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Description

Description

Covered in this report

In this report, Mintel considers what insurers need to do to drive growth going forward, whether through new product innovation or by adopting more sustainable pricing models. The market and company analysis is supplemented by the findings of an online consumer survey. The latter provides insight into product ownership and renewal behaviour, and assesses people’s interest in cybercrime cover. Additionally, it identifies opportunities for new business, by revealing people’s plans for the coming year, such as moving home, undertaking a major renovation and acquiring high-value items

“In terms of premium income, the domestic home insurance market has stagnated over the past decade. Technological-driven innovation is needed to achieve real growth potential and to enable insurers to better respond to changing consumer needs in the digital era, as well as shifting demographics and tenure patterns.”
– Sarah Hitchcock, Senior Financial Services Analyst

This report looks at the following areas:

  • Extend cover to address people’s fear of cybercrime
  • Sustainable pricing could reduce churn and encourage loyalty

What's included

What's included

Table of contents

Table of contents

  1. Overview

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

          • The market
            • Market fails to achieve real growth in premium income…
              • Figure 1: Gross written domestic property insurance premiums – Fan chart, 2014-24
            • …and barely managed to stay in the black in 2018
              • Escape of water and the weather are the two costliest perils
                • 34% of home insurance premiums generated by brokers
                  • The complex issue of the ‘loyalty penalty’
                    • Companies and brands
                      • The market is fairly consolidated on the supply-side
                        • Aviva is the largest domestic property insurer
                          • Allianz is set to challenge the current market leaders
                            • Insurers are investing in digital and smart technologies to create new opportunities
                              • The consumer
                                • Two thirds of UK adults have a home insurance policy
                                  • Figure 2: Ownership of contents, buildings and home emergency cover, by age group, September 2019
                                • Almost a fifth have been with their current insurer for at least six years
                                  • Figure 3: Length of time been a customer of current home insurance provider, September 2019
                                • Premium rises drive switching behaviour
                                  • Figure 4: Stayed with provider or switched at last renewal, by what happened to premium at last renewal, September 2019
                                • Customers with a contents-only policy are more likely to auto-renew
                                  • Figure 5: Intentions at next policy renewal, September 2019
                                • A fifth of adults plan to move home
                                  • Figure 6: Plans for the coming year that could change home insurance needs, September 2019
                                • Significant interest in cybercrime cover as home insurance add-on
                                  • Figure 7: Interest in cybercrime cover as an optional extra to home insurance, September 2019
                                • What we think
                                • Issues and Insights

                                  • Extend cover to address people’s fear of cybercrime
                                    • The facts
                                      • The implications
                                        • Sustainable pricing could reduce churn and encourage loyalty
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Market fails to achieve real growth in premium income…
                                                • …but has been largely profitable over the past 10 years
                                                  • Escape of water and the weather are the two costliest perils
                                                    • Web aggregators contribute to sales made via all the main channels
                                                      • Solving the ‘loyalty penalty’ may not be straightforward
                                                      • Market Size and Forecast

                                                        • The market has seen a lack of real premium growth over the past decade
                                                          • Figure 8: Domestic property gross and net written premium, 2009-19
                                                        • Standard model forecast: market will continue to contract in real terms
                                                          • Figure 9: Gross written domestic property insurance premiums – Fan chart, 2014-24
                                                          • Figure 10: Forecast of gross written domestic property insurance premiums, 2014-24
                                                        • Forecast methodology
                                                        • Claims Incurred and Underwriting Result

                                                          • Volume of claims has fallen over the past decade…
                                                            • Figure 11: Number of domestic property claims notified, 2009-18
                                                          • …although the average claim value has grown faster than inflation
                                                            • Figure 12: Average value of a domestic property claim notified, 2009-18
                                                          • Burst pipes and leaks account for the largest share of the claims bill…
                                                            • …although accidental damage has a higher claims frequency
                                                              • Figure 13: Proportional distribution of gross domestic property claims incurred, by type of peril, 2013-18
                                                            • Acquisition costs up by 12% in 2018
                                                              • Domestic household market barely managed to make a profit in 2018
                                                                • Figure 14: Domestic property outgoings and underwriting result, 2013-18
                                                              • Underwriting ratio varies year on year, due to the unpredictable nature of the underlying risks
                                                                • Figure 15: Domestic property underwriting ratio, 2007-18
                                                            • Channels to Market

                                                              • Direct insurers increases share, but brokers still account for the largest proportion of premiums
                                                                • Figure 16: Proportional distribution of gross domestic property premiums, by sales channel, 2013-18
                                                              • Price comparisons are hugely influential
                                                                • Figure 17: Consumer behaviours when arranging home insurance policy with a new provider, September 2019
                                                            • Market Drivers

                                                              • Two thirds of policyholders have a combined policy
                                                                • Figure 18: Proportional distribution of home insurance sales, by product type, 2018
                                                              • Regulator considers remedies to tackle ‘loyalty penalty’
                                                                • Some insurers have already adopted new pricing policies
                                                                  • Lower claims volumes have helped to keep average premiums stable
                                                                    • Figure 19: Average domestic property insurance premiums, at current prices, by policy type, 2014-19
                                                                  • Climate change set to increase the number of homes at risk of flooding
                                                                  • Companies and Brands – What You Need to Know

                                                                    • A consolidated market
                                                                      • Movement in the top-five rankings
                                                                        • Merger and acquisition activity
                                                                          • Digital and smart technologies continue to fuel innovation
                                                                          • Market Share

                                                                            • Small players increased their share of the market in 2018
                                                                              • Figure 20: Top 20 domestic property underwriters – UK, by share of total market GWP, 2018
                                                                            • Market-leader, Aviva holds on to top spot
                                                                              • A drop in DLG’s home premium income sees the group fall to fourth place…
                                                                                • …while RSA Group moves up to second off the back of a strong performance
                                                                                  • LBG increases net household premiums by just over a quarter
                                                                                    • Admiral grows household customer base by nearly a third
                                                                                      • Allianz set to become second-largest general insurer as a result of two key acquisitions
                                                                                        • Co-op agrees sale of underwriting business to Markerstudy
                                                                                        • Competitive Strategies and Innovation

                                                                                          • Aviva separates the management of life and general insurance business…
                                                                                            • … and invests in smart technology
                                                                                              • RSA Group implements new digital service platform
                                                                                                • DLG looks to improve the customer experience and offer a fast response
                                                                                                  • LBG seeks to become the “Go to Provider” for home insurance
                                                                                                  • Launch Activity

                                                                                                    • AvivaPlus – an “industry-first” subscription service
                                                                                                      • Saga introduces pricing promise
                                                                                                        • HSBC’s launches ‘Select and Cover’ monthly subscription deal
                                                                                                          • Azur launches a new home insurance product for wealthy homeowners
                                                                                                            • Insurance disruptor, Buzzvault enters the fray with new personalised policy
                                                                                                              • Other InsureTech firms to watch out for
                                                                                                              • Advertising and Marketing Activity

                                                                                                                • Home insurance industry spends around £100 million a year on above-the-line advertising
                                                                                                                  • Figure 21: Total above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by sub-category, 2014/15-18/19
                                                                                                                • Advertisers cut back on direct mail
                                                                                                                    • Figure 22: Above-the-line, online display and direct mail advertising expenditure on home insurance and related products, by media type, 2016/17-18/19
                                                                                                                    • Figure 23: Adspend split by media type, 2018/19
                                                                                                                  • Direct Line and Aviva more than double their adspend
                                                                                                                    • Figure 24: Top 15 above-the-line advertisers of home insurance and related products, 2016/17-18/19
                                                                                                                  • Nielsen Ad Intel coverage
                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                    • 65% of UK adults have a home insurance policy
                                                                                                                      • Around a fifth have been with their current provider for six years or more
                                                                                                                        • Premium rises drive switching
                                                                                                                          • 10% of contents policyholders plan to start paying monthly at next renewal
                                                                                                                            • A fifth of adults plan to move within the next 12 months
                                                                                                                              • Two thirds of adults are worried about cybercrime
                                                                                                                              • Product Ownership

                                                                                                                                • 43% of UK adults have both buildings and contents insurance
                                                                                                                                  • Figure 25: Ownership of home and other general insurance policies, September 2019
                                                                                                                                • Take-up of home insurance increases sharply with age
                                                                                                                                  • Figure 26: Ownership of contents, buildings and home emergency cover, by age group, September 2019
                                                                                                                                • 25% of mortgage holders do not have buildings cover
                                                                                                                                  • Figure 27: Ownership of home insurance and home emergency cover, by housing tenure, September 2019
                                                                                                                                • Nearly a quarter of outright owners have home emergency cover
                                                                                                                                  • 90% with both types of household cover have a combined policy
                                                                                                                                    • Figure 28: Proportion of policyholders with both contents and buildings insurance who have a combined policy, September 2019
                                                                                                                                • Length of Tenure with Current Provider

                                                                                                                                  • A fifth of policyholders have been with their insurer for six or more years
                                                                                                                                    • Figure 29: Length of time been a customer of current home insurance provider, September 2019
                                                                                                                                  • Measures to tackle the “loyalty penalty” could ultimately increase loyalty
                                                                                                                                  • Renewal Behaviour

                                                                                                                                    • Half of all combined household policyholders saw their premium increase at renewal
                                                                                                                                      • Figure 30: What happened to premium at last renewal, September 2019
                                                                                                                                    • 45% of combined policyholders chose to stay with their insurer after shopping around
                                                                                                                                      • Behaviour differs according to whether people have a combined or contents-only policy
                                                                                                                                        • Figure 31: Stayed with provider or switched at last renewal, September 2019
                                                                                                                                      • Increasing premiums at renewal encourages more customers to switch
                                                                                                                                        • Figure 32: Stayed with provider or switched at last renewal, by what happened to premium at last renewal, September 2019
                                                                                                                                      • A significant minority of customers ignore prompts to shop around at renewal
                                                                                                                                        • Figure 33: Stayed with provider or switched at last renewal – combined policyholders only, September 2016 and September 2019
                                                                                                                                      • Two thirds expect to shop around at their next renewal
                                                                                                                                        • Figure 34: Intentions at next policy renewal, September 2019
                                                                                                                                      • 6% of customers plan to start paying monthly
                                                                                                                                      • Forthcoming Plans Relevant to Home Insurance

                                                                                                                                        • One in five adults expects to move over the coming year…
                                                                                                                                          • Figure 35: Plans for the coming year that could change home insurance needs, September 2019
                                                                                                                                        • A quarter of potential movers plan to live in a flood-risk area
                                                                                                                                          • Starting a family and acquiring more valuable possessions prompts the need to review cover
                                                                                                                                            • 12% of policyholders plan to improve home security
                                                                                                                                            • Assessing Demand for Cybercrime Cover

                                                                                                                                              • Two thirds of UK adults are concerned about experiencing cybercrime
                                                                                                                                                • Figure 36: Level of concern about cybercrime, September 2019
                                                                                                                                              • 44% of policyholders are interested in optional cyber cover add-on
                                                                                                                                                • Figure 37: Interest in cybercrime cover as an optional extra to home insurance, September 2019
                                                                                                                                            • Appendix – Data Sources and Abbreviations

                                                                                                                                              • Abbreviations
                                                                                                                                                • Key sources
                                                                                                                                                  • Consumer research methodology
                                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                                    • Total market sales forecast – best- and worst-case scenarios
                                                                                                                                                      • Figure 38: Forecast of home insurance premiums – best- and worst-case scenarios, 2019-24
                                                                                                                                                    • Forecast methodology

                                                                                                                                                    This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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