Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Motor Insurance - UK - February 2010

  • There is no sign of the move online slowing. The proportion who arranged their policy over the internet has more than doubled over the past four years, transforming the industry.
  • Mintel's forecasts show that unless insurers have the ruthlessness to force through significant year-on-year premium increases, the industry will continue to make an underwriting loss for the foreseeable future.
  • The car scrappage scheme led to a 12% increase in new car registrations, helping underpin the value of the motor insurance market, and shielding it from some of the worst affects of the recession.
  • Steady growth in online sales has engrained the shoparound mentality. By the standards of the financial services industry, loyalty is appalling. Less than half of those with motor insurance have been with the same provider for three years or more.
  • True innovation is rare in this market, but there is some interest in pay-as-you-drive schemes, with around 15% of insured drivers prepared to consider the idea.
  • Mintel's research shows that many people don't trust insurers to treat them fairly. However, almost all of those who had made a claim within the last three years had their claim accepted, and it seems to be price, rather than poor service, that drives switching.

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Issues in the Market

      • In this report Mintel asks…
        • Report coverage
          • Market definitions
            • Abbreviations
            • Future Opportunities

              • A growing trend to outsource may not be a good thing
                • Happy claimants make loyal customers
                  • First get your house in order
                    • Increase premiums by all means, but remember to reward loyalty
                      • Develop a reward scheme
                        • A market characterised by ‘disintermediation’
                          • Managing expectation
                            • Going green
                              • Huge potential
                                • Green motor insurance
                                • Market in Brief

                                  • Recent performance
                                    • Market outlook
                                      • Demand drivers and inhibitors
                                        • Market dynamics and product development
                                          • Competitive environment
                                            • Distribution trends
                                              • Decline in advertising activity
                                                • Key findings of Mintel’s consumer survey: product penetration
                                                  • Buying habits
                                                    • Most appealing policy benefits
                                                    • Internal Market Environment

                                                      • Key points
                                                        • The claims burden
                                                          • Figure 1: Total motor insurance market GWP and gross claims incurred, 2004-08
                                                        • Claims account for over three quarters of personal sector outgoings
                                                          • Figure 2: Value of personal motor net claims incurred and other outgoings, 2004-09
                                                        • Volume of private motor claims has fallen over the past few years
                                                          • Figure 3: Total number of private car insurance claims notified and claims frequency, 2003-09
                                                        • Claims outlook
                                                          • Comprehensive policies have a higher claims frequency
                                                            • Figure 4: Total number of private car insurance claims notified and claims frequency, by type of policy, 2003-09
                                                          • Theft claims fall …
                                                            • Figure 5: Volume and value of private car theft claims settled, by type of policy, 2003-09
                                                          • …but average comprehensive claim rises
                                                            • Figure 6: Average claim value for private car theft claims settled, by type of policy, 2003-09
                                                          • Number of road traffic accidents continues to decline
                                                            • Figure 7: Reported road casualties, by severity – GB, 1994-98 average, 2007/08 and 2008/09
                                                          • Claims for accidental damage are the most commonly notified
                                                            • Figure 8: Number of notified motor insurance claims, by type, 2005-08
                                                          • Personal injury payouts rise steeply
                                                            • Figure 9: Average motor claims payment amount, by type, 2005-08
                                                          • Steps taken to tackle rising costs
                                                            • Jackson Review of Civil Litigation Costs
                                                              • Fraud detection improves
                                                                • Figure 10: Proportion of private motor claims repudiated and total general insurance fraud savings, 2005-08
                                                              • Electronic motor certificates available from April 2010…finally!
                                                              • Broader Market Environment

                                                                • Key points
                                                                  • Economic backdrop
                                                                    • Impact of downturn on motor industry
                                                                      • Impact on driving habits and buying behaviour
                                                                        • The green agenda
                                                                          • A large and expanding car parc underpins demand for motor insurance
                                                                            • Figure 11: Private motor insurance – demand drivers and supressors, 2009
                                                                          • Modest growth in UK car parc
                                                                            • Figure 12: UK car parc, 2000-09
                                                                          • Rise in female driver population prompted the emergence of specialist women-only brands
                                                                            • Figure 13: Full GB driving licence holders, by gender, 1975/76-2008
                                                                          • The number of two-car households shrinks in 2009
                                                                            • Figure 14: Number of cars in household, 2003-09
                                                                          • New private car sales in 2009 boosted by scrappage scheme…
                                                                            • Figure 15: New car registrations, by sector, 2002-09
                                                                          • Outlook
                                                                            • …while used car sales fell again
                                                                              • Figure 16: Sales of used cars, 2002-09
                                                                            • Running costs are higher for used car owners
                                                                              • Figure 17: Average cost per mile – new and used car comparison, 2009
                                                                            • Temporary respite in the cost of motoring in 2009
                                                                              • Figure 18: Average annual running costs for new cars – UK, 2005-09
                                                                            • Merely a short reprieve from rising petrol prices
                                                                              • Figure 19: Average petrol prices – UK major brands, 2002-09
                                                                          • Competitive Context

                                                                            • Key points
                                                                              • Comprehensive policies account for over 90% of all motor policies
                                                                                • Figure 20: Proportion of cars with comprehensive and non-comprehensive cover, based on exposure (vehicle years), 2000-08
                                                                              • Third-party cover is mostly bought by younger drivers
                                                                                • Figure 21: Comparison of market average and shoparound motor premiums, Jul-94, Jul-09 and Oct-09
                                                                              • Motor insurers start to hike up premiums
                                                                                • Figure 22: Market average motor premiums, by type of policy, Oct 1994-Oct 2009
                                                                              • Significant customer churn
                                                                                • Figure 23: Length of time with current car insurance provider, 2001-09
                                                                              • One in 20 drive without insurance
                                                                                • Declining number of claims against uninsured drivers
                                                                                  • Figure 24: Volume of new claims made to MIB, 2004-08
                                                                                • Government to get even tougher on uninsured drivers
                                                                                • SWOT Analysis

                                                                                    • Figure 25: Motor insurance market – summary of strengths, weaknesses, opportunities and threats, 2010
                                                                                • Who’s Innovating?

                                                                                  • Key points
                                                                                    • Limited scope for real product innovation…
                                                                                      • …with the exception of ‘green’ insurance
                                                                                        • Pay-as-you-drive makes a slow start
                                                                                          • Telematics used to offer young drivers cheaper insurance
                                                                                          • Trade Perspective

                                                                                              • About the respondents
                                                                                                • A market in the red – it’s simply unsustainable
                                                                                                  • Insurers are getting better at rooting out fraud
                                                                                                    • Rise in legal referrals of personal injury cases are driving up costs
                                                                                                      • New compensation reforms are cautiously welcomed
                                                                                                        • Online aggregators – weighing product features against price
                                                                                                          • Real product innovation is rare
                                                                                                            • Insurers get bullish on rates to counter rising claims costs
                                                                                                            • Market Size and Forecast

                                                                                                              • Key points
                                                                                                                • Total UK motor insurance market worth nearly £12 billion
                                                                                                                  • Figure 26: Key financials for the UK motor insurance market, 2004-08
                                                                                                                • Claims ratio continues to rise in the personal sector
                                                                                                                  • Figure 27: Motor insurance market claims ratio, expenses ratio and underwriting ratio – by sector, 2004-08
                                                                                                                • Personal sector is expected to record another underwriting loss in 2009
                                                                                                                  • Figure 28: Breakdown of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2004-09
                                                                                                                • Change in approach needed
                                                                                                                  • Standard model forecast suggests pattern of underwriting losses will continue…
                                                                                                                    • Figure 29: Standard scenario forecast of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2009-14
                                                                                                                  • …unless annual premium growth of 5% can be achieved
                                                                                                                    • Figure 30: Alternative scenario forecast of personal motor insurance market, by GWP, NWP, total outgoings and underwriting result, 2009-14
                                                                                                                  • Forecast variables
                                                                                                                  • Market Share

                                                                                                                    • Key points
                                                                                                                      • RBS Insurance has the largest market share…
                                                                                                                        • Figure 31: Top 15 personal motor underwriters, by gross written premiums, 2007 and 2008
                                                                                                                      • …and Direct Line is the leading car insurance brand
                                                                                                                        • Figure 32: Company providing current car insurance policy, September 2009
                                                                                                                      • Movers and shakers
                                                                                                                        • RBS puts insurance business up for sale
                                                                                                                          • Buyout bid for esure
                                                                                                                            • QBE pulls personal motor line
                                                                                                                              • Legal & General mulls re-entry
                                                                                                                                • Fortis to ascend motor rankings following tie-up with Tesco
                                                                                                                                • Companies and Products

                                                                                                                                    • Admiral Group
                                                                                                                                      • Aviva
                                                                                                                                        • Fortis
                                                                                                                                          • Lloyds Banking Group
                                                                                                                                            • LV=
                                                                                                                                              • RBS Group
                                                                                                                                                • RSA
                                                                                                                                                  • Zurich
                                                                                                                                                  • Brand Communication and Promotion

                                                                                                                                                    • Key points
                                                                                                                                                      • Total motor adspend declines in 2009
                                                                                                                                                        • Figure 33: Annual advertising expenditure on motor insurance products, 2005-09
                                                                                                                                                      • Adspend peaks to coincide with the release of new car plates
                                                                                                                                                        • Figure 34: Monthly advertising expenditure on motor insurance products, October 2007-September 2009
                                                                                                                                                      • Direct Line retains top spot in 2009
                                                                                                                                                        • Figure 35: Top 20 advertisers of motor insurance, 2007-09
                                                                                                                                                      • Most adspend is concentrated on TV commercials and direct mail
                                                                                                                                                        • Figure 36: Distribution of total adspend on motor insurance products, by media type, 2007-09
                                                                                                                                                      • The value of direct mail to motor insurers
                                                                                                                                                      • Channels to Market

                                                                                                                                                        • Key points
                                                                                                                                                          • Direct sales’ share of market stabilises
                                                                                                                                                            • Figure 37: Proportional distribution of UK personal motor insurance GWP, by channel, 2004-08
                                                                                                                                                          • Increasing proportion of sales being generated online
                                                                                                                                                            • Figure 38: Channel used to arrange car insurance, 2001-09
                                                                                                                                                          • Price-comparison sites gain share
                                                                                                                                                            • Figure 39: Type of company used to arrange car insurance, 2001-09
                                                                                                                                                          • Confused.com tops aggregator rankings
                                                                                                                                                            • Figure 40: Price-comparison sites used to obtain quotes/compare prices or buy financial product online, September 2009
                                                                                                                                                          • The rise of price-comparison sites
                                                                                                                                                            • Aggregators have dramatically altered the insurance landscape…
                                                                                                                                                              • …and have come under increased scrutiny
                                                                                                                                                              • The Consumer – Product Ownership

                                                                                                                                                                • Key points
                                                                                                                                                                  • About Mintel’s consumer survey
                                                                                                                                                                    • Two thirds of UK adults have motor insurance
                                                                                                                                                                        • Figure 41: Ownership of car insurance, by type, November 2009
                                                                                                                                                                        • Figure 42: Proportional distribution of motor policyholders, by type of policy and status, November 2009
                                                                                                                                                                      • A small proportion of people have more than one type of insurance
                                                                                                                                                                        • Figure 43: Ownership of car insurance, by number of types held, November 2009
                                                                                                                                                                      • Trends in car insurance ownership
                                                                                                                                                                        • Figure 44: Trends in car insurance ownership, 2004-09
                                                                                                                                                                      • Women less likely to drive and more likely to be a named driver
                                                                                                                                                                        • Figure 45: Ownership of car insurance, by gender and number of cars in household, November 2009
                                                                                                                                                                      • Take-up of motor insurance peaks in the 45-54 age group
                                                                                                                                                                        • Figure 46: Ownership of car insurance, by age, November 2009
                                                                                                                                                                      • The typical comprehensive policyholder is a married male AB aged 55-64
                                                                                                                                                                        • Figure 47: Typical characteristics of comprehensive versus third-party policyholders, November 2009
                                                                                                                                                                      • Identifying the core target groups
                                                                                                                                                                        • Figure 48: Target groups identified for the personal motor insurance market, November 2009
                                                                                                                                                                    • The Consumer – Renewal Behaviour

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Merely a third of motor policyholders will routinely stick with their existing insurer at renewal
                                                                                                                                                                            • Figure 49: Renewing car insurance, November 2009
                                                                                                                                                                          • The potential pitfall of focusing too much on price
                                                                                                                                                                            • Third-party policyholders are more inclined to shop around…
                                                                                                                                                                              • Figure 50: Renewing car insurance, by type of policy held, November 2009
                                                                                                                                                                            • …as are households with multiple cars
                                                                                                                                                                              • Figure 51: Renewing car insurance, by gender and number of cars in household, November 2009
                                                                                                                                                                            • Brand loyalty is strongest among the over-65s
                                                                                                                                                                              • Figure 52: Renewing car insurance, by age, November 2009
                                                                                                                                                                          • The Consumer – Switching and Claims Experience

                                                                                                                                                                            • Key points
                                                                                                                                                                              • More than half of all motor policyholders have changed providers within the past three years
                                                                                                                                                                                  • Figure 53: Switching and claims experience, November 2009
                                                                                                                                                                                • Customer loyalty springs from good service and claims handling
                                                                                                                                                                                  • Third-party policyholders are less likely to claim
                                                                                                                                                                                    • Figure 54: Switching and claims experience, by type of policy held, November 2009
                                                                                                                                                                                  • Those who shop around at renewal are more prone to switching
                                                                                                                                                                                    • Figure 55: Switching and claims experience, by tendency to shop around or stick with existing insurer at renewal, November 2009
                                                                                                                                                                                  • Men are more likely to claim than women
                                                                                                                                                                                    • Figure 56: Switching and claims experience, by gender and number of cars in household, November 2009
                                                                                                                                                                                  • Young drivers are no more liable to claim than older drivers
                                                                                                                                                                                    • Figure 57: Switching and claims experience, by age, November 2009
                                                                                                                                                                                • The Consumer – Key Selling Points

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Relative attractiveness of common product features and benefits
                                                                                                                                                                                        • Figure 58: Product features interested in, by type of policy held, November 2009
                                                                                                                                                                                      • Those who shop around at renewal are looking to be enticed
                                                                                                                                                                                        • Figure 59: Car insurance product features and policy types interested in, by tendency to shop around or stick with existing insurer at renewal, November 2009
                                                                                                                                                                                      • Gender differences
                                                                                                                                                                                        • Figure 60: Car insurance product features and policy types interested in, by gender and number of cars in household, November 2009
                                                                                                                                                                                      • Pay-as-you-drive policies most appeal to those aged 35-44
                                                                                                                                                                                        • Figure 61: Car insurance product features and policy types interested in, by age, November 2009
                                                                                                                                                                                      • Further analysis
                                                                                                                                                                                      • Appendix – Ownership of Car Insurance by Demographics

                                                                                                                                                                                          • Figure 62: Ownership of car insurance, by demographics, November 2009
                                                                                                                                                                                      • Appendix – Demographic Profile of Car Insurance Policyholders

                                                                                                                                                                                          • Figure 63: Profile of comprehensive and third-party policyholders versus the total sample, by demographics, November 2009

                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                      • Abbey
                                                                                                                                                                                      • Asda Group Ltd
                                                                                                                                                                                      • Association of British Insurers
                                                                                                                                                                                      • Automobile Association (AA)
                                                                                                                                                                                      • Aviva Plc
                                                                                                                                                                                      • Bank of England
                                                                                                                                                                                      • BeatThatQuote.com
                                                                                                                                                                                      • British Market Research Bureau (BMRB)
                                                                                                                                                                                      • CGU
                                                                                                                                                                                      • Churchill Insurance
                                                                                                                                                                                      • Co-operative Group
                                                                                                                                                                                      • ComparetheMarket.com
                                                                                                                                                                                      • Direct Line Group Limited
                                                                                                                                                                                      • Driver and Vehicle Licensing Agency
                                                                                                                                                                                      • Financial Services Authority (The)
                                                                                                                                                                                      • Ford Motor Company Limited (UK)
                                                                                                                                                                                      • Fortis Insurance Limited
                                                                                                                                                                                      • Gfk NOP
                                                                                                                                                                                      • GoCompare
                                                                                                                                                                                      • Great Lakes Reinsurance
                                                                                                                                                                                      • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                                                      • Highway Insurance Holdings Plc
                                                                                                                                                                                      • HSBC Private Bank (UK) Limited
                                                                                                                                                                                      • Insurance Fraud Bureau
                                                                                                                                                                                      • J. Sainsbury
                                                                                                                                                                                      • Lloyds Banking Group
                                                                                                                                                                                      • Marks & Spencer
                                                                                                                                                                                      • Mercedes-Benz UK
                                                                                                                                                                                      • Moneyextra
                                                                                                                                                                                      • MoneySupermarket.com Limited
                                                                                                                                                                                      • Munich Re Group
                                                                                                                                                                                      • NatWest
                                                                                                                                                                                      • Norwich Union
                                                                                                                                                                                      • Office of Fair Trading
                                                                                                                                                                                      • Privilege Insurance
                                                                                                                                                                                      • Royal Bank of Scotland Group plc
                                                                                                                                                                                      • RSA
                                                                                                                                                                                      • Saga Services (finance)
                                                                                                                                                                                      • Society of Motor Manufacturers and Traders
                                                                                                                                                                                      • Somerfield
                                                                                                                                                                                      • Swinton
                                                                                                                                                                                      • Tesco Personal Finance Limited
                                                                                                                                                                                      • The National Insurance and Guarantee Corporation Limited
                                                                                                                                                                                      • Waitrose
                                                                                                                                                                                      • Wm Morrison Supermarkets
                                                                                                                                                                                      • Zurich Financial Services

                                                                                                                                                                                      Motor Insurance - UK - February 2010

                                                                                                                                                                                      £1,995.00 (Excl.Tax)