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Insurance - Ireland - July 2012

Despite the extraordinary financial pressures facing Irish consumers, there is no real appetite to cancel or downgrade insurance. In part, this is due to the strong belief on the part of consumers that it is important to be well insured for everything. Some consumers (29% in RoI, 20% in NI) also believe that insurance is even more important when things are tough financially. Although some consumers have been forced by personal financial circumstances to go without insurance, there is a strong reluctance to make this decision. All of this indicates the resilient appeal of insurance. However, premiums for almost all major forms of insurance have increased quite significantly in recent years – and are continuing to increase, albeit more moderately – which may leave more consumers with little option but to cancel or downgrade cover.

The industry faces a number of serious challenges. Weak consumer confidence, declining real incomes and ongoing difficulties within the broader Irish economy are putting pressure on consumers to reduce monthly expenditure wherever possible. While the industry is resilient, it is not immune to these challenges.

Some questions answered in this report include:

  • How has the economic downturn impacted upon consumers’ appetite for and attitudes towards insurance? – Are consumers still as willing to opt for premium insurance options?
  • To what degree are insurance products affordable and accessible for consumers? – Is value for money driving consumer choice of insurance products?
  • What are the main channels to market within the insurance industry and where do consumers go to purchase insurance products? – What channels do consumers use to buy insurance, and how has greater internet access changed this?
  • What are the ownership levels among consumers across the various insurance products? – What are the most common types of insurance products?
  • What degree of loyalty exists among consumers towards insurers? – What are the reasons for the lack of trust that some consumers have towards insurers and the insurance industry as a whole?
  • How do consumers approach the purchasing of an insurance product? – What are their attitudes towards the value and importance of insurance?

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Table of contents

  1. Issues in Market

      • Key themes
        • Definitions
          • Health insurance/private medical insurance
            • Home/property insurance
              • Life insurance/life assurance
                • Motor insurance
                  • Travel insurance
                    • Other terms
                      • Data sources
                        • Abbreviations
                        • Insights and Opportunities

                          • The ‘recession factor’ may be more important than price
                            • Consumers prefer personal touch when buying insurance
                              • Giving reassurance and certainty to uncertain consumers
                              • Market in Brief

                                • Non-life insurance market worth around €4 bn (£3.45 bn) in 2011
                                  • Economic recovery likely to be slow and uncertain
                                    • Ageing population presents challenges and opportunities
                                      • Decline in vehicle registrations hitting motor insurance
                                        • Crime down in NI generally, while certain crimes up in RoI
                                          • Decline in overseas travel by Irish consumers
                                            • Premiums up across all insurance products
                                              • Consumers prefer to purchase insurance by phone or in person
                                                • Majority of consumers own some type of insurance
                                                  • Relatively high level of loyalty among consumers
                                                    • Evidence of lack of trust among consumers towards insurers
                                                      • Consumers’ purchasing behaviour suggests lack of engagement
                                                        • High level of scepticism about certain insurance types
                                                        • Fast Forward Trends

                                                            • Trend 1: Decline of Deference
                                                              • What’s it about?
                                                                • What we’ve seen
                                                                  • What next?
                                                                    • Trend 2: Prepare for the worst
                                                                      • What’s it about?
                                                                        • What we’ve seen
                                                                          • What next?
                                                                          • Internal Market Environment

                                                                            • Key points
                                                                              • Consumers keeping closer eye on spending
                                                                                • Figure 1: Agreement with statement, ‘I spend money more carefully than I used to,’ NI and RoI, 2007-11
                                                                                • Figure 2: Agreement with selected statements relating to personal finance management, NI and RoI, 2011
                                                                              • Fraud costing innocent policyholders dearly
                                                                                • Travel premiums up 25% in three years, while value of cover down
                                                                                  • Over-65s being hit hardest by increases in UK (including NI)
                                                                                    • Motor premiums increasing (but more moderately than previous years)
                                                                                      • Figure 3: Average motor insurance (comprehensive) premiums, UK (including NI), 2008-12
                                                                                    • Premiums down for young men in UK (incl. NI), but still considered high
                                                                                      • Figure 4: average motor insurance premiums, by age and gender, UK, April 2012
                                                                                    • NI consumers getting raw deal on car insurance
                                                                                      • ... with NI motorists aged 17-22 suffering most
                                                                                        • Motor premiums up 3% during year to February 2012 in RoI
                                                                                          • RoI premiums up 5% for women, only moderately for men
                                                                                            • RoI motorists paying 50% less for motor insurance than NI counterparts
                                                                                              • RoI insurers quietly increasing ‘excess’ on motor policies
                                                                                                • EU Gender Directive to push premiums up for women, down for men
                                                                                                  • ... and middle-aged motorists next in line for increases
                                                                                                    • Home premiums increasing, but still giving value for money
                                                                                                      • RoI home insurance premiums up 3% in 2011
                                                                                                          • Figure 5: Market average home premiums (buildings and contents combined), RoI, Q1 2011-Q1 2012
                                                                                                        • NI home premiums up 7.6% during 12 months to March 2012
                                                                                                          • Figure 6: average home insurance premiums, UK (including NI), April 2011 and April 2012
                                                                                                          • Figure 7: Buildings and contents, premiums trends, UK (including NI) 2008-12
                                                                                                        • Increases in health premiums threaten affordability
                                                                                                          • RoI health insurance premiums up 50% in 18 months
                                                                                                            • Only a quarter have switched health insurer – despite premium hikes
                                                                                                              • Figure 8: Incidence of switching health insurance provider, RoI, 2002-11
                                                                                                            • Health premiums increasing 10-15% per year in UK (including NI)
                                                                                                              • Insurers getting tougher on ‘non-disclosure’
                                                                                                                • Claims that insurers hitting consumers with hidden charges
                                                                                                                  • Widespread mis-selling of PPI emerges in RoI
                                                                                                                  • Broader Market Environment

                                                                                                                    • Key points
                                                                                                                      • Tentative economic recovery doing little for consumers
                                                                                                                        • Figure 9: Economic outlook, NI and RoI, 2010-13
                                                                                                                      • Unemployment to remain high for foreseeable future
                                                                                                                        • Figure 10: ILO unemployment rate (% of labour force), actual and projected, NI and RoI, 2008-15
                                                                                                                      • Ageing population presents challenges and opportunities
                                                                                                                        • Figure 11: Population, by age, projected, RoI, 2011 and 2021
                                                                                                                        • Figure 12: Population, by age, projected, NI, 2011 and 2021
                                                                                                                      • Challenges for insurers
                                                                                                                        • Opportunities for insurers
                                                                                                                          • Figure 13: Agreement with the statement, ‘It is important to be well insured for everything’, by age, NI and RoI, 2011
                                                                                                                          • Figure 14: Consumers who travelled by air in the last 12 months for holiday/personal reasons, by age, NI and RoI, 2011
                                                                                                                        • Decline in vehicle registrations hitting motor insurance
                                                                                                                          • Figure 15: Number of vehicles registered for the first time, RoI and NI, 2006-11*
                                                                                                                        • Crime down in NI, while vehicle theft and criminal damage up in RoI
                                                                                                                          • Figure 16: Selected recorded crime incidents, by offense group, NI and RoI, 2008-11*
                                                                                                                        • Steep decline in number of consumers travelling overseas
                                                                                                                          • Figure 17: Consumers who travelled by air in the last 12 months, NI and RoI, 2007-11
                                                                                                                      • Strengths and Weaknesses

                                                                                                                        • Strengths
                                                                                                                          • Weaknesses
                                                                                                                          • Market Value and Forecast

                                                                                                                            • Key points
                                                                                                                              • Gross written premiums less than €4 billion (£3.45 billion) in 2011
                                                                                                                                  • Figure 18: Non-life insurance, gross written premiums, IoI, RoI and NI, 2004-17
                                                                                                                                  • Figure 19: Index of gross written premiums, IoI, RoI and NI, 2004-17
                                                                                                                                • RoI insurance industry sees profits decline dramatically
                                                                                                                                  • Figure 20: Profit as % of total gross written premiums, RoI, 2005-09
                                                                                                                              • Who’s Innovating?

                                                                                                                                • Key points
                                                                                                                                  • Making insurance more accessible to older consumers
                                                                                                                                    • Use of ‘smartboxes’ to cut costs for younger drivers
                                                                                                                                      • New entrant to shake up RoI’s private health insurance sector
                                                                                                                                      • Companies and Products

                                                                                                                                          • Figure 21: Profiled providers of insurance, RoI and NI, 2012
                                                                                                                                        • Insurance companies – NI and RoI
                                                                                                                                          • Allianz Group PLC
                                                                                                                                            • AXA Ireland
                                                                                                                                              • Insurance companies – NI
                                                                                                                                                • Admiral Group PLC
                                                                                                                                                  • Direct Line Group
                                                                                                                                                    • Open and Direct Insurance
                                                                                                                                                      • Hughes Insurance
                                                                                                                                                        • Insurance companies – RoI
                                                                                                                                                          • Aviva Group Ireland PLC
                                                                                                                                                            • Liberty Insurance (formerly Quinn Direct Insurance)
                                                                                                                                                              • Zurich Insurance
                                                                                                                                                                • VHI Healthcare
                                                                                                                                                                  • Royal Sun Alliance Ireland (RSA Ireland)
                                                                                                                                                                    • Retailers – NI
                                                                                                                                                                      • Asda
                                                                                                                                                                        • Sainsbury’s
                                                                                                                                                                          • Retailers – NI and RoI
                                                                                                                                                                            • Tesco
                                                                                                                                                                              • Banks and building societies – NI and RoI
                                                                                                                                                                                • Allied Irish Bank (AIB)
                                                                                                                                                                                  • Bank of Ireland Group
                                                                                                                                                                                    • Ulster Bank Group
                                                                                                                                                                                      • Danske Bank Group (operating as Northern Bank and National Irish Bank)
                                                                                                                                                                                        • Banks and building societies – NI
                                                                                                                                                                                          • Nationwide
                                                                                                                                                                                            • Banks and building societies – RoI
                                                                                                                                                                                              • Permanent TSB
                                                                                                                                                                                                • HSBC Ireland
                                                                                                                                                                                                  • Online providers – NI and RoI
                                                                                                                                                                                                    • Getcover and Company Ltd (Getcover.ie)
                                                                                                                                                                                                      • Its4women.ie and 25plus.ie
                                                                                                                                                                                                        • 123.ie
                                                                                                                                                                                                          • Confused.com
                                                                                                                                                                                                            • Comparethemarket.com
                                                                                                                                                                                                              • One Direct
                                                                                                                                                                                                              • Channels to Market

                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                  • Preference to purchase car insurance with a phone call
                                                                                                                                                                                                                    • Figure 22: How main car insurance policy was arranged, NI and RoI, 2011
                                                                                                                                                                                                                  • Buildings and contents cover purchased over the phone or in person
                                                                                                                                                                                                                    • Figure 23: How buildings and contents insurance was arranged, NI and RoI, 2011
                                                                                                                                                                                                                  • Consumers going online to purchase holiday/travel insurance
                                                                                                                                                                                                                    • Figure 24: How holiday and travel insurance was arranged, NI and RoI, 2011
                                                                                                                                                                                                                • The Consumer – Product Ownership

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • Majority of consumers own some sort of insurance policy
                                                                                                                                                                                                                        • Figure 25: Types of insurance currently owned, RoI and NI, June 2012
                                                                                                                                                                                                                      • Comprehensive motor cover most common among Irish consumers
                                                                                                                                                                                                                          • Figure 26: Ownership of motor insurance, by type, RoI and NI, June 2012
                                                                                                                                                                                                                        • Third party policies more popular among RoI than NI consumers
                                                                                                                                                                                                                          • Third party policies favoured only by younger consumers
                                                                                                                                                                                                                              • Figure 27: Ownership of comprehensive and third party motor insurance policies, by age, RoI, June 2012
                                                                                                                                                                                                                            • Two thirds in RoI, three quarters in NI have home insurance
                                                                                                                                                                                                                                • Figure 28: Ownership of home insurance, by type, RoI and NI, June 2012
                                                                                                                                                                                                                              • ABC1s far more likely to own home cover in NI, but not in RoI
                                                                                                                                                                                                                                  • Figure 29: Ownership of buildings and contents insurance, by socio-economic background, RoI and NI, June 2012
                                                                                                                                                                                                                                • Home insurance ownership strongly linked to age
                                                                                                                                                                                                                                    • Figure 30: Ownership of buildings and contents insurance, by age, RoI and NI, June 2012
                                                                                                                                                                                                                                  • Sizeable minority of consumers own some form of travel cover
                                                                                                                                                                                                                                    • Figure 31: Ownership of travel insurance, by type, RoI and NI, June 2012
                                                                                                                                                                                                                                  • Ownership of holiday and travel cover highest among ABC1s and 45+
                                                                                                                                                                                                                                      • Figure 32: Ownership of holiday and travel insurance, by age and socio-economic background, RoI and NI, June 2012
                                                                                                                                                                                                                                    • Health insurance ownership more than twice as high in RoI as in NI
                                                                                                                                                                                                                                        • Figure 33: Ownership of private medical/health insurance, RoI and NI, June 2012
                                                                                                                                                                                                                                    • The Consumer – Trust and Complaints

                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                        • Half of all consumers believe some insurers act unfairly
                                                                                                                                                                                                                                            • Figure 34: Agreement with statement ‘I believe that some insurers don’t treat their customers fairly’, by gender and age, RoI and NI, June 2012
                                                                                                                                                                                                                                          • ... while around 15% claim to have been mis-sold insurance products
                                                                                                                                                                                                                                              • Figure 35: Agreement with statement ‘I have been mis-sold insurance products in the past’, by gender and age, RoI and NI, June 2012
                                                                                                                                                                                                                                            • Lack of trust reflected in number of complaints about insurance
                                                                                                                                                                                                                                              • 61% of complaints to UK (incl. NI) Ombudsman relate to insurance in 2010/11
                                                                                                                                                                                                                                                • Figure 36: Complaints to UK financial ombudsman service, by sector, UK (incl. NI), 2010/11*
                                                                                                                                                                                                                                              • 47% of complaints in RoI were insurance-related in 2011
                                                                                                                                                                                                                                                • Figure 37: Complaints to RoI Financial Services Ombudsman, RoI, 2011
                                                                                                                                                                                                                                              • Majority of UK (incl. NI) complaints about PPI
                                                                                                                                                                                                                                                • Figure 38: Insurance-related complaints, by product type, UK (incl. NI), 2010/11*
                                                                                                                                                                                                                                                • Figure 39: Number of complaints about insurance products, by type, UK (incl. NI), 2010/11*
                                                                                                                                                                                                                                                • Figure 40: Insurance-related complaints as % of total complaints, UK (incl. NI), 2006/07 to 2010/11
                                                                                                                                                                                                                                              • Increase in complaints over travel insurance in UK (incl. NI)
                                                                                                                                                                                                                                                  • Figure 41: Annual percentage change in number of insurance-related complaints, by product type, UK, (incl. NI), 2010/11*
                                                                                                                                                                                                                                                • Motor and buildings insurance generate most complaints in RoI
                                                                                                                                                                                                                                                  • Figure 42: Insurance-related complaints, by product type, RoI, 2011
                                                                                                                                                                                                                                                • 50% of all insurance complaints in RoI related to claims
                                                                                                                                                                                                                                                    • Figure 43: Reasons for insurance-related complaints, RoI, 2011
                                                                                                                                                                                                                                                  • 50% of insurance complaints upheld in UK (incl. NI)
                                                                                                                                                                                                                                                      • Figure 44: Insurance-related complaints upheld, % of total received, UK (incl. NI), 2007/08* and 2010/11**
                                                                                                                                                                                                                                                    • ... but only a quarter of insurance complaints upheld in RoI
                                                                                                                                                                                                                                                      • Figure 45: Outcome of insurance-related complaints, RoI, 2011
                                                                                                                                                                                                                                                  • The Consumer – Purchasing Behaviour

                                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                                        • Figure 46: Agreement with selected statements related to insurance-purchasing, RoI and NI, June 2012
                                                                                                                                                                                                                                                      • Relatively low tendency to invest time in finding right policy
                                                                                                                                                                                                                                                          • Figure 47: Agreement with statement, ‘I am prepared to spend time finding the right insurance policy’, by gender, age and socio-economic background, NI and RoI, June 2012
                                                                                                                                                                                                                                                        • Use of price-comparison sites puts undue emphasis on price alone
                                                                                                                                                                                                                                                          • Older consumers more confident about sufficiency of cover
                                                                                                                                                                                                                                                              • Figure 48: Agreement with statement, ‘I am confident that I have sufficient insurance cover in place’, by age, NI and RoI, June 2012
                                                                                                                                                                                                                                                            • A ‘recognisable’ brand not overly important for most
                                                                                                                                                                                                                                                              • Failure of read ‘small print’ threatens trust and loyalty
                                                                                                                                                                                                                                                              • The Consumer – Price, Value and Affordability

                                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                                    • Figure 49: Agreement with statements relating to price, value and affordability, RoI and NI, June 2012
                                                                                                                                                                                                                                                                  • Most consumers sceptical about some types of cover
                                                                                                                                                                                                                                                                    • Affordability issues for 41% of RoI and 22% of NI consumers
                                                                                                                                                                                                                                                                      • Around a quarter believe insurance is more important during recession
                                                                                                                                                                                                                                                                        • Little sense that low price equates to low quality
                                                                                                                                                                                                                                                                        • Consumer Typologies

                                                                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                                                                            • RoI target groups
                                                                                                                                                                                                                                                                              • Figure 50: Consumer typologies, RoI, June 2012
                                                                                                                                                                                                                                                                            • Risk Averse
                                                                                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                                                                                • Demographic pattern
                                                                                                                                                                                                                                                                                  • Understanding the Risk Averse
                                                                                                                                                                                                                                                                                    • Price Sensitive
                                                                                                                                                                                                                                                                                      • Characteristics
                                                                                                                                                                                                                                                                                        • Demographic pattern
                                                                                                                                                                                                                                                                                          • Understanding the Price Sensitive
                                                                                                                                                                                                                                                                                            • Care Free
                                                                                                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                                                                                                • Demographic pattern
                                                                                                                                                                                                                                                                                                  • Understanding the Care Free
                                                                                                                                                                                                                                                                                                    • Savvy Insurers
                                                                                                                                                                                                                                                                                                      • Characteristics
                                                                                                                                                                                                                                                                                                        • Demographic pattern
                                                                                                                                                                                                                                                                                                          • Understanding Savvy Insurers
                                                                                                                                                                                                                                                                                                            • NI target groups
                                                                                                                                                                                                                                                                                                              • Figure 51: Consumer typologies, NI, June 2012
                                                                                                                                                                                                                                                                                                            • Traditional Insurers
                                                                                                                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                                                                                                                • Demographic pattern
                                                                                                                                                                                                                                                                                                                  • Understanding Traditional Insurers
                                                                                                                                                                                                                                                                                                                    • Risk Takers
                                                                                                                                                                                                                                                                                                                      • Characteristics
                                                                                                                                                                                                                                                                                                                        • Demographic pattern
                                                                                                                                                                                                                                                                                                                          • Understanding the Risk Takers
                                                                                                                                                                                                                                                                                                                            • Finance Managers
                                                                                                                                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                                                                                                                                • Demographic pattern
                                                                                                                                                                                                                                                                                                                                  • Understanding the Finance Managers
                                                                                                                                                                                                                                                                                                                                    • Can’t Be Bothered
                                                                                                                                                                                                                                                                                                                                      • Characteristics
                                                                                                                                                                                                                                                                                                                                        • Demographic pattern
                                                                                                                                                                                                                                                                                                                                          • Understanding the Can’t Be Bothered
                                                                                                                                                                                                                                                                                                                                          • Appendix

                                                                                                                                                                                                                                                                                                                                            • Population data
                                                                                                                                                                                                                                                                                                                                              • Figure 52: Population, by age, RoI, 2006-41
                                                                                                                                                                                                                                                                                                                                              • Figure 53: Population, by age, NI, 2010-56
                                                                                                                                                                                                                                                                                                                                            • Product ownership data (Toluna)
                                                                                                                                                                                                                                                                                                                                              • RoI
                                                                                                                                                                                                                                                                                                                                                • Figure 54: Types of insurance currently owned, by demographics, RoI, June 2012
                                                                                                                                                                                                                                                                                                                                                • Figure 55: Types of insurance currently owned, by demographics, RoI, June 2012 (Continued)
                                                                                                                                                                                                                                                                                                                                                • Figure 56: Types of insurance currently owned, by demographics, RoI, June 2012 (Continued)
                                                                                                                                                                                                                                                                                                                                              • NI
                                                                                                                                                                                                                                                                                                                                                • Figure 57: Types of insurance currently owned, by demographics, NI, June 2012
                                                                                                                                                                                                                                                                                                                                                • Figure 58: Types of insurance currently owned, by demographics, NI, June 2012 (Continued)
                                                                                                                                                                                                                                                                                                                                                • Figure 59: Types of insurance currently owned, by demographics, NI, June 2012 (Continued)
                                                                                                                                                                                                                                                                                                                                              • Attitudinal data (Toluna)
                                                                                                                                                                                                                                                                                                                                                • RoI
                                                                                                                                                                                                                                                                                                                                                  • Figure 60: Agreement with statements relating to insurance, by demographics, RoI, June 2012
                                                                                                                                                                                                                                                                                                                                                  • Figure 61: Agreement with statements relating to insurance, by demographics, RoI, June 2012 (continued)
                                                                                                                                                                                                                                                                                                                                                • NI
                                                                                                                                                                                                                                                                                                                                                  • Figure 62: Agreement with statements relating to insurance, by demographics, NI, June 2012
                                                                                                                                                                                                                                                                                                                                                  • Figure 63: Agreement with statements relating to insurance, by demographics, NI, June 2012 (continued)
                                                                                                                                                                                                                                                                                                                                                • Consumer typologies data
                                                                                                                                                                                                                                                                                                                                                  • RoI
                                                                                                                                                                                                                                                                                                                                                    • Figure 64: Consumer typologies, by demographics, RoI, June 2012
                                                                                                                                                                                                                                                                                                                                                    • Figure 65: Types of insurance currently owned, by consumer typologies, RoI, June 2012
                                                                                                                                                                                                                                                                                                                                                    • Figure 66: Agreement with statements relating to insurance, by consumer typologies, RoI, June 2012 (continued)
                                                                                                                                                                                                                                                                                                                                                  • NI
                                                                                                                                                                                                                                                                                                                                                    • Figure 67: Consumer typologies, by demographics, NI, June 2012
                                                                                                                                                                                                                                                                                                                                                    • Figure 68: Types of insurance currently owned, by consumer typologies, NI, June 2012
                                                                                                                                                                                                                                                                                                                                                    • Figure 69: Agreement with statements relating to insurance, by consumer typologies, NI, June 2012 (continued)

                                                                                                                                                                                                                                                                                                                                                Insurance - Ireland - July 2012

                                                                                                                                                                                                                                                                                                                                                US $1,453.83 (Excl.Tax)