2020
9
UK Home Insurance Market Report 2020
2021-12-15T03:02:34+00:00
OX989904
2195
146266
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Report
en_GB
“The economic impact of COVID-19 will focus minds on value for money, further intensifying price competition in the home insurance market. The industry has struggled to increase penetration for a…

UK Home Insurance Market Report 2020

£ 2,195 (Excl.Tax)

Description

“The economic impact of COVID-19 will focus minds on value for money, further intensifying price competition in the home insurance market. The industry has struggled to increase penetration for a number of years, especially among the private rental market. To appeal to renters insurance must be reframed to dispel its association with home ownership. Meanwhile, expanding protection into cyberspace can help reassure older people whilst offering protection to the increasingly connected home.”

– Thomas Slide, Senior Financial Services Analyst

This report covers the following issues:

  • The impact of COVID-19 on the home insurance market.
  • The size of the domestic home insurance market as well as a five-year forecast covering gross written premiums.
  • The changing nature of claims and its impact on profitability in the sector.
  • Competitive strategies, innovations and launch activity within the domestic home insurance market.
  • Ways to encourage switching in home insurance without relying so much on price competition.
  • Attitudes of consumers towards the changing nature of home insurance including integration of the smart home and expansion into cyberspace.

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Impact of the January lockdown and the vaccination rollout
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on home insurance
      • Figure 1: Short, medium and long-term impact of COVID-19 on home insurance, January 2020
    • The market
    • A mature market struggling to generate growth
      • Figure 2: Market size for home insurance, 2015-25 (prepared in December 2020)
    • Value of claims falls in 2019
    • Fewer storms leads to improved profitability in 2019
    • Direct sales are taking a growing share of the market
    • Smart home adoption is gathering pace
    • FCA publishes final report into pricing practices
    • Companies and brands
    • Aviva is the leading insurance brand
      • Figure 3: Customer share of home insurance brands, October 2020
    • Smart devices sweeten the deal
    • Expanding the boundaries of home insurance
    • Advertising becomes more generalised
    • The Direct Line brand offers a clear point of difference
    • The consumer
    • Market penetration stagnates in a mature market
      • Figure 4: Home insurance ownership, October 2020
    • Those who pay monthly pay more
      • Figure 5: Home insurance premiums, by how consumers pay for home insurance, October 2020
    • Comparison sites dominate home insurance research
      • Figure 6: Quote sources for new policies, October 2020
    • Encourage consumers to consider the value of their possessions
      • Figure 7: Barriers to purchase, October 2020
    • Customer service is crucial to persuading consumers to switch
      • Figure 8: Factors that would encourage switching, October 2020
    • The over-55s seek protection in cyberspace
    • Young people are willing to pay for prevention
      • Figure 9: Attitudes towards home insurance, October 2020
  3. Issues and Insights

    • COVID-19 is changing our relationship with our homes
    • Redefine value by taking a more proactive approach
    • Protecting the future home from cyber threats
  4. The Market – Key Takeaways

    • COVID has a limited impact on the home insurance market
    • A highly mature and stable market
    • Value of claims falls in 2019
    • A turbulent year reflected in the claims data
    • Profitability improves in 2019 but storms will hit profits in 2020
    • Growth in direct sales
    • FCA publishes final report into pricing practices
  5. Market Size and Forecast

    • Impact of COVID-19 on home insurance
      • Figure 10: Short, medium and long-term impact of COVID-19 on home insurance, January 2020
    • A mature market struggling to generate growth
      • Figure 11: Gross written premiums for home insurance, 2015-20
    • The pandemic will encourage savvy spending
    • The pandemic has highlighted the fragility of our world
    • Technology offers a way to reframe home insurance
    • Untapped opportunities remain for whoever can crack them
      • Figure 12: Market size for home insurance, 2015-25 (prepared in December 2020)
    • Market drivers and assumptions
      • Figure 13: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared: December 2020)
    • Learnings from the last recession
      • Figure 14: Gross and net written premiums, 2007-13
    • Forecast methodology
  6. Claims Incurred

    • Value of claims incurred falls 8% in 2019
      • Figure 15: Value of domestic home insurance claims incurred, 2014-19
    • Escape of water accounts for over a quarter of claims
      • Figure 16: Proportional distribution of gross domestic property claims incurred, by value of claims, 2014-19
    • COVID-19 leads to more fires but fewer burglaries
      • Figure 17: Quarterly distribution of gross domestic property claims incurred, by value of claims, Q1 2018-Q3 2020
  7. Average Premiums

    • Premiums reach new highs in 2020…
      • Figure 18: Average home insurance premium, Q1 2012-Q3 2020
    • …but premiums have often fallen in real terms
      • Figure 19: Annual change in average premiums and all items CPI, 2012-19
  8. Underwriting Result

    • Profitability improves in 2019
    • Weather events of 2020 will hit profitability
      • Figure 20: Domestic property outgoings and underwriting result, 2014-19
  9. Channels to Market

    • Growing proportion of sales go direct
      • Figure 21: Proportional distribution of gross domestic property premiums, by sales channel, 2014-19
  10. Market Drivers

    • Impact of Brexit on home insurance
    • A turbulent year for the housing market
      • Figure 22: Monthly housing transactions, January 2016-October 2020
    • ‘Generation Rent’ demands a different kind of insurance
      • Figure 23: Housing tenure, by age, 2018/19
    • Consumers are embracing the smart home revolution
      • Figure 24: Ownership of connected home devices, March 2020
    • Changing weather conditions
  11. Regulatory and Legislative Changes

    • COVID rules to protect household finances
    • FCA publishes final report into pricing practices
    • CMA fines ComparetheMarket for keeping home insurance costs high
    • Stamp Duty holiday
  12. Companies and Brands – Key Takeaways

    • Aviva is the leading insurance brand
    • Smart devices sweeten the deal
    • Expanding the boundaries of home insurance
    • Advertising becomes more generalised
    • Direct Line offers a clear point of difference
  13. Market Share

    • Market consolidation in 2019
      • Figure 25: Top 20 domestic property underwriters – UK, by share of total market GWP, 2018-19
    • Aviva is the leading home insurance brand
      • Figure 26: Customer share of home insurance brands, October 2020
    • LV= acquires L&G’s general insurance business
    • Santander and Aviva renew partnership in 2020
    • Co-op Insurance sells underwriting business to Markerstudy
      • Figure 27: Underwriting arrangements, November 2020
  14. Competitive Strategies

    • Supporting households during COVID-19
    • Banks use data to speed up the quote process
    • John Lewis eyes a bigger share of the market
    • Putting spending analytics to work to avoid overpaying
    • Protection for the future
    • Smart home devices to sweeten the deal
    • Integrating the smart home to deliver value
  15. Launch Activity and Innovation

    • LV= launches Flow renters insurance
    • NFU Mutual introduces Cybercrime cover
    • LV= launches through smart assistants
  16. Advertising and Marketing Activity

    • Adspend declines two years running
      • Figure 28: Total above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, 2015/16-2019/20
    • Confused.com and Direct Line lead on spending
      • Figure 29: Above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by advertiser, 2019/20
    • Shift towards generalised advertising
      • Figure 30: Above-the-line, online display and direct mail advertising expenditure on home insurance, home emergency and related products, by product type, 2015/16-2019/20
    • Direct Line launches “We’re on it” campaign
      • Figure 31: Donatello Home Insurance advert, Direct Line, March 2020
    • LV= focuses on customer service and price
      • Figure 32: LV= home insurance, July 2020
    • Saga shows that not everything has to change
      • Figure 33: Saga home insurance ‘Time Shouldn’t Change a Thing’, May 2020
    • Churchill the dog becomes a bit more real and a bit more chilled
      • Figure 34: Chur-Chill advert, October 2019
    • Nielsen Ad Intel coverage
  17. Brand Research

    • Brand map
      • Figure 35: Attitudes towards and usage of selected brands, November 2020
    • Key brand metrics
      • Figure 36: Key metrics for selected brands, November 2020
    • Brand attitudes: Aviva stands out for service
      • Figure 37: Attitudes, by brand, November 2020
    • Brand personality: Direct Line plays on its fun image
      • Figure 38: Brand personality – macro image, November 2020
    • Hiscox seen as prestigious and authoritative
      • Figure 39: Brand personality – micro image, November 2020
    • Brand analysis
    • Aviva is the most used and trusted brand
      • Figure 40: User profile of Aviva, November 2020
    • LV= offers honest and affordable insurance
      • Figure 41: User profile of LV=, November 2020
    • AXA is a well-known brand that struggles to stand out
      • Figure 42: User profile of AXA, November 2020
    • Admiral’s messaging around loyalty cuts through
      • Figure 43: User profile of Admiral, November 2020
    • Direct Line stands apart from the rest
      • Figure 44: User profile of Direct Line, November 2020
    • NFU Mutual offers a reassuring and ethical choice
      • Figure 45: User profile of NFU Mutual, November 2020
    • Hiscox lacks brand awareness but scores highly among those who know it
      • Figure 46: User profile of Hiscox, November 2020
    • MORE TH>N struggles to garner customer satisfaction
      • Figure 47: User profile of MORE TH>N, November 2020
  18. The Consumer – Key Takeaways

    • An opportunity remains among Generation Rent
    • Encourage consumers to consider the value of their possessions
    • Customer service is crucial to persuading consumers to switch
    • The over-55s seek protection in cyberspace
    • Young people are willing to pay for prevention
  19. Impact of COVID-19 on Home Insurance

    • COVID-19 has changed our relationship with our homes
    • A focus on value will lead people to reassess cover
      • Figure 48: Impact of COVID-19 on household finances, 10-19 November 2020
    • Changing behaviours demand clarity of messaging
    • People have been pushed online and are worried about new threats
  20. Home Insurance Ownership

    • Two thirds of people have some kind of home insurance
      • Figure 49: Home insurance ownership, October 2020
    • Stable penetration rates create intense competition for customers
      • Figure 50: Trends in home insurance ownership, 2014-20
    • Less than half of renters have any home insurance
      • Figure 51: Home insurance ownership, by housing tenure, October 2020
    • Londoners lack home insurance
      • Figure 52: Home insurance ownership, by region, October 2020
  21. How Consumers Pay for Home Insurance

    • Four in 10 pay monthly insurance premiums
      • Figure 53: How consumers pay for home insurance, by age, October 2020
    • Struggling households are most likely to pay monthly
      • Figure 54: How consumers pay for home insurance, by financial situation, October 2020
  22. How Much Consumers Pay for Home Insurance

    • Those who pay monthly pay more
      • Figure 55: Home insurance premiums, October 2020
    • Uncertainty over cost could lead to overpayment
      • Figure 56: Home insurance premiums, by age, October 2020
  23. Sources of Information

    • Comparison sites dominate home insurance research
      • Figure 57: Quote sources for new policies, October 2020
    • People are less likely to go direct than they think
      • Figure 58: Expected sources for a home insurance quote, October 2020
    • Those with the highest premiums prefer to go direct
      • Figure 59: Quote sources for new policies, by home insurance premium, October 2020
  24. Barriers to Purchase

    • Affordability is a key concern
      • Figure 60: Barriers to purchase, October 2020
    • Highlight the value of contents to appeal to renters
      • Figure 61: Barriers to purchase, by housing tenure, October 2020
  25. Factors Encouraging Switching

    • Customer service is key
      • Figure 62: Factors that would encourage switching, October 2020
    • Putting the customer in control
      • Figure 63: Selected factors that would encourage switching (any rank), by age, October 2020
    • Appeal to the over-55s by offering protection in cyberspace
      • Figure 64: Selected factors that would encourage switching, by age, October 2020
  26. Attitudes towards Home Insurance

    • COVID changes demand better communication
      • Figure 65: Attitudes towards home insurance, October 2020
    • Consumers trust insurers…to a point
      • Figure 66: Attitudes towards home insurance, October 2020
    • Millennials are comfortable buying insurance from unknown brands
      • Figure 67: Home insurance behaviours, CHAID analysis, Tree output, October 2020
    • Young people are willing to pay for prevention
      • Figure 68: Willingness to pay for smart devices, by age, October 2020
    • Clarity required on digital assets
      • Figure 69: Home insurance and digital assets, by age, October 2020
  27. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID analysis Methodology
      • Figure 70: Home insurance behaviours – CHAID – Table output, October 2020

About the report

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.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

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*databooks not available with UK B2B Industry reports.

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