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Consumers and General Insurance - UK - December 2011

“The demand for insurance cover has held up well despite a difficult economic climate. There are even signs that the weak economy may have some positive effects for the market, as many consumers consider insurance as even more important when things are tough financially. However, as household budgets face increased pressure, the majority of policyholders will still opt to find the best possible deal at their renewal.”

– Deborah Osguthorpe, Senior Financial Services Analyst

Some questions answered in the report include:
  • 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?

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Table of contents

  1. Introduction

      • Market definitions
        • Note on consumer research
          • Abbreviations
          • Executive Summary

              • The market
                • Nine in ten have some type of general insurance product
                  • Figure 1: General insurance product ownership, August 2011
                • Gross written premiums increased by 4% in 2010
                  • Figure 2: NWPs, total outgoings and underwriting result for annual general insurance business, 2006-10
                • Market factors
                  • Appetite for insurance declines
                    • Figure 3: Agreement with the statement “it is important to be well insured for everything”, 2007-11
                  • Companies, brands and innovation
                    • RBS continues to lead the way, but competitor brands gain ground
                      • Low levels of trust and differentiation
                        • Figure 4: Attitudes towards and usage of general insurance brands, October 2011
                      • The consumer
                        • Consumers prioritise saving and debt repayment activity over insurance matters
                          • Figure 5: Consumer financial priorities, August 2011
                        • Most policyholders shop around at renewal but few are prepared to cancel cover
                          • Figure 6: Shoparound and cancellation behaviour, by product, August 2011
                        • Two fifths believe insurance is even more important when things are tough financially
                          • Figure 7: Attitudes towards general insurance, August 2011
                        • Only 50% are confident that they have sufficient insurance cover in place
                          • Figure 8: Buying behaviours and approach to cover, August 2011
                        • Policyholders seek good value for money
                          • Figure 9: Purchasing considerations among policyholders, August 2011
                        • 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
                                              • Figure 10: UK GDP growth – percentage change, latest quarter on previous quarter, Q2 2008-Q3 2011
                                            • Motor insurance premiums are starting to level off
                                              • Figure 11: AA British Insurance Premium Index market average trends, April 2008-October 2011
                                            • Property premiums threatened by weather-related costs
                                              • Detected fraudulent claims continue to rise
                                                • Figure 12: Detected general insurance fraud rates, by volume and value, 2004-10
                                              • 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
                                                            • Figure 13: Agreement with the statement “it is important to be well insured for everything”, 2007-11
                                                          • Consumers lack trust in the insurance sector…
                                                            • Figure 14: Consumer attitudes towards insurance providers, May 2011
                                                          • … although attitudes tend to be based on perception and not experience
                                                            • Figure 15: Consumer attitudes towards insurance providers, by insurance claimants, May 2011
                                                          • Consumer confidence remains weak…
                                                            • Figure 16: Monthly, 3-monthly and 12-monthly UK consumer confidence indices, January 1997 to October 2011
                                                          • … although most people are getting by
                                                            • Figure 17: Current financial situation, April 2009-August 2011
                                                          • One in four are nervous about the next 12 months
                                                            • Figure 18: Financial confidence for the next 12 months, April 2009-August 2011
                                                        • SWOT Analysis

                                                            • Figure 19: SWOT analysis for personal lines general insurance business, 2011
                                                        • General Insurance Market Size

                                                          • Key points
                                                            • Premiums increase by 4% in 2010…
                                                              • Figure 20: Summary of annual general insurance business – UK risks, by sector NWPs, 2006-10
                                                            • … but market still delivers a substantial underwriting loss
                                                              • Figure 21: UK outgo and underwriting result for annual general insurance business, 2006-10
                                                            • Motor insurance performance continues to deteriorate
                                                              • Figure 22: Underwriting ratio – UK annual general insurance business, by sector, 2006-10
                                                              • Figure 23: Claims ratio – UK annual general insurance business, by sector, 2006-10
                                                          • Market Segmentation

                                                            • Key points
                                                              • Private motor insurance is largest general insurance sector
                                                                • Figure 24: Share of premium income (UK annual business), by sector, 2010
                                                              • Premium income experience varies between sectors
                                                                • Figure 25: Premium analysis of UK general insurance business – 2005-06 to 2009-10
                                                              • Personal lines business accounts for 60% of GWP
                                                                • Figure 26: Split of general insurance GWP, by personal, commercial and MAT sectors, 2010
                                                            • Underwriter Share

                                                              • Key points
                                                                • RBS remains the leading UK general insurance underwriter
                                                                  • Figure 27: Largest general insurers/reinsurers – total market (direct and facultative business), based on GWP, 2008-10
                                                                • Underwriters gaining ground
                                                                • Companies and Products

                                                                  • Aviva
                                                                      • Figure 28: Key financial data for Aviva UK General Insurance business, H1 2010-H1 2011
                                                                      • Figure 29: Key financial data for Aviva UK General Insurance business, 2009-10
                                                                    • AXA Insurance
                                                                      • Chartis Insurance
                                                                          • Figure 30: Key financial data for Chartis UK, 2009-10
                                                                        • RBS Insurance
                                                                            • Figure 31: Key financial data for RBS Insurance, H1 2010-H1 2011
                                                                            • Figure 32: Key financial data for RBS Insurance, 2009-10
                                                                          • RSA Insurance
                                                                              • Figure 33: Key financial data for RSA UK Insurance, H1 2010-H1 2011
                                                                              • Figure 34: Key financial data for RSA UK Insurance, 2009-10
                                                                          • Brand Research

                                                                            • Brand map
                                                                                • Figure 35: Attitudes towards and usage of general insurance brands, October 2011
                                                                              • Correspondence analysis
                                                                                • Brand attitudes
                                                                                  • Figure 36: Attitudes, by general insurance brand, October 2011
                                                                                • Brand personality
                                                                                  • Figure 37: General insurance brand personality – macro image, October 2011
                                                                                  • Figure 38: General insurance brand personality – micro image, October 2011
                                                                                • Brand experience
                                                                                  • Figure 39: General insurance brand usage, October 2011
                                                                                  • Figure 40: Satisfaction with general insurance brands, October 2011
                                                                                  • Figure 41: Consideration of general insurance brands, October 2011
                                                                                  • Figure 42: Consumer perceptions of current general insurance brand performance, October 2011
                                                                                  • Figure 43: General insurance brand recommendation – Net Promoter Score, October 2011
                                                                                • Brand index
                                                                                  • Figure 44: General insurance brand index, October 2011
                                                                                  • Figure 45: General insurance brand index vs. recommendation, October 2011
                                                                                • Target group analysis
                                                                                  • Figure 46: Target groups, October 2011
                                                                                  • Figure 47: General insurance brand usage, by target groups, October 2011
                                                                                • 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
                                                                                              • Figure 48: Topline adspend for general insurance products, 2008/09-2010/11
                                                                                            • Adspend on major insurance products declines…
                                                                                              • Figure 49: Adspend, by general insurance category, 2008/09-2010/11
                                                                                            • … but there is growth in smaller insurance markets
                                                                                              • TV advertising becomes main channel for adspend
                                                                                                • Figure 50: General insurance adspend, by media type, 2008/09-2010/11
                                                                                              • Most insurers reduce adspend over the last 12 months
                                                                                                • Figure 51: Top 20 general insurance advertisers, 2008/09-2010/11
                                                                                              • A note on adspend
                                                                                              • Channels to Market

                                                                                                • Key points
                                                                                                  • Intermediary channel fights back
                                                                                                    • Figure 52: Proportional distribution for personal lines general insurance, by value, 2001-10
                                                                                                  • Relative stability in distribution of motor insurance
                                                                                                    • Figure 53: Proportional distribution for personal lines motor insurance, by value, 2001-10
                                                                                                  • Intermediaries are growing share in personal property market
                                                                                                    • Figure 54: Proportional distribution for personal lines property insurance, by value, 2001-10
                                                                                                  • Aggregators play a major role in car and home insurance markets
                                                                                                    • Figure 55: Aggregator usage, by insurance product, April 2011
                                                                                                  • Distribution channel has direct impact on customer loyalty
                                                                                                    • Figure 56: Car insurance loyalty, by preferred channel for arranging cover, October 2011
                                                                                                • Consumer Financial Priorities

                                                                                                  • Key points
                                                                                                    • Bolstering savings is the main priority for consumers
                                                                                                      • Figure 57: Consumer financial priorities, August 2011
                                                                                                    • Being well insured is a priority for one in five
                                                                                                      • Insurance tops list of financial priorities among 65+ age group
                                                                                                        • Figure 58: Consumer financial priorities, by age group, August 2011
                                                                                                      • Some people have a greater inclination for insurance
                                                                                                        • Figure 59: Consumer financial priorities, by consumer financial priorities, August 2011
                                                                                                      • Appetite for insurance is not entirely determined by financial health
                                                                                                        • Figure 60: Consumer financial priorities, by current financial situation, August 2011
                                                                                                      • Financial confidence has little bearing on desire to be fully insured
                                                                                                        • Figure 61: Consumer financial priorities, by financial confidence for the next 12 months, August 2011
                                                                                                    • General Insurance Product Ownership

                                                                                                      • Key points
                                                                                                        • Almost 90% of internet users have some type of general insurance cover
                                                                                                          • Figure 62: General insurance product ownership, August 2011
                                                                                                        • Bundled products and policy add-ons boost ownership of some products
                                                                                                          • Over-35s and more affluent consumers are more likely to have cover
                                                                                                            • Figure 63: Demographic overview of general insurance product ownership, by product, August 2011
                                                                                                          • Almost two fifths have at least five types of general insurance cover
                                                                                                            • Figure 64: Repertoire of general insurance product ownership, August 2011
                                                                                                            • Figure 65: General insurance product ownership, by repertoire of products owned, August 2011
                                                                                                          • Financial health is generally reflected in insurance product ownership…
                                                                                                            • Figure 66: General insurance product ownership, by current financial situation, August 2011
                                                                                                          • … but there are some exceptions
                                                                                                          • Shoparound and Cancellation Behaviour

                                                                                                            • Key points
                                                                                                              • Consumers are shopping around at renewal…
                                                                                                                • Figure 67: Shoparound and cancellation behaviour, by product, August 2011
                                                                                                              • … 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
                                                                                                                    • Figure 68: Cancellation behaviour, by age group, August 2011
                                                                                                                  • Aversion to risk increases with age
                                                                                                                    • Figure 69: Responses to statements about insurance and risk, by age group, 2011
                                                                                                                  • Likelihood to shop around for insurance increases with affluence
                                                                                                                    • Figure 70: Responses to the statement ‘I shopped around when I last renewed this type of cover’, by gross annual household income, August 2011
                                                                                                                • Attitudes Towards General Insurance

                                                                                                                  • Key points
                                                                                                                    • Almost two thirds believe that some insurances are a waste of money
                                                                                                                      • Figure 71: Attitudes towards general insurance, August 2011
                                                                                                                    • Lack of consumer trust undermines insurance market
                                                                                                                      • 40% believe insurance is more important in a tough economic climate
                                                                                                                        • Figure 72: Responses to statement ‘Insurance is even more important when things are tough financially’, by gender, age group and annual household income, August 2011
                                                                                                                      • Financial strugglers are more sceptical about the insurance industry
                                                                                                                        • Figure 73: Attitudes towards general insurance, by current financial situation, August 2011
                                                                                                                      • Demonstrating value and greater differentiation could help to build trust
                                                                                                                        • Figure 74: Cross-analysis of attitudes towards general insurance, August 2011
                                                                                                                    • Buying Behaviour and Approach to Cover

                                                                                                                      • Key points
                                                                                                                        • Only 50% are confident that they have sufficient insurance cover
                                                                                                                          • Figure 75: Buying behaviours and approach to cover, August 2011
                                                                                                                          • Figure 76: Cross-analysis of buying behaviours and approach to cover, August 2011
                                                                                                                        • An opportunity to provide consumers with real peace of mind
                                                                                                                          • Time-pressed adults need a helping hand to get the right level of cover
                                                                                                                            • Figure 77: Buying behaviours and approach to cover, by gender, age group and working status, August 2011
                                                                                                                          • Financially healthy are more confident about their insurance coverage
                                                                                                                            • Figure 78: Buying behaviours and approach to cover, by current financial situation, August 2011
                                                                                                                        • Purchasing Considerations

                                                                                                                          • Key points
                                                                                                                            • Consumers opt for good value rather than the cheapest price
                                                                                                                              • Figure 79: Purchasing considerations among policyholders, August 2011
                                                                                                                            • Price-sensitivity is more evident in the car insurance market
                                                                                                                              • Appreciation of getting value for money increases with age
                                                                                                                                • Figure 80: Good value for money vs. cheapest available price (total of responses across all categories), by age group, August 2011
                                                                                                                              • Lack of trust is more likely to drive price-driven purchasing behaviour
                                                                                                                                • Figure 81: Purchasing considerations, by attitudes towards general insurance, August 2011
                                                                                                                              • Extensive policy coverage appeals across the financial health spectrum
                                                                                                                                • Figure 82: Purchasing considerations, by current financial situation, August 2011
                                                                                                                            • Targeting Opportunities

                                                                                                                              • Key points
                                                                                                                                  • Figure 83: Target groups based on attitudes towards buying general insurance products, August 2011
                                                                                                                                • Price sensitive
                                                                                                                                  • Taking the middle ground
                                                                                                                                    • Discerning quality seekers
                                                                                                                                      • It’s all about value
                                                                                                                                          • Figure 84: Purchasing considerations, by target groups, August 2011
                                                                                                                                      • Appendix – Consumer Sentiment

                                                                                                                                          • Figure 85: Current financial situation, by demographics, August 2011
                                                                                                                                          • Figure 86: Financial confidence for the next 12 months, by demographics, August 2011
                                                                                                                                      • Appendix – Brand Research

                                                                                                                                          • Figure 87: Brand usage, October 2011
                                                                                                                                          • Figure 88: Brand commitment, October 2011
                                                                                                                                          • Figure 89: Brand momentum, October 2011
                                                                                                                                          • Figure 90: Brand diversity, October 2011
                                                                                                                                          • Figure 91: Brand satisfaction, October 2011
                                                                                                                                          • Figure 92: Brand recommendation, October 2011
                                                                                                                                          • Figure 93: Brand attitude, October 2011
                                                                                                                                          • Figure 94: Brand image – macro image, October 2011
                                                                                                                                          • Figure 95: Brand image – micro image, October 2011
                                                                                                                                          • Figure 96: Profile of target groups, by demographics, October 2011
                                                                                                                                          • Figure 97: Psychographic segmentation by target group, October 2011
                                                                                                                                          • Figure 98: Brand usage by target groups, October 2011
                                                                                                                                          • Figure 99: Brand index, October 2011
                                                                                                                                      • Appendix –Consumer Financial Priorities

                                                                                                                                          • Figure 100: Consumer financial priorities, by demographics, August 2011
                                                                                                                                          • Figure 101: Consumer financial priorities (continued), by demographics, August 2011
                                                                                                                                      • Appendix – General Insurance Product Ownership

                                                                                                                                          • Figure 102: Most popular general insurance product ownership, by demographics, August 2011
                                                                                                                                          • Figure 103: Next most popular general insurance product ownership, by demographics, August 2011
                                                                                                                                          • Figure 104: Other general insurance product ownership, by demographics, August 2011
                                                                                                                                          • Figure 105: General insurance product ownership repertoire, by demographics, August 2011
                                                                                                                                      • Appendix – Shoparound and Cancellation Behaviour

                                                                                                                                          • Figure 106: Renewal behaviour and attitudes, by demographics, August 2011
                                                                                                                                      • Appendix – Attitudes Towards General Insurance

                                                                                                                                          • Figure 107: Attitudes towards general insurance, by demographics, August 2011
                                                                                                                                      • Appendix –Buying Behaviour and Approach to Cover

                                                                                                                                          • Figure 108: Buying behaviours and approach to cover, by demographics, August 2011
                                                                                                                                          • Figure 109: Buying behaviours and approach to cover (continued), by demographics, August 2011
                                                                                                                                      • Appendix – Purchasing Considerations

                                                                                                                                          • Figure 110: Purchasing considerations (total across all featured categories), by demographics, August 2011
                                                                                                                                          • Figure 111: Purchasing considerations continued (total across all categories), by demographics, August 2011
                                                                                                                                      • Appendix – Targeting Opportunities

                                                                                                                                          • Figure 112: Target groups, by demographics, August 2011
                                                                                                                                          • Figure 113: General insurance product ownership, by target groups, August 2011
                                                                                                                                          • Figure 114: Current financial situation, by target groups August 2011
                                                                                                                                          • Figure 115: Financial confidence for the next 12 months, by target groups, August 2011
                                                                                                                                          • Figure 116: Consumer financial priorities, by target groups, August 2011
                                                                                                                                          • Figure 117: Attitudes towards general insurance, by target groups, August 2011
                                                                                                                                          • Figure 118: Buying behaviours and approach to cover, by target groups, August 2011

                                                                                                                                      Companies Covered

                                                                                                                                      • Admiral Insurance
                                                                                                                                      • Ageas
                                                                                                                                      • AIG Group (American International Group Inc)
                                                                                                                                      • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                      • Allianz Group
                                                                                                                                      • Asda Group Ltd
                                                                                                                                      • Association of British Insurers
                                                                                                                                      • Automobile Association (AA)
                                                                                                                                      • Aviva Plc
                                                                                                                                      • AXA PPP healthcare
                                                                                                                                      • AXA Wealth
                                                                                                                                      • Bank of England
                                                                                                                                      • BGL Group
                                                                                                                                      • Bluefin
                                                                                                                                      • British Gas
                                                                                                                                      • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                      • BUPA
                                                                                                                                      • Carlyle Group (The)
                                                                                                                                      • Centrica Plc
                                                                                                                                      • Churchill Insurance
                                                                                                                                      • Co-operative Group
                                                                                                                                      • Confused.com
                                                                                                                                      • Devitt Insurance Services
                                                                                                                                      • Direct Line Group Limited
                                                                                                                                      • Esure
                                                                                                                                      • Facebook, Inc.
                                                                                                                                      • Financial Services Authority (The)
                                                                                                                                      • Fortis Insurance Limited
                                                                                                                                      • Freeview
                                                                                                                                      • Gfk NOP
                                                                                                                                      • GoCompare
                                                                                                                                      • Great Lakes Reinsurance
                                                                                                                                      • Green Flag Motoring Assistance
                                                                                                                                      • Grupo Santander Central Hispano S.A.
                                                                                                                                      • Homeserve Plc
                                                                                                                                      • HSBC Investments (UK) Limited
                                                                                                                                      • Insurance Fraud Bureau
                                                                                                                                      • J. Sainsbury
                                                                                                                                      • Kantar Media
                                                                                                                                      • Lidl (UK)
                                                                                                                                      • Lloyd's
                                                                                                                                      • Lloyds Banking Group
                                                                                                                                      • Lloyds TSB Insurance
                                                                                                                                      • LV=
                                                                                                                                      • Marks & Spencer
                                                                                                                                      • mmO2 plc
                                                                                                                                      • MoneySupermarket.com Limited
                                                                                                                                      • MORE TH>N
                                                                                                                                      • MTV Europe (UK)
                                                                                                                                      • Munich Re Group
                                                                                                                                      • NatWest
                                                                                                                                      • Netto Foodstores Ltd
                                                                                                                                      • NFU Mutual
                                                                                                                                      • Norwich City Football Club
                                                                                                                                      • Norwich Union
                                                                                                                                      • Npower Limited
                                                                                                                                      • Orange plc (UK)
                                                                                                                                      • Privilege Insurance
                                                                                                                                      • Prudential plc
                                                                                                                                      • QBE Insurance (Europe)
                                                                                                                                      • Retirement Insurance Advisory Service (RIAS)
                                                                                                                                      • Royal Automobile Club
                                                                                                                                      • Royal Bank of Scotland Group plc
                                                                                                                                      • RSA
                                                                                                                                      • Saga Services (finance)
                                                                                                                                      • Swiftcover
                                                                                                                                      • T-Mobile (UK) Ltd
                                                                                                                                      • Tesco Plc
                                                                                                                                      • The National Insurance and Guarantee Corporation Limited
                                                                                                                                      • Twitter, Inc.
                                                                                                                                      • UKI Partnerships
                                                                                                                                      • Virgin Media Ltd
                                                                                                                                      • Virgin Mobile
                                                                                                                                      • Vodafone Group Plc (UK)
                                                                                                                                      • Waitrose
                                                                                                                                      • Wm Morrison Supermarkets
                                                                                                                                      • Yellow Pages Association
                                                                                                                                      • Zurich Financial Services

                                                                                                                                      Consumers and General Insurance - UK - December 2011

                                                                                                                                      £2,195.00 (Excl.Tax)