Motor Insurance - UK - March 2017
“The motor insurance industry has been hit hard by recent legislative changes to insurance premium tax and the personal injury discount rate. This will inevitably pass higher premiums on to young drivers in particular, who are already considering alternatives to car ownership such as car sharing schemes.
As a result providers will need to develop more flexible policies to suit part-time drivers, with InsurTech start-ups leading the way with the launch of on-demand insurance models.”
– Paul Davies, Senior Financial Services Analyst
This report examines the following issues:
- How can motor insurers reduce price sensitivity?
- Fewer young people getting in the driving seat
- Will insurance and banking blur in to one?
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- Consumer Attitudes and Behaviour
- Market data
- Competitive analysis
- Risks and Opportunities
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Table of contents
Overview
- What you need to know
- Scope of this Report
- What you need to know
Executive Summary
- The market
- Motor premiums reached new record high in 2016
- Premiums set to soar again in 2017
- Figure 1: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2011-21
- Companies and brands
- Direct Line was the largest underwriter again in 2015
- On-demand insurance
- Direct Line and Aviva remain at the forefront
- Figure 2: Attitudes, by brand, December 2016
- The consumer
- Nine out of 10 policyholders have fully comp
- Figure 3: Ownership of motor insurance, November 2016
- Only one in four policyholders chose not to shop around
- Figure 4: Motor insurance renewal behaviour, December 2015 and November 2016
- Lack of trust in renewal quote drives price comparison usage
- Figure 5: Attitudes towards motor insurance, November 2016
- Claimants still prefer to call
- Figure 6: Motor insurance channel preferences, November 2016
- Over two fifths interested in car sharing schemes
- Figure 7: Interest in car sharing or rental schemes, November 2016
- What we think
Issues and Insights
- How can motor insurers reduce price sensitivity?
- The facts
- The implications
- Fewer young people getting in the driving seat
- The facts
- The implications
- Will insurance and banking blur in to one?
- The facts
- The implications
- How can motor insurers reduce price sensitivity?
The Market – What You Need to Know
- Premiums reached new record high in 2016
- More cars, but fewer young drivers
- Autonomous features start to impact insurers
- IPT to increase to 12% in 2017
- Discount rate slashed
- Whiplash reforms set to offer respite
- Premiums reached new record high in 2016
Market Size and Forecast
- Premiums reached new record high in 2016
- Figure 8: Gross written personal motor insurance premiums (UK business only), 2012-16
- Market forecast
- Premiums set to soar again in 2017
- Brexit could inflate premiums
- Figure 9: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2011-21
- Figure 10: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2011-21
- Forecast methodology
- Premiums reached new record high in 2016
Market Environment
- Number of licensed cars exceeds 30 million
- Figure 11: Number of licensed vehicles (cars) in the UK, 1994-2015
- New car sales hit record high
- Figure 12: Number of new car registrations in 2011-16 and forecast for 2017-18
- Government prepares for driverless cars
- Premiums continued to harden in 2016
- Figure 13: Average premium for comprehensive car insurance policies, 2012-16
- Accidental damage fuels rise in claims costs
- Figure 14: Volume and average cost of domestic motor insurance claims for private cars, 2013-16
- Insurers made underwriting loss again in 2015
- Figure 15: Personal motor insurance underwriting result, 2011-15
- Number of licensed cars exceeds 30 million
Regulatory and Legislative Changes
- IPT to increase to 12% in 2017
- Figure 16: Changes to the insurance premium tax rate, 1 October 1994-1 June 2017
- Discount rate slashed
- Whiplash reforms set to offer respite
- FCA wants insurers to offer more transparency
- Brexit could add to insurer costs
- IPT to increase to 12% in 2017
Companies and Brands – What You Need to Know
- Direct Line was the largest underwriter again in 2015
- Taking control of autonomous policies
- On-demand insurance
- Direct Line and Aviva remain prominent
- Non-specialists highlight potential for others to diversify
- Motor insurers put the brakes on ATL adspend
- Direct Line was the largest underwriter again in 2015
Underwriter Share
- Direct Line was the largest underwriter again in 2015
- Figure 17: Top 10 personal motor insurance underwriters (UK-domiciled), by gross written premiums, 2013-15 (UK business only)
- Direct Line was the largest underwriter again in 2015
Competitive Strategies
- Taking control of autonomous policies
- Telematics: insurers look to break out of a niche market
- Big Data now a big issue
- InsurTech reinvigorates industry
- On-demand insurance
- Figure 18: Just Miles app screenshot, launched February 2017
- GoCompare and esure part ways
- Good customer service seen to boost renewals…
- …now for increased transparency
- Taking control of autonomous policies
Advertising and Marketing Activity
- Motor insurers put the brakes on ATL adspend
- Figure 19: Total above-the-line, online display and direct mail advertising expenditure on car insurance, 2012-16
- TV still the driving force for ATL campaigns
- Figure 20: Total above-the-line, online display and direct mail advertising expenditure on car insurance, by media type, 2016
- Direct Line looks to stay in the public eye
- Figure 21: Above-the-line, online display and direct mail advertising expenditure on car insurance, by the top 20 advertisers, 2014-16
- Nielsen Ad Intel coverage
- Motor insurers put the brakes on ATL adspend
Brand Research
- What you need to know
- Brand map
- Figure 22: Attitudes towards and usage of selected brands, December 2016
- Key brand metrics
- Figure 23: Key metrics for selected brands, December 2016
- Brand attitudes: Saga’s focus on over-50s makes it stand out
- Figure 24: Attitudes, by brand, December 2016
- Brand personality: Humorous TV ads help Direct Line build a fun image
- Figure 25: Brand personality – Macro image, December 2016
- People are most positive about established traditional insurers
- Figure 26: Brand personality – Micro image, December 2016
- Brand analysis
- Direct Line and Aviva remain prominent
- LV=, AXA and Zurich also viewed positively, but lack standout
- Admiral, Churchill and MORE TH>N
- Non-specialists highlight potential for others to diversify
- Swinton seen as less accessible despite vast branch network
The Consumer – What You Need to Know
- Nine out of 10 policyholders have fully comp
- Aviva and Direct Line prove it’s not all about price comparison
- Half of consumers go for the cheapest option
- Only one in four policyholders chose not to shop around
- Claimants still prefer to speak to someone
- Over two fifths interested in car sharing schemes
- Nine out of 10 policyholders have fully comp
Ownership of Motor Insurance
- Nine out of 10 policyholders have fully comp
- Figure 27: Ownership of motor insurance, November 2016
- A third of 17-24s don’t have a driving licence
- Figure 28: Proportion of consumers without a driving licence, by age, November 2016
- Nine out of 10 policyholders have fully comp
Motor Insurance Providers
- Aviva and Direct Line prove it’s not all about price comparison
- Figure 29: Motor insurance providers, November 2016
- AA highlights the potential for cross-selling
- Aviva and Direct Line prove it’s not all about price comparison
Reasons for Choosing Provider
- Half of consumers go for the cheapest option
- Figure 30: Reasons for choosing current motor insurance provider/policy, November 2016
- Packages for new car owners
- Cuvva for the holidays
- Half of consumers go for the cheapest option
Motor Insurance Renewal Behaviour
- Only one in four policyholders chose not to shop around
- Figure 31: Motor insurance renewal behaviour, December 2015 and November 2016
- Renewal communications should be sent digitally
- Only one in four policyholders chose not to shop around
Motor Insurance Channel Preferences
- Claimants still prefer to call
- Figure 32: Motor insurance channel preferences, November 2016
- Management apps can make mobile go mainstream
- Claimants still prefer to call
Attitudes towards Motor Insurance
- Lack of trust in renewals drives price comparison usage
- Figure 33: Attitudes towards motor insurance, November 2016
- Customisation and transparency will appease consumers
- Lack of trust in renewals drives price comparison usage
Interest in Car Sharing Policies
- Over two fifths interested in car sharing schemes
- Figure 34: Interest in car sharing or rental schemes, November 2016
- Customer-centric insurance models
- Figure 35: Preferred types of insurance cover for car sharing or rental schemes, November 2016
- Over two fifths interested in car sharing schemes
Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
- Additional best/worst forecast table
- Figure 36: Best- and worst-case forecast for the value of gross written premiums for personal motor insurance (UK business only), 2016-21
- Forecast methodology
- Additional best/worst forecast table
Motor Insurance - UK - March 2017