“The general insurance market faces a challenging year in 2023 as inflation continues to grip the UK economy and consumers continue to face a squeeze on household finances. While the essential nature of insurance means that cover cancellation is likely a last resort, consumers will look for ways to lower their cost of insurance or seek additional value from their policy.”
– Natasha Hayes, Senior Financial Services Analyst, January 2023
This Report looks at the following areas:
- Market size and performance for the general insurance market.
- Regulatory and legislative changes in the market.
- Recent brand activity, including launch activity, competitive strategies and advertising.
- Ownership and channels to purchase general insurance products.
- Policy management, both for straightforward changes and for claims.
- Attitudes towards general insurance, including purchasing.
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Overview
- Key issues covered in this Report
- Products covered in this Report
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Executive Summary
- The five-year outlook for general insurance
- Figure 1: Category outlook, 2023-27
- The market
- Domestic general insurance estimated to have grown in 2022
- Figure 2: Gross written premiums for general insurance (personal lines), 2016-22
- Motor insurance dominates the domestic general insurance market
- Figure 3: Market segmentation for general insurance (personal lines), by gross written premium, 2016-21
- Quarterly sales data shows more customers renewing in 2022
- Direct channels dominate distribution
- Figure 4: Channels to market for general insurance (personal lines), by gross written premiums, 2021
- Insurance markets are rocked by claims inflation
- GIPP rules came into effect at the start of 2022
- Companies and brands
- Tiered and low-cost cover options filter into the market
- Amazon opens new insurance store
- Lemonade enters UK market in partnership with Aviva
- Other insurance launches aim to offer consumers additional choice
- Advertising spend returns to pre-pandemic levels
- Figure 5: Total above-the line, online display and direct mail advertising expenditure on general insurance, 2017/18-2021/22
- The consumer
- Majority of consumers own some kind of insurance
- Figure 6: Insurance product ownership, 2021-22
- PCWs are most popular channel to market
- Figure 7: Method of arranging last general insurance policy, 2022
- Market competitiveness means consumers use multiple insurers
- Figure 8: Use of single or multiple insurance providers, 2022
- Communication preferences depend on nature of interaction
- Figure 9: Policy management preferences, 2022
- Gen Z and Millennials are most likely to use apps to manage policies
- Consumers try to balance price with level of cover at renewal
- Figure 10: Important factors when renewing an insurance policy, 2022
- Consumers are willing to buy insurance from tech firms
- Figure 11: Attitudes towards purchasing general insurance products, 2022
- Hassle of switching offers opportunities to promote retention
- Consumers need reasons to engage with insurers
- Figure 12: Attitudes towards general insurance, 2022
- The five-year outlook for general insurance
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Issues and Insights
- Despite price rises, insurance remains an essential purchase
- Shopping around is an engrained consumer behaviour
- Opportunity for insurance apps to boost engagement
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Market Size and Performance
- Despite economic decline, the general insurance market will be resilient
- Figure 13: Category outlook, 2023-27
- Domestic general insurance estimated to have grown in 2022
- Figure 14: Gross written premiums for general insurance (personal lines), 2016-22
- Learnings from the last income squeeze
- Despite economic decline, the general insurance market will be resilient
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Market Segmentation
- Motor insurance dominates the domestic general insurance market…
- Figure 15: Market segmentation for general insurance (personal lines), by gross written premium, 2016-21
- Quarterly sales data shows more motor customers renewing in 2022
- Figure 16: Motor premium tracker – Number of policies sold, by type of customer, 2022
- Nearly 80% of property insurance sales are renewed policies
- Figure 17: Domestic property premium tracker – Number of policies sold, by type of customer, 2022
- Other lines of insurance have experienced growth, but below the rate of inflation
- Demand for health insurance boosted by NHS backlog
- Premiums continue to rise for pet insurance
- Motor insurance dominates the domestic general insurance market…
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Channels to Market
- Direct channels dominate distribution
- Figure 18: Channels to market for general insurance (personal lines), by gross written premiums, 2021
- Price comparison sites also play an important role
- Figure 19: Financial services products researched using a price comparison site, 2022
- Direct channels dominate distribution
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Market Drivers
- Inflation is the key concern for consumers and brands…
- …and a rise in energy prices leads to fall in financial wellbeing…
- Figure 20: Household financial wellbeing index, 2016-22
- …and confidence
- Figure 21: Household financial confidence index, 2016-22
- Insurance markets are rocked by claims inflation
- Figure 22: Total value of claims incurred for general insurance (personal lines), 2016-22
- Market factors will also impact specific insurance markets
- NHS waiting list boosts interest in health insurance
- The conflict in Ukraine puts pressure on the automotive industry
- Property transactions down 3% in October 2022
- Growth in pet ownership plateaued in 2022
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Regulatory and Legislative Changes
- GIPP rules came into effect at the start of 2022
- FCA introduces new consumer duty rules
- Final policy statement on Solvency II reforms published
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Competitive Strategies
- Aviva invests to help with crisis support
- Providers offer tiered cover to increase options for customers
- L&G partners with RedSTART to provide financial education
- LV= GI partners with Bristol University
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Launch Activity and Innovation
- Amazon opens new insurance store
- Lemonade enters UK market in partnership with Aviva
- Insurtech Urban Jungle moves into car insurance space
- Revolut launches pet insurance product
- BGL and Covea launch Millennial motor product
- Aviva launches Aviva Zero for the environmentally conscious…
- …as well as its lowest cost car insurance product
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Advertising and Marketing Activity
- Advertising spend returns to pre-pandemic levels
- Figure 23: Total above-the line, online display and direct mail advertising expenditure on general insurance, 2017/18-2021/22
- Above-the-line spend is dominated by car insurance
- Figure 24: Above-the line, online display and direct mail advertising expenditure on general insurance, by insurance category, 2021/22
- Direct Line launches Marvel TV campaign
- Figure 25: Total above-the line, online display and direct mail advertising expenditure on general insurance, by advertiser, 2017/18-2021/22
- Price comparison sites focus on general insurance advertising
- Nielsen Ad Intel coverage
- Advertising spend returns to pre-pandemic levels
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General Insurance Product Ownership
- Nine of out ten have some kind of insurance
- Figure 26: Insurance product ownership, 2021-22
- One in four owns three types of insurance
- Figure 27: Insurance product ownership – Repertoire analysis, 2022
- Flexible policies could boost insurance uptake among lower earners
- Figure 28: Insurance product ownership – Repertoire analysis, by household income, 2022
- Nine of out ten have some kind of insurance
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Channels to Purchase Insurance
- Pricing regulation is yet to dent confidence in PCWs
- Figure 29: Method of arranging last general insurance policy, 2022
- Under-35s are turning to insurance apps…
- …but telephone options should not be overlooked
- Market competitiveness means consumers use multiple insurers
- Figure 30: Use of single or multiple insurance providers, 2022
- Over-55s most likely to take out cover with different providers
- Figure 31: Use of single or multiple insurance providers, by age, 2022
- Pricing regulation is yet to dent confidence in PCWs
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Insurance Policy Management
- Communication preferences depend on nature of interaction
- Figure 32: Policy management preferences, 2022
- Gen Z and Millennials are most likely to use apps to manage policies
- Figure 33: Preference towards apps for making straightforward changes to an insurance policy, by generation, 2022
- Claims process must focus on customer service
- Communication preferences depend on nature of interaction
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Priorities at Renewal
- Consumers try to balance price with level of cover at renewal
- Figure 34: Important factors when renewing an insurance policy, 2022
- Retention will be a challenge in the current economic environment
- Sustainability credentials are important for a minority
- Consumers try to balance price with level of cover at renewal
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Attitudes towards General Insurance
- Consumers are willing to buy insurance from tech firms
- Figure 35: attitudes towards purchasing general insurance products, 2022
- Hassle of switching offers opportunities to promote retention
- Figure 36: Attitudes towards switching insurance provider at renewal, by age, 2022
- Consumers need reasons to engage with insurers
- Figure 37: Attitudes towards general insurance, 2022
- Male Gen Zs are most likely to reduce insurance spend due to cost of living
- Figure 38: Consumers and general insurance – CHAID – Tree output, 2022
- Consumers are willing to buy insurance from tech firms
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
- Figure 39: Consumers and general insurance – CHAID – Table output, October 2022
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