“Loyalty or reward schemes could help to improve customer retention. However, Mintel’s research suggests that an annual reduction in premiums is much more likely to drive loyalty than an elaborate rewards programme or discount scheme.”
– Deborah Osguthorpe, Head of UK Financial Services Research
Some questions answered in this report include:
- How much appeal do multi-product discount schemes have?
- How much time do customer retention schemes have to make an impact?
- Why does the insurance industry need to tackle consumers uncertainty?
General insurers are facing challenging conditions. Regulators are paying close attention to the market, and customers are more demanding and discerning. Switching is high across the general insurance market, but is most pronounced in the car and home insurance markets. Few people are prepared to renew their policy without shopping around, resulting in high levels of churn. Insurers use aggressive pricing to attract new customers, which puts downward pressure on underwriting profits and encourages people to switch providers each year.
Some insurers have tried to improve retention rates through the introduction of loyalty schemes. However, in a market where switching has become an engrained behaviour, policyholders will only be tempted to remain with an existing provider if there is a financial incentive. They are unlikely to welcome multifaceted reward schemes, preferring instead a straightforward loyalty discount for each year that they remain with a provider.
This report looks at the relationship between consumers and general insurance providers. It offers a broad overview of the market for personal lines general insurance in terms of the market size, market segmentation and underwriter share. It also includes exclusive research on brand perception, as well as profiles of the main players and an overview of advertising activity. Mintel’s consumer research provides insight into product ownership, shoparound behaviour and attitudes towards loyalty schemes. It also looks at general attitudes towards insurance and examines consumer trust in insurance companies.
Report scope and market definitions
This report is a consumer research-focused overview of the UK personal lines general insurance market.
General insurance – is insurance that covers (non-life) risks for a limited period, typically one year.
The main sectors within the personal lines market are:
- Motor – motor policies cover the legal liabilities arising from the use of a motor vehicle, such as a private car or motorcycle. Comprehensive policies additionally cover damage to the vehicle.
- Household – household policies cover specified property that may be damaged or destroyed by events or perils such as fire, storm, subsidence or theft.
- Accident and health – comprises two main types of business: personal accident and medical expenses. Personal accident policies will pay a lump sum or weekly benefits in the event of accidental death or a specified injury. Private medical insurance (PMI) will pay the costs of medical treatment for acute conditions.
- Pecuniary loss – relates to financial losses that may have occurred, includes travel insurance, pet insurance, legal expenses etc.
Gross written premium (GWP) – premium income accepted during the year, which is quoted gross of reinsurance ceded, but net of reinsurance accepted.
Net written premium (NWP) – premium income net of reinsurance ceded but gross of commission, and excluding Insurance Premium Tax.