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Motor Insurance - UK - March 2018

“Such strong growth in average motor insurance premiums appears to be unsustainable given upcoming changes to claims processes, meaning insurers will need to look elsewhere for healthy margins. High potential distribution channels represent a chance to embrace changes in the way people drive, while brand is becoming more important in the fight to stay relevant.”

– Patrick Ross, Senior Financial Services Analyst

This report examines the following issues:

  • Using multiple price comparison sites is seen as logical, but not always worthwhile 
  • Apps target change in driving habits with straightforward flexible services

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Table of contents

  1. Overview

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

          • The market
            • Premiums reach record highs in 2017
              • Figure 1: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2012-22
            • Companies and brands
              • Direct Line Group holds the top spot by GWP
                • Figure 2: Type of car insurance provider, December 2017
              • Traditional heavy-hitting insurance brands boast solid trust and good reputation
                • Figure 3: Attitudes towards and usage of selected brands, November 2017
              • The consumer
                • 81% of people have a driving licence, and most drivers have fully comprehensive cover
                  • Figure 4: Motor insurance ownership, December 2017
                • Seven in 10 insurance holders shopped around
                  • Figure 5: Behaviour at last car insurance policy arrangement or renewal, December 2017
                • Nine in 10 used at least one price comparison site as a research tool
                  • Figure 6: Price comparison sites used when researching current car insurance policy, December 2017
                • A third of policyholders used insurer websites for research
                  • Figure 7: Other sources of information when researching current car insurance policy, December 2017
                • The short-term market is still dominated by traditional insurers
                  • Figure 8: Most likely short-term car access and insurance arrangement methods, December 2017
                • Insurance could be set for a key role in selling cars of the future
                  • Figure 9: Attitudes towards car insurance and car technology, December 2017
                • What we think
                • Issues and Insights

                  • Using multiple price comparison sites is seen as logical, but not always worthwhile
                    • The facts
                      • The implications
                        • Apps target change in driving habits with straightforward flexible services
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Premiums reach record highs in 2017
                                • The car parc is growing and average premiums are at record levels
                                  • Government reviewing Ogden discount rate change in insurers’ favour
                                  • Market Size and Forecast

                                    • Premiums reach record highs in 2017
                                      • Figure 10: Gross written personal motor insurance premiums (UK domestic business only), 2013-17
                                    • Premium growth to soften in response to Ogden rate changes
                                      • Figure 11: Forecast of the value of gross written personal motor insurance premiums (UK business only), 2012-22
                                      • Figure 12: Forecast of the value of gross written personal motor insurance premiums (UK business only), current and constant prices, 2012-22
                                    • Forecast methodology
                                    • Market Environment

                                      • Growth in the car parc has accelerated
                                          • Figure 13: Licenced cars, Great Britain, Q1 2010-Q1 2017*
                                          • Figure 14: Car ownership, February 2016-17
                                        • Average premium reaches record level high despite shopping around
                                          • Figure 15: Average premium and claim values, by age, 2016
                                        • Average claim cost increased again in 2017
                                          • Figure 16: Gross claims paid and total number of claims settled for private cars, 2013-17
                                          • Figure 17: Average cost of claims for private cars, 2013-17
                                      • Regulatory and Legislative Changes

                                        • Government reviewing Ogden discount rate change
                                          • Government to tackle insurance fraud with changes to claims process
                                            • Concerns over implementation of renewal letter changes
                                              • BIBA manifesto sets sights on IPT fairness
                                              • Companies and Brands – What You Need to Know

                                                • Direct Line Group remained market leader in 2016
                                                  • Car manufacturers and Insurtech app show promise as distribution channels
                                                    • Adspend recovers as competition hots up
                                                      • Traditional heavy-hitting insurance brands boast solid trust and good reputation
                                                      • Market Share

                                                        • Direct Line Group retained number one spot in 2016
                                                          • Figure 17: Top 20 domestic motor underwriters – UK, by share of total market GWP – ABI members only, 2016
                                                        • Seven in 10 people say they have car insurance with a traditional insurer
                                                            • Figure 18: Type of car insurance provider, December 2017
                                                        • Competitive Strategies

                                                          • Manufacturers stake a bigger claim to insurance distribution
                                                            • Vauxhall (underwritten by Ageas)
                                                              • Tesla and Direct Line (underwritten by UK Insurance Limited)
                                                                • New apps set sights on disrupting distribution
                                                                  • honcho
                                                                    • Wrisk
                                                                    • Advertising and Marketing Activity

                                                                      • Adspend recovers as competition hots up
                                                                        • Figure 19: Total above-the line, online display and direct mail advertising expenditure on car insurance, 2017
                                                                      • More than half of spending goes on TV advertising
                                                                        • Figure 20: Total above-the line, online display and direct mail advertising expenditure on car insurance, by media type, 2017
                                                                      • Confused.com pursues aggressive advertising expansion
                                                                        • Figure 21: Total above-the line, online display and direct mail advertising expenditure on car insurance, 2015-2017
                                                                      • Nielsen Ad Intel coverage
                                                                      • Brand Research

                                                                          • Brand map
                                                                            • Figure 22: Attitudes towards and usage of selected brands, November 2017
                                                                          • Key brand metrics
                                                                            • Figure 23: Key metrics for selected brands, November 2017
                                                                          • Brand attitudes: Traditional brands benefit from reputational positives
                                                                            • Figure 24: Attitudes, by brand, November 2017
                                                                          • Brand personality: Saga’s exclusivity marks it out among over-50s
                                                                            • Figure 25: Brand personality – macro image, November 2017
                                                                          • esure suffers under the spotlight
                                                                            • Figure 26: Brand personality – micro image, November 2017
                                                                          • Brand analysis
                                                                            • Traditional heavy-hitting insurance brands boast solid trust and good reputation
                                                                              • Co-op Insurance and esure are held back by some less favourable brand associations
                                                                                • RAC picks up some outstanding brand attributes from breakdown cover heritage
                                                                                  • Saga uses exclusivity to appeal to over-50s
                                                                                  • The Consumer – What You Need to Know

                                                                                    • 81% of people have a driving licence
                                                                                      • Non-insurance brands struggle to make headway with motorists
                                                                                        • Seven in 10 insurance holders shopped around
                                                                                          • Nine in 10 used at least one price comparison site as a research tool
                                                                                            • Insurer websites and friends/family prove popular for research
                                                                                              • The short-term market is still dominated by traditional insurers
                                                                                                • Insurance could be set for a key role in selling cars of the future
                                                                                                • Motor Insurance Ownership

                                                                                                  • 81% of people have a driving licence
                                                                                                    • Positive news for insurers, but driving behaviours are changing
                                                                                                      • Figure 27: Motor insurance ownership, December 2017
                                                                                                      • Figure 28: Motor insurance ownership, insurance holders only (rebase), December 2017
                                                                                                    • Price puts pressure on quality of younger drivers’ cover
                                                                                                      • Figure 29: Motor insurance ownership, December 2017
                                                                                                  • Motor Insurance Providers

                                                                                                    • Non-insurance brands struggle to make headway with motorists
                                                                                                      • Figure 30: Current car insurance provider, December 2017
                                                                                                  • Renewal and Arrangement Behaviour

                                                                                                    • Seven in 10 insurance holders shopped around
                                                                                                        • Figure 31: Behaviour at last car insurance policy arrangement or renewal, December 2017
                                                                                                      • 17-24s are most likely to stick with their provider at renewal
                                                                                                        • Figure 32: Behaviour at last car insurance policy arrangement or renewal, by age, December 2017
                                                                                                    • Researching with Price Comparison Sites

                                                                                                      • Nine in 10 used at least one price comparison site as a research tool
                                                                                                          • Figure 33: Price comparison sites used when researching current car insurance policy, December 2017
                                                                                                        • Younger people driven to pursue best possible price
                                                                                                          • Figure 34: Price comparison sites used when researching current car insurance policy, by gender and age, December 2017
                                                                                                        • Switchers more likely to use many different price comparison sites
                                                                                                            • Figure 35: Number of price comparison sites used when researching last car insurance policy, December 2017
                                                                                                            • Figure 36: Number of price comparison sites used when researching current car insurance policy, by behaviour at last renewal, December 2017
                                                                                                        • Other Research Sources

                                                                                                          • A third of policyholders used insurer websites for research
                                                                                                            • 16% turn to their Influentials for guidance
                                                                                                                • Figure 37: Other sources of information when researching current car insurance policy, December 2017
                                                                                                              • Younger drivers keener to check in with a bank or building society
                                                                                                                • Figure 38: Other sources of information when researching current car insurance policy, by age, December 2017
                                                                                                            • Short-term Insurance Preferences

                                                                                                              • The short-term market is still dominated by traditional insurers …
                                                                                                                • … but challengers are making headway
                                                                                                                  • Figure 39: Most likely short-term car access and insurance arrangement methods, December 2017
                                                                                                                • Urban areas are driving the trend towards short-termism
                                                                                                                  • Figure 40: Most likely short-term car access and insurance arrangement methods, by area type, December 2017
                                                                                                                • Traditional car rental is front-of-mind for the carless
                                                                                                                  • Figure 41: Most likely short-term car access and insurance arrangement methods, by insurance ownership, December 2017
                                                                                                              • Attitudes towards Car Insurance and Technology

                                                                                                                • Insurance could be set for a key role in selling cars of the future
                                                                                                                  • Figure 42: Attitudes towards car insurance and car technology, December 2017
                                                                                                                • More than half of Millennials show interest in chatbot management
                                                                                                                  • Figure 43: Agreement with the statement ‘I would be interested in using an automated online service (eg chatbot) to manage my insurance needs’, by age, December 2017
                                                                                                                • Benefits of using more than one price comparison site are widely recognised
                                                                                                                  • Figure 44: Agreement with the statement ‘You can only be sure you are getting the best car insurance deal by using more than one price comparison site’, by number of price comparison sites used when researching last car insurance policy, December 2017
                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                        • Figure 45: Best- and worst-case forecast for the value of gross written premiums for personal motor insurance (UK business only), 2017-22
                                                                                                                      • Forecast methodology

                                                                                                                      Motor Insurance - UK - March 2018

                                                                                                                      US $2,693.85 (Excl.Tax)