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Consumers and General Insurance - UK - December 2017

“Consumers are still extremely price sensitive when it comes to selecting a general insurance provider, as many see no reason to automatically renew with their existing insurer/s. However, the rollout of more loyalty schemes may help brands to improve retention and gain a valuable and regular touchpoint with Millennials in particular.”

– Paul Davies, Associate Director, Financial Services

This report examines the following issues:

  • Flexible policies can help to address the insurance gap
  • The loyalty exchange
  • PFMs could manage consumers’ insurance needs

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Table of contents

  1. Overview

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

            • The market
              • Value of general insurance premiums rose by £600 million in 2016
                • Figure 1: General insurance revenue – retail products – UK risks, by gross written premiums, 2012-16
              • Motor insurance premiums account for 40% of incomings…
                • Figure 2: Share of premium income, by category, UK general insurance retail products, by gross written premiums, 2016
              • Companies and brands
                • Motor insurance accounts for over a third of total adspend
                  • Figure 3: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2012/13-2016/17*
                • The consumer
                  • Motor and home policies sit at the core of general insurance
                    • Figure 4: Insurance product ownership, September 2017
                  • Consumers show little loyalty towards general insurers
                    • Figure 5: Switching activity in general insurance markets, September 2017
                  • The importance of multichannel communication is clear
                    • Figure 6: Channel preferences in general insurance, September 2017
                  • Price guarantees most likely to improve retention
                    • Figure 7: Things that would encourage consumers to renew policies with their existing insurers, September 2017
                  • Consumers want more ways to customise policies
                    • Figure 8: Interest in new features, September 2017
                  • Insurers can utilise Open Banking to improve engagement
                    • Figure 9: Interest in sharing financial data with different providers, September 2017
                  • What we think
                  • Issues and Insights

                    • Flexible policies can help to address the insurance gap
                      • The facts
                        • The implications
                          • The loyalty exchange
                            • The facts
                              • The implications
                                • PFMs could manage consumers’ insurance needs
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Value of general insurance premiums rose by £600 million in 2016
                                        • Motor insurance premiums account for 40% of incomings
                                          • Improving transparency at renewal
                                            • Open Banking gives insurers the opportunity to get personal
                                            • Market Size

                                              • Value of general insurance premiums rose by £600 million in 2016
                                                  • Figure 10: General insurance revenue – retail products – UK risks, by gross written premiums, 2012-16
                                                • Drop in claims helps insurers to boost underwriting profits
                                                  • Figure 11: General insurance – retail products – UK outgo and underwriting result, 2012-16
                                              • Market Segmentation

                                                • Motor insurance premiums account for 40% of incomings…
                                                  • Figure 12: Share of premium income, by category, UK general insurance retail products, by gross written premiums, 2016
                                                • … but cost pressures and claim costs lead to motor underwriting losses
                                                  • Figure 13: Underwriting result – UK general insurance retail products, 2012-16
                                                • The calm after the storm
                                                  • Figure 14: Claims ratio – UK general insurance retail products, 2012-16
                                              • Market Environment

                                                • Solvency II forces insurers to boost reserves
                                                  • GDPR underpins the need for transparency
                                                    • Figure 15: Types of information that consumers would like insurers to share, May 2017
                                                  • Open Banking gives insurers the opportunity to get personal
                                                      • Figure 16: Types of information that consumers would be comfortable sharing with insurers, May 2017
                                                    • FCA calls for greater access to insurance…
                                                      • …and investigates insurers’ pricing practices
                                                        • IPT increases again
                                                          • Figure 17: Changes to the insurance premium tax rate, 1 October 1994-1 June 2017
                                                      • Companies and Brands – What You Need to Know

                                                        • Smart policies: the new-generation of add-ons
                                                          • Multiple policies under one umbrella
                                                            • Motor insurance accounts for over a third of total adspend
                                                            • Competitive Strategies

                                                              • Smart policies: the new-generation of add-ons
                                                                • Figure 18: Ownership/interest in owning smart devices, May 2017
                                                                • Figure 19: Willingness to share information from devices with insurers, May 2017
                                                              • Multiple policies under one umbrella
                                                                • Rewarding customer loyalty
                                                                  • Figure 20: Consumers’ perceptions of how well brands reward customer loyalty, August 2017
                                                              • Advertising and Marketing Activity

                                                                • Motor insurance accounts for over a third of total adspend
                                                                    • Figure 21: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2012/13-2016/17*
                                                                  • Confused.com spent more on ATL ads than any insurer in 2016/17
                                                                    • Figure 22: Top 20 brands for above-the-line, online display and direct mail advertising expenditure on general insurance, 2014/15-2016/17*
                                                                  • Sponsorships help to keep insurers in the public eye
                                                                    • TV remains insurers’ favoured ATL channel
                                                                      • Figure 23: Total above-the-line, online display and direct mail advertising expenditure on general insurance, by media type, 2016/17*
                                                                    • Nielsen Ad Intel coverage
                                                                    • The Consumer – What You Need to Know

                                                                      • Motor and home policies sit at the core of general insurance
                                                                        • Consumers show little loyalty towards general insurers
                                                                          • The importance of multichannel communication is clear
                                                                            • Price guarantees most likely to improve retention
                                                                              • Consumers want more ways to customise policies
                                                                                • Insurers can utilise Open Banking to improve engagement
                                                                                • Product Ownership

                                                                                  • Motor and home policies sit at the core of general insurance
                                                                                      • Figure 24: Insurance product ownership, September 2017
                                                                                    • Flexible policies can help to address the age and income gaps
                                                                                      • Figure 25: Insurance product ownership (any insurance), September 2017
                                                                                    • Most consumers have multiple policies
                                                                                      • Figure 26: Repertoire of insurance product ownership, September 2017
                                                                                  • Switching Activity

                                                                                    • Consumers show little loyalty towards general insurers
                                                                                      • Figure 27: Switching activity in general insurance markets, September 2017
                                                                                    • The loyalty exchange
                                                                                      • Price promises could improve retention
                                                                                      • Channel Preferences

                                                                                        • Online channels are favoured for basic interactions…
                                                                                          • … however less than half would go with an online-only provider
                                                                                              • Figure 28: Channel preferences in general insurance, September 2017
                                                                                            • Millennials demand more options
                                                                                            • Improving Customer Retention

                                                                                              • Price guarantees most likely to improve retention
                                                                                                • Figure 29: Things that would encourage consumers to renew policies with their existing insurers, September 2017
                                                                                              • Reward schemes could make younger consumers less price sensitive
                                                                                                • Figure 30: Things that would encourage consumers to renew policies with their existing insurers (ongoing rewards), September 2017
                                                                                            • Interest in New Features

                                                                                              • Consumers want more ways to customise policies
                                                                                                  • Figure 31: Interest in new features, September 2017
                                                                                                • PFMs could transform the way that Millennials access insurance
                                                                                                  • Figure 32: Interest in new features, by generation, September 2017
                                                                                                • Smart devices could give insurers a valuable new touchpoint
                                                                                                • Interest in Sharing Financial Data

                                                                                                  • Insurers can utilise Open Banking to improve engagement
                                                                                                    • Figure 33: Interest in sharing financial data with different providers, September 2017
                                                                                                  • Pro-active price comparison tools
                                                                                                  • Barriers to Data Sharing

                                                                                                    • Consumers concerned about insurers’ ability to handle data securely
                                                                                                        • Figure 34: Barriers to sharing financial data with insurance companies, September 2017
                                                                                                      • Convincing consumers of the value exchange
                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                          • Abbreviations
                                                                                                            • Consumer research methodology

                                                                                                            Consumers and General Insurance - UK - December 2017

                                                                                                            US $2,914.30 (Excl.Tax)