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Home Insurance - UK - December 2018

“Home insurers stand to benefit from adding value to their propositions, in a market where price competition remains a major challenge. Policy flexibility and tools to help people calculate the cover they need will appeal to new and existing customers, whilst the growing popularity of smart devices gives insurers an opportunity to move from offering protection to prevention.”
– Jessica Galletley, Senior Financial Services Analyst

This Report looks at the following areas:

  • Innovations will help insurers to engage the younger demographic
  • Trust in information drives usage of PCWs

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Table of contents

  1. Overview

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

          • The market
            • Mintel forecasts a slow recovery for the market
              • Figure 1: Forecast for gross written premiums – UK domestic property insurance, 2013-23
            • Number of claims falls
              • Figure 2: Total number of domestic property claims, 2008-17
            • Brokers account for the largest proportion of sales
              • Figure 3: Share of gross domestic property insurance premiums, by sales channel, 2013-17
            • Combined policy costs fall
              • Figure 4: Average combined, buildings-only and contents-only insurance premiums, 2012-17
            • FCA announces investigation into motor and home insurance
              • Companies and brands
                • Share of top five grows
                  • Figure 5: Top 20 domestic property underwriters – UK, by share of total market GWP – ABI members only, 2016 and 2017
                • Simplification of application and claims process
                  • Adspend increases by 17%
                    • Figure 6: Total above-the-line, online display and direct mail advertising expenditure on home insurance, 2014-18*
                  • The consumer
                    • Two thirds have home insurance
                      • Figure 7: Insurance product ownership, October 2018
                    • Half consult price comparison sites
                      • Figure 8: Sources of home insurance information, October 2018
                    • Trust is a key driver of PCW use
                      • Figure 9: Trust in different sources of information, October 2018
                    • Accidental damage is the most popular add-on
                      • Figure 10: Interest in paying extra for home insurance add-ons, by policy ownership, October 2018
                    • Around one in three are interested in smart security devices
                      • Figure 11: Ownership and interest in smart devices for the home, October 2018
                    • Home insurers can add value in a number of ways
                      • Figure 12: Attitudes towards home insurance, October 2018
                    • What we think
                    • Issues and Insights

                      • Innovations will help insurers to engage the younger demographic
                        • The facts
                          • The implications
                            • Trust in information drives usage of PCWs
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Mintel forecasts a slow recovery for the market
                                    • Number of claims falls
                                      • Brokers account for the largest proportion of sales
                                        • Combined policy costs fall
                                          • FCA announces investigation into motor and home insurance
                                          • Market Size and Forecast

                                            • Market sees second year of growth in 2017
                                              • Figure 13: Gross and net written premiums – UK domestic property insurance, 2008-18
                                            • Mintel forecasts a slow recovery for the market
                                              • Figure 14: Forecast for gross written premiums – UK domestic property insurance, 2013-23
                                              • Figure 15: Forecast for gross written premiums – UK domestic property insurance, at 2018 prices, 2013-23
                                            • Forecast methodology
                                            • Claims Incurred and Underwriting Result

                                              • Net claims incurred rise by 6%
                                                  • Figure 16: Total outgo and underwriting result – UK domestic property insurance, 2013-17
                                                • Underwriting ratio remains positive at 7.9%
                                                  • Figure 17: Domestic property insurance underwriting ratio, 2008-17
                                                • Number of claims falls
                                                  • Figure 18: Total number of domestic property claims, 2008-17
                                                • A third of claims are for accidental damage
                                                  • Figure 19: Proportional distribution of domestic property claims, by type of peril, 2017
                                              • Channels to Market

                                                • Brokers account for the largest proportion of sales
                                                  • Figure 20: Share of gross domestic property insurance premiums, by sales channel, 2013-17
                                              • Market Drivers

                                                • IPT stays at 12%
                                                  • Figure 21: Changes to the standard rate of IPT, 2011-18
                                                • Majority of policies are sold as combined
                                                  • Figure 22: Proportional distribution of home insurance sales, by product type, 2017
                                                • Combined policy costs fall
                                                  • Figure 23: Average combined, buildings-only and contents-only insurance premiums, 2012-17
                                              • Regulatory and Legislative Changes

                                                • FCA announces investigation into motor and home insurance
                                                  • The industry is already making changes
                                                  • Companies and Brands – What You Need to Know

                                                    • Share of top five grows
                                                      • Simplification of application and claims process
                                                        • Adspend increases by 17%
                                                        • Market Share

                                                          • Share of top five grows
                                                            • Figure 24: Top 20 domestic property underwriters – UK, by share of total market GWP – ABI members only, 2016 and 2017
                                                            • Figure 25: Largest current account providers and their home insurance underwriters, 2018
                                                        • Competitive Strategies

                                                          • Simplification of application and claims process
                                                            • Homelyfe
                                                              • Figure 26: Homelyfe locker
                                                            • Aviva
                                                              • Using technology to add value
                                                                • Buzzvault
                                                                  • Brolly
                                                                      • Figure 27: Brolly mobile app
                                                                    • Trōv
                                                                      • Availability of smart home insurance remains limited
                                                                        • Neos
                                                                          • Aviva
                                                                            • AXA
                                                                              • Amazon
                                                                              • Advertising and Marketing Activity

                                                                                • Adspend increases by 17%
                                                                                  • Figure 28: Total above-the-line, online display and direct mail advertising expenditure on home insurance, 2014-18*
                                                                                • Gocompare.com is the biggest spender on home insurance advertising
                                                                                  • Figure 29: Total above-the-line, online display and direct mail advertising expenditure on home insurance, by advertiser, 2014-18
                                                                                • Nearly half of all spend on TV
                                                                                  • Figure 30: Total above-the-line, online display and direct mail advertising expenditure on home insurance, by media type, 2016-18
                                                                                • Nielsen Ad Intel coverage
                                                                                • The Consumer – What You Need to Know

                                                                                  • Two thirds have home insurance
                                                                                    • Half consult price comparison sites
                                                                                      • Trust is a key driver of PCW use
                                                                                        • Accidental damage is the most popular add-on
                                                                                          • Around one in three interested in smart security devices
                                                                                            • Home insurers can add value in a number of ways
                                                                                            • Insurance Product Ownership

                                                                                              • Two thirds have home insurance
                                                                                                  • Figure 31: Insurance product ownership, October 2018
                                                                                                • Significant difference in ownership between renters and homeowners
                                                                                                  • Figure 32: Insurance product ownership, October 2018
                                                                                              • Source of Information

                                                                                                • Half consult price comparison sites…
                                                                                                  • …whilst 23% go direct
                                                                                                    • Figure 33: Sources of home insurance information, October 2018
                                                                                                  • Recommendations are key for new customers
                                                                                                      • Figure 34: Sources of home insurance information, by age, October 2018
                                                                                                  • Trust in Different Information Sources

                                                                                                    • Trust is a key driver of PCW use
                                                                                                      • High level of trust in information from insurers
                                                                                                        • Figure 35: Trust in different sources of information, October 2018
                                                                                                      • Lettings agents have a role to play...but lack of trust is an issue
                                                                                                        • Figure 36: Trust in different sources of information – ‘Yes’, by housing situation, October 2018
                                                                                                    • Interest in Home Insurance Add-ons

                                                                                                      • Accidental damage is the most popular add-on
                                                                                                          • Figure 37: Interest in paying extra for home insurance add-ons, by policy ownership, October 2018
                                                                                                        • Interest falls for other forms of cover
                                                                                                        • Most Appealing Home Insurance Features

                                                                                                          • Low excess is a key feature
                                                                                                              • Figure 38: Top three appealing features when considering a home insurance policy, October 2018
                                                                                                            • Replacement goods can add tangible value to insurance
                                                                                                              • Time is precious
                                                                                                                • Tools and speed will appeal to new customers
                                                                                                                  • Figure 39: Top three appealing features when considering a home insurance policy, by age, October 2018
                                                                                                              • Ownership and Interest in Smart Devices

                                                                                                                • Around one in three interested in smart security devices
                                                                                                                  • Figure 40: Ownership and interest in smart devices for the home, October 2018
                                                                                                                • Interest is higher among young people
                                                                                                                  • Figure 41: Ownership and interest in smart devices for the home – ‘No, but interested in having’, by age, October 2018
                                                                                                                • Half would share smart device data
                                                                                                                    • Figure 42: Willingness to give an insurer access to the data collected by a smart device, October 2018
                                                                                                                • Attitudes towards Home Insurance

                                                                                                                  • Vast majority are confident in their policy
                                                                                                                      • Figure 43: Attitudes towards home insurance, October 2018
                                                                                                                    • Opportunities for insurers to extend their brand
                                                                                                                      • Open Banking
                                                                                                                        • Online only
                                                                                                                          • Home safety
                                                                                                                              • Figure 44: Home insurance – CHAID – Tree output, October 2018
                                                                                                                            • Loyalty undermined by the need to switch each year
                                                                                                                              • Figure 45: Attitudes towards home insurance, by policy ownership, October 2018
                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                              • Abbreviations
                                                                                                                                • Consumer research methodology
                                                                                                                                  • CHAID Methodology
                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                    • Home insurance value forecast
                                                                                                                                      • Figure 46: Best- and worst-case forecasts for gross written premiums – UK domestic property insurance, 2018-23
                                                                                                                                    • Forecast methodology

                                                                                                                                    Home Insurance - UK - December 2018

                                                                                                                                    US $2,552.20 (Excl.Tax)