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Consumers and Insurance Innovation - UK - December 2018

“Innovative and tech-based approaches to insurance are here to stay, but remain niche and are yet to significantly shake up the industry. Partnerships between traditional providers and start-ups will become more common to please that minority that values technology most, but effective overall innovation needs to start at the beginning: simplifying existing channels and processes and rewarding loyalty.”
– Irene Salazar, Financial Services Analyst

This report looks at the following areas:

  • Innovation: a means to an end
  • Mobile apps have limited appeal
  • Rewarding loyalty: the ultimate innovation

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
        • Definitions
        • Executive Summary

            • The market
              • General insurance GWP up by 6% in 2017
                • Figure 1: Total UK general insurance market (Direct – UK risks), by gross written premiums, 2013-17
              • Direct channels offer opportunity to enhance customer relationship
                • Price comparison sites and innovation: a circular reference
                  • InsurTech and banking marketplaces
                    • GDPR and Open Banking come into force
                      • FCA calls for innovation to improve access to insurance
                        • Companies and brands
                          • InsurTech players in the FCA’s sandbox
                            • Comparison sites look to differentiate themselves
                              • Digital-only banking apps incorporate innovative insurance
                                • Multiple-product insurance that simplifies admin
                                  • Keeping up with consumer trends
                                    • The consumer
                                      • 88% of people have at least one insurance product
                                        • Figure 2: Insurance product ownership, October 2018
                                      • Satisfaction declines as customer journey progresses
                                        • Figure 3: Satisfaction with selected insurance activities, October 2018
                                      • Lack of engagement remains a challenge
                                        • Figure 4: Attitudes towards insurance, October 2018
                                      • A combination of basic but useful channels attracts the majority
                                        • Figure 5: Channel and contact preferences in insurance, October 2018
                                      • Consumers are most interested in being rewarded for their loyalty
                                        • Figure 6: Interest in insurance rewards and extras, October 2018
                                      • What we think
                                      • Issues and Insights

                                        • Innovation: a means to an end
                                          • The facts
                                            • The implications
                                              • Mobile apps have limited appeal
                                                • The facts
                                                  • The implications
                                                    • Rewarding loyalty: the ultimate innovation
                                                      • The facts
                                                        • The implications
                                                        • The Market – What You Need to Know

                                                          • General insurance GWP up by 6% in 2017, with variation in distribution channels by sector
                                                            • Price comparison sites and innovation: a circular reference
                                                              • InsurTech and banking marketplaces
                                                                • GDPR and Open Banking come into force
                                                                  • FCA calls for innovation to improve access to insurance
                                                                  • Market Context

                                                                    • Value of general insurance premiums grew by £2.8 billion in 2017
                                                                      • Figure 7: Total UK general insurance market (Direct – UK risks), by gross written premiums, 2013-17
                                                                    • Personal business accounts for almost two thirds of the market
                                                                      • Figure 8: Breakdown of the UK general insurance gross written premiums, by type of business, 2017
                                                                  • Insurance Distribution Channels

                                                                    • 80% of business written either directly or through brokers…
                                                                      • …but there are significant differences by sector
                                                                        • Figure 9: Distribution channels in personal general insurance, by risk, 2017
                                                                      • Price comparison sites are key to the insurance market
                                                                        • More than just a number
                                                                          • The more the merrier
                                                                            • Amazon: is a giant about to enter the PCW jungle?
                                                                              • InsurTech and banking marketplaces
                                                                              • Regulatory and Legislative Changes

                                                                                • GDPR and Open Banking come into force
                                                                                  • FCA calls for innovation to improve access to insurance
                                                                                    • FCA to measure value of add-ons
                                                                                      • BIBA manifesto calls for HM Treasury to remove IPT from telematics policies
                                                                                      • Companies and Brands – What You Need to Know

                                                                                        • InsurTech players in the FCA’s sandbox
                                                                                          • Reverse-auction marketplace challenge to PCWs
                                                                                            • Digital-only banking apps incorporate innovative insurance
                                                                                              • Multiple-product insurance that simplifies admin
                                                                                                • Keeping up with consumer trends
                                                                                                  • General insurance adspend increases by 12%
                                                                                                  • Launch Activity and Innovation

                                                                                                    • InsurTech players in the FCA’s sandbox
                                                                                                      • Laka: crowd-based cycle insurance
                                                                                                        • Pluto: chatbot insurance through Facebook Messenger
                                                                                                          • YouToggle: app telematics
                                                                                                            • Comparison sites look to differentiate themselves
                                                                                                              • Two new specialised PCWs
                                                                                                                • Making ‘quick quotes’ more accurate
                                                                                                                  • honcho’s reverse-auction marketplace
                                                                                                                    • Figure 10: honcho’s reverse marketplace
                                                                                                                  • Digital-only banking apps incorporate innovative insurance
                                                                                                                    • Multiple-product insurance
                                                                                                                      • Wrisk’s ‘macroinsurance’
                                                                                                                        • Back Me Up: flat monthly fee, no annual contract
                                                                                                                          • Insurance in the age of social media…
                                                                                                                            • …and the gig and sharing economies
                                                                                                                              • Channels and Developments
                                                                                                                                • The manufacturer’s role in car, contents and gadget insurance
                                                                                                                                  • Case study: Trōv’s partnership with Waymo
                                                                                                                                  • Advertising and Marketing Activity

                                                                                                                                    • General insurance adspend increases by 12%
                                                                                                                                      • Figure 11: Total above-the-line, online display and direct mail advertising expenditure on general insurance, 2013/14-2017/18*
                                                                                                                                    • Top 10 advertisers account for 54% of adspend in 2017/18
                                                                                                                                      • Figure 12: Top 20 brands for above-the-line, online display and direct mail advertising expenditure on general insurance, 2015/16-2017/18*
                                                                                                                                    • TV accounts for almost half of all ATL adspend
                                                                                                                                      • Figure 13: Total above-the-line, online display and direct mail advertising expenditure on general insurance, by media type, 2016/17 and 2017/18*
                                                                                                                                    • Nielsen Ad Intel coverage
                                                                                                                                    • The Consumer – What You Need to Know

                                                                                                                                      • 88% of people have at least one insurance product
                                                                                                                                        • Satisfaction declines as the customer journey progresses
                                                                                                                                          • Lack of engagement remains a challenge
                                                                                                                                            • A combination of basic but useful channels attracts the majority
                                                                                                                                              • Consumers most interested in being rewarded for their loyalty
                                                                                                                                              • Product Ownership

                                                                                                                                                • Motor and home policies are the most widely owned insurance products
                                                                                                                                                  • Figure 14: Insurance product ownership, October 2018
                                                                                                                                                • Multiple ownership increases with age
                                                                                                                                                  • Figure 15: Repertoire of insurance product ownership, by generation, October 2018
                                                                                                                                                • Open Banking can simplify buying and managing insurance
                                                                                                                                                • Satisfaction with Insurance Customer Journey

                                                                                                                                                  • Satisfaction varies by step of the customer journey…
                                                                                                                                                    • …and is more likely to drop as the relationship progresses
                                                                                                                                                      • Figure 16: Satisfaction with selected insurance activities, October 2018
                                                                                                                                                    • Overall levels of satisfaction with insurance are high…
                                                                                                                                                      • Figure 17: Overall satisfaction with most recently arranged insurance policy, October 2018
                                                                                                                                                    • …but certain aspects of the customer journey have a much higher impact
                                                                                                                                                      • Consumers need to feel they’ve got a good deal
                                                                                                                                                        • High expectations, higher standards
                                                                                                                                                          • Room for improvement
                                                                                                                                                            • Figure 18: Key drivers of overall satisfaction with insurance, October 2018
                                                                                                                                                            • Figure 19: Overall satisfaction with insurance – key driver output, October 2018
                                                                                                                                                        • Attitudes towards Insurance

                                                                                                                                                          • Back to basics
                                                                                                                                                            • Lack of engagement could make it easier for disruptors
                                                                                                                                                              • T&Cs apply
                                                                                                                                                                  • Figure 20: Attitudes towards insurance, October 2018
                                                                                                                                                                • Identifying those willing to connect smart tech and insurance
                                                                                                                                                                  • Insurers starting to incorporate new technology
                                                                                                                                                                    • Target demographic for insurance-related smart technology is identified
                                                                                                                                                                      • Figure 21: Attitudes towards insurance – CHAID – Tree output, October 2018
                                                                                                                                                                  • Channel and Contact Preferences

                                                                                                                                                                    • Mobile apps: not an asset but a liability?
                                                                                                                                                                      • Online access is taken for granted
                                                                                                                                                                        • UK-based call centres are a must
                                                                                                                                                                            • Figure 22: Channel and contact preferences in insurance, October 2018
                                                                                                                                                                          • A combination of basic but useful channels attracts the majority
                                                                                                                                                                            • Figure 23: TURF Analysis – interest in customer service channels in insurance, October 2018
                                                                                                                                                                        • Interest in Insurance Rewards and Extras

                                                                                                                                                                          • Consumers most interested in being rewarded for their loyalty…
                                                                                                                                                                            • …but are still on the lookout for introductory offers
                                                                                                                                                                              • Figure 24: Interest in insurance rewards and extras, October 2018
                                                                                                                                                                            • Extras remain extra
                                                                                                                                                                              • Insurers as a source of guidance or expertise have limited appeal
                                                                                                                                                                                • Figure 25: Interest in insurance innovations, by rank, October 2018
                                                                                                                                                                              • Interest in discounted or free smart devices is highest among parents
                                                                                                                                                                                • Ongoing rewards can take many shapes and forms
                                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                    • Abbreviations
                                                                                                                                                                                      • Consumer research methodology
                                                                                                                                                                                        • Key driver analysis methodology
                                                                                                                                                                                          • Interpretation of results
                                                                                                                                                                                            • Figure 26: Overall satisfaction with insurance – key driver output, October 2018
                                                                                                                                                                                            • Figure 27: Satisfaction with insurance, October 2018
                                                                                                                                                                                          • CHAID analysis methodology
                                                                                                                                                                                            • Figure 28: Attitudes towards insurance – CHAID – Table output, October 2018
                                                                                                                                                                                          • TURF analysis methodology
                                                                                                                                                                                            • Figure 29: Table – TURF Analysis – interest in customer service channels in insurance, October 2018

                                                                                                                                                                                        Consumers and Insurance Innovation - UK - December 2018

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