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Consumers and General Insurance - UK - December 2016

“Sales of general insurance are well set to grow by volume because of the captive customer bases in car and home insurance. However, intense price competition could hold back growth in premiums. Looking ahead to 2017, the pending rise in IPT will further squeeze the profitability of policies. Despite these challenges, there are great opportunities for insurers, particularly in the improved use of data to improve both underwriting and the customer experience.”

– Rich Shepherd, Senior Financial Services Analyst

This report is looking at the following areas:

  • The connected home offers new insurance opportunities
  • Aggregators make cross-selling policies increasingly difficult
  • Understanding of policies must be improved

Consumers hold insurance in a high regard, so the industry is expected to grow in the coming years. However, developments throughout 2016 have created challenges and opportunities that providers will have to face in 2017 and beyond. The FCA’s introduction of new transparency and engagement rules will be introduced in April 2017, while the third increase to premium tax will take effect from June 2017. Further ahead, Brexit has myriad potential consequences for the industry, while developments in smart technology are opening up new avenues for innovation in insurance.

This Report gives a high-level overview of the UK’s general insurance markets. This includes examining the size of the industry and its constituent categories, and analysis of the market share of the leading insurance underwriters. The Report also looks at company strategies, innovations, and advertising activity. Finally, Mintel’s exclusive consumer research examines levels of product ownership, how people research and buy general insurance, including whether those who have more than one policy shop at the same insurer or keep them separate, and consumer attitudes towards aspects of insurance such as data sharing and transparency.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
        • Definitions
        • Executive Summary

            • The market
              • Market growth in 2015 and 2016 fuelled by rising motor premiums
                • Figure 1: General insurance revenue – Retail products – UK risks, by GWP, 2011-15
              • Motor insurance accounts for two fifths of general insurance
                • Figure 2: Underwriting result – UK general insurance retail products, 2015
              • Insurers face tax rises and increased transparency rules
                • Companies and brands
                  • Aviva is Britain’s biggest insurer
                    • Figure 3: Largest personal lines underwriters, by GWP, 2015
                  • Squeeze on advertising budgets continues
                    • Figure 4: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2011/12-2015/16*
                  • The consumer
                    • 84% have some type of general insurance policy
                      • Figure 5: Product ownership, September 2016
                    • Price comparison sites are the top choice for researching general insurance…
                      • Figure 6: Sources of information used prior to last purchase, by type of insurance product, September 2016
                    • …and online channels dominate purchase behaviour
                      • Figure 7: Method of purchasing most recent policy, by type of insurance product, September 2016
                    • Most multiple policy owners use more than one provider
                      • Figure 8: Approach towards owning multiple insurance policies, September 2016
                    • Half could be encouraged to buy multiple policies for a discount
                      • Figure 9: Attitudes towards buying multiple insurance products from the same insurer, September 2016
                    • Two fifths are worried about sharing personal data
                      • Figure 10: Willingness to provide insurers with additional personal information, September 2016
                    • Poor understanding makes it hard for people to evaluate policies
                      • Figure 11: Understanding of last quote and insurer transparency, September 2016
                    • What we think
                    • Issues and Insights

                      • The connected home offers new insurance opportunities
                        • The facts
                          • The implications
                            • Aggregators make cross-selling policies increasingly difficult
                              • The facts
                                • The implications
                                  • Understanding of policies must be improved
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Market growth in 2015 and 2016 fuelled by rising motor premiums
                                          • Motor insurance accounts for two fifths of general insurance
                                            • Insurers face tax rises and increased transparency rules
                                            • Market Size

                                              • 2016 expected to see similar growth to 2015
                                                • Figure 12: General insurance revenue – Retail products – UK risks, by GWP, 2011-15
                                              • The industry remains in profit, but there are pressures on underwriting results
                                                • Figure 13: General insurance – Retail products – UK outgo and underwriting result, 2011-15
                                            • Market Segmentation

                                              • Motor insurance retains dominance, while property slips slightly
                                                  • Figure 14: Share of premium income, by category, UK general insurance retail products, by GWP, 2015
                                                • Motor insurance saw increased losses, while property profits fell
                                                  • Figure 15: Underwriting result – UK general insurance retail products, 2011-15
                                                • Claims ratios stayed broadly stable
                                                  • Figure 16: Claims ratio – UK general insurance retail products, 2011-15
                                              • Regulatory and Legislative Changes

                                                • FCA finalises rules for transparency in general insurance
                                                  • Increased tax on premiums to cause rise in the cost of insurance
                                                    • Flood Re finally launched in 2016
                                                      • Driverless cars: technology changing the insurance landscape
                                                        • Open banking can help bring insurance and banking together
                                                          • Potential implications of Brexit on the general insurance industry
                                                          • Companies and Brands – What You Need to Know

                                                            • Aviva is Britain’s biggest insurer
                                                              • Mobile and increased data use are driving innovation
                                                                • Squeeze on advertising budgets continues
                                                                • Underwriter Share

                                                                  • Aviva is the largest general insurer in the UK
                                                                    • Figure 17: Largest personal lines underwriters, by GWP, 2013-15
                                                                • Competitive Strategies

                                                                  • Use of data is moving beyond telematics…
                                                                    • …but social media has become problematic
                                                                      • P2P insurance launches across the industry
                                                                        • Limited day-to-day interaction holds back mobile adoption
                                                                          • On-demand insurance
                                                                          • Advertising and Marketing Activity

                                                                            • Squeeze on traditional advertising budgets continues
                                                                              • Figure 18: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2011/12-2015/16*
                                                                            • TV accounts for almost half of adspend
                                                                              • Figure 19: Total above-the-line, online display and direct mail advertising expenditure on general insurance, by media type, 2013/14-2015/16*
                                                                            • Direct Line is the biggest advertiser in general insurance
                                                                              • Figure 20: Top 20 brands for above-the-line, online display and direct mail advertising expenditure on general insurance, 2013/14-2015/16*
                                                                            • Nielsen Ad Intel coverage
                                                                            • The Consumer – What You Need to Know

                                                                              • 84% have some type of general insurance policy
                                                                                • Price comparison sites are the top choice for researching general insurance…
                                                                                  • …and online channels dominate purchase behaviour
                                                                                    • Most insurance customers use a different provider for every policy
                                                                                      • Half could be encouraged to buy multiple policies for a discount…
                                                                                        • Two fifths are unwilling to provide personal data to insurers
                                                                                          • Poor understanding makes it hard for people to evaluate policies
                                                                                          • Product Ownership

                                                                                            • 84% have some type of general insurance policy
                                                                                                • Figure 21: Product ownership, September 2016
                                                                                              • Pet policies are key to avoid unwelcome costs
                                                                                                • Insurance ownership is linked to age…
                                                                                                  • …and income
                                                                                                    • Most consumers have three or more insurance products
                                                                                                      • Figure 22: Repertoire of insurance product ownership, September 2016
                                                                                                  • Product Research

                                                                                                    • Price comparison sites are the top choice for researching general insurance
                                                                                                        • Figure 23: Sources of information used prior to most recent purchase, by type of insurance product, September 2016
                                                                                                      • Packaged current accounts are a key channel for travel insurers…
                                                                                                        • …while health insurance requires more personalised research
                                                                                                        • Purchasing Methods

                                                                                                          • Online channels dominate purchase behaviour
                                                                                                              • Figure 24: Method of purchasing most recent policy, by type of insurance product, September 2016
                                                                                                            • The general insurance customer journey
                                                                                                                • Figure 25: Method of purchasing most recent home insurance policy, by sources of information used, September 2016
                                                                                                            • Multiple Policy Ownership

                                                                                                              • Most multiple policy owners use more than one provider
                                                                                                                  • Figure 26: Approach towards owning multiple insurance policies, September 2016
                                                                                                                • A significant minority display strong favour for individual insurers
                                                                                                                  • Figure 27: Approach towards owning multiple insurance policies, by number of general insurance policies owned, September 2016
                                                                                                                • PCWs suppress interest in multiple policy ownership
                                                                                                                    • Figure 28: Approach towards owning multiple insurance policies, by sources of information used prior to most recent purchase (car insurance policyholders), by September 2016
                                                                                                                    • Figure 29: Approach towards owning multiple insurance policies, by sources of information used prior to most recent purchase (home insurance policyholders), by September 2016
                                                                                                                • Attitudes towards Multiple Policy Ownership

                                                                                                                  • Half could be encouraged to buy multiple policies for a discount…
                                                                                                                      • Figure 30: Attitudes towards buying multiple insurance products from the same insurer, September 2016
                                                                                                                    • …but other incentives have limited appeal
                                                                                                                      • Those who use more than one insurer aren’t averse to multiple policy ownership
                                                                                                                        • Figure 31: Attitudes towards buying multiple insurance products from the same insurer, by approach towards owning multiple insurance policies, September 2016
                                                                                                                      • Niche insurance owners most likely to find central hubs appealing
                                                                                                                        • Figure 32: Agreement with the statement “Being able to manage all my policies in the same place (eg in a mobile app or online portal) would encourage me to buy all my policies from the same insurer”, by type of insurance product owned, September 2016
                                                                                                                      • Specialists are still valued in health and legal cover
                                                                                                                        • Figure 33: Agreement with the statement “I'd be concerned that having all my insurance policies with one insurer would not provide the same standard of cover across all products”, by type of insurance product owned, September 2016
                                                                                                                    • Attitudes towards Data Sharing

                                                                                                                      • Two fifths are unwilling to provide personal data to insurers
                                                                                                                          • Figure 34: Willingness to provide insurers with additional personal information, September 2016
                                                                                                                        • The connected home: an insurance opportunity, but consumers are yet to embrace the technology
                                                                                                                          • Younger consumers are more open to sharing data
                                                                                                                              • Figure 35: Willingness to provide insurers with additional personal information, by age, September 2016
                                                                                                                          • Transparency and Understanding of Policies

                                                                                                                            • Less than half are confident that their insurer provided a competitive quote
                                                                                                                                • Figure 36: Understanding of last quote and insurer transparency, September 2016
                                                                                                                              • Understanding of policies is poor across the board
                                                                                                                                • Figure 37: Agreement with the statement “I fully understood the terms of my renewal/new policy, by age, September 2016
                                                                                                                              • Greater transparency at renewal is a welcome change
                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                  • Abbreviations
                                                                                                                                    • Consumer research methodology

                                                                                                                                    Companies Covered

                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                    Consumers and General Insurance - UK - December 2016

                                                                                                                                    £2,195.00 (Excl.Tax)