurance is largest general insurance sector

Premium income experience varies between sectors

Personal lines business accounts for 60% of GWP

Underwriter Share

Key points

RBS remains the leading UK general insurance underwriter

Underwriters gaining ground

Companies and Products

Aviva

AXA Insurance

Chartis Insurance

RBS Insurance

RSA Insurance

Brand Research

Brand map

Correspondence analysis

Brand attitudes

Brand personality

Brand experience

Brand index

Target group analysis

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

Adspend on major insurance products declines…

… but there is growth in smaller insurance markets

TV advertising becomes main channel for adspend

Most insurers reduce adspend over the last 12 months

A note on adspend

Channels to Market

Key points

Intermediary channel fights back

Relative stability in distribution of motor insurance

Intermediaries are growing share in personal property market

Aggregators play a major role in car and home insurance markets

Distribution channel has direct impact on customer loyalty

Consumer Financial Priorities

Key points

Bolstering savings is the main priority for consumers

Being well insured is a priority for one in five

Insurance tops list of financial priorities among 65+ age group

Some people have a greater inclination for insurance

Appetite for insurance is not entirely determined by financial health

Financial confidence has little bearing on desire to be fully insured

General Insurance Product Ownership

Key points

Almost 90% of internet users have some type of general insurance cover

Bundled products and policy add-ons boost ownership of some products

Over-35s and more affluent consumers are more likely to have cover

Almost two fifths have at least five types of general insurance cover

Financial health is generally reflected in insurance product ownership…

… but there are some exceptions

Shoparound and Cancellation Behaviour

Key points

Consumers are shopping around at renewal…

… 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

Aversion to risk increases with age

Likelihood to shop around for insurance increases with affluence

Attitudes Towards General Insurance

Key points

Almost two thirds believe that some insurances are a waste of money

Lack of consumer trust undermines insurance market

40% believe insurance is more important in a tough economic climate

Financial strugglers are more sceptical about the insurance industry

Demonstrating value and greater differentiation could help to build trust

Buying Behaviour and Approach to Cover

Key points

Only 50% are confident that they have sufficient insurance cover

An opportunity to provide consumers with real peace of mind

Time-pressed adults need a helping hand to get the right level of cover

Financially healthy are more confident about their insurance coverage

Purchasing Considerations

Key points

Consumers opt for good value rather than the cheapest price

Price-sensitivity is more evident in the car insurance market

Appreciation of getting value for money increases with age

Lack of trust is more likely to drive price-driven purchasing behaviour

Extensive policy coverage appeals across the financial health spectrum

Targeting Opportunities

Key points

Price sensitive

Taking the middle ground

Discerning quality seekers

It’s all about value

Appendix – Consumer Sentiment

Appendix – Brand Research

Appendix –Consumer Financial Priorities

Appendix – General Insurance Product Ownership

Appendix – Shoparound and Cancellation Behaviour

Appendix – Attitudes Towards General Insurance

Appendix –Buying Behaviour and Approach to Cover

Appendix – Purchasing Considerations

Appendix – Targeting Opportunities