Only 42% of insured UK adults think insurance companies are innovative, highlighting large scope to change perceptions. However, most policyholders also believe insurers should focus on getting the basics right, not introducing new innovations.
An issue for insurance brands is that owners hope to never need to use the product, and many only want to hear from their insurer when a policy is up for renewal. This lack of engagement throughout a policy term can lead to policyholders becoming somewhat disinterested in product specifics.
Maintaining trust and satisfaction is key. In a market where policyholders are conditioned to shop around when renewing a policy, it is important for insurers to offer ongoing discounts and rewards to ensure they remain competitive.
This report looks at the following areas:
- The short-, medium- and long-term impact of the economic climate and regulation on insurance
- Reasons why policyholders take out insurance products
- Customer interest in policy features that insurance providers should offer
- Consideration of sharing data with insurers in exchange for personalised policy recommendations, and the types of data customers are willing to share
- Level of comfort with insurance companies using AI to undertake certain processes
- Policyholder interest in purchasing insurance for individual items, using alternative payment methods, ‘on-demand’ insurance, and in a single policy that covers all their respective insurance needs
Customer expectations in insurance are changing, with growing demand for flexible products and rewards to match protection needs that meet modern lifestyles.
Lewis Cone, Associate Director – Financial Services
Market Definitions
For the purposes of this Report, Mintel has used the following definitions:
General insurance is insurance that covers (non-life) risks for a limited period, typically one year.
The main sectors are:
- Motor – Motor policies cover the legal liabilities arising from the use of a motor vehicle, such as a private car or motorcycle. Comprehensive policies additionally cover damage to the vehicle (see UK Motor Insurance).
- Household – Household policies cover specified property that may be damaged or destroyed by events or perils such as fire, storm, subsidence or theft (see UK Home Insurance).
- Accident and health – Comprises two main types of business: personal accident and medical expenses. Personal accident policies will pay a lump sum or weekly benefits in the event of accidental death or a specified injury. PMI (Private medical insurance) will pay the costs of medical treatment for acute conditions (see UK Consumers and Health Insurance).
- Pecuniary loss – Relates to financial losses that may have occurred, includes travel insurance, pet insurance, legal expenses, etc.
- Other lines – includes extended warranties and mobile phone and gadget insurance
Also relevant for this Report:
- Protection products – cover a person or their dependents should they lose their ability to earn an income. The largest sectors are term assurance and whole-of-life insurance.
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EXECUTIVE SUMMARY
- Opportunities for innovations in insurance
- Insurers can drive engagement by modernising communication methods
- Convince customers to allow AI to undertake basic tasks
- Showcase how sharing data can improve the value of policy features
- Market dynamics
- General insurance premiums value estimated to have risen in 2024
- Graph 1: total general insurance market (direct – UK risks), by gross written premiums, 2019-24
- Majority of Brits own some form of insurance
- Graph 2: insurance product ownership, 2024
- What consumers want and why
- Cost and coverage are key drivers of insurance purchases
- Graph 3: motivations behind choice of insurance, by order of ranking, 2024
- Policy-specific loyalty rewards pique most interest
- Graph 4: interest in insurance policy features, 2024
- Policyholders are willing to share less evasive personal data
- Graph 5: types of data considered to be shared with an insurer, 2024
- Policyholders remain wary of AI use for insurance purposes
- Graph 6: comfort with insurance companies using AI, 2024
- Policyholders do not view insurers as innovative
- Graph 7: attitudes towards innovations in insurance, 2024
- Competitive strategies and launch activity
- Insurers revamp offerings to meet evolving needs
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MARKET DYNAMICS
- Market context
- General insurance premiums value estimated to have risen in 2024
- Graph 8: total general insurance market (direct – UK risks), by gross written premiums, 2019-24
- Premium inflation has contributed to GWP growth
- Most business is written directly or via an independent intermediary
- Graph 9: distribution channels in personal lines general insurance, by risk, 2023
- PCWs play a major role across the industry
- Graph 10: usage of comparison websites for insurance products, 2024
- Majority of Brits own some form of insurance
- Graph 11: insurance product ownership, 2024
- Insurance needs change with age
- Market drivers
- Inflation has fallen significantly, but some households continue to feel the impact
- Graph 12: RPI and CPI inflation rate, 2021-25
- Physical, mental, and financial health are deeply interconnected
- Graph 13: self-reported physical and mental health (NET), by financial situation, 2024
- Wearable tech moves towards being mainstream
- Graph 14: use of and interest in new technologies, 2024
- ABI and Insurtech UK sign Memorandum of Understanding
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WHAT CONSUMERS WANT AND WHY
- Motivations behind choice of insurance
- Cost and coverage are key drivers of insurance purchases
- Graph 15: motivations behind choice of insurance, by order of ranking, 2024
- Older customers are most resolute on premium costs
- Showcase positive reviews and recommendations to win younger customers
- Graph 16: respondents influenced by recommendations and customer reviews – any rank, by age, 2024
- Highlight multichannel account management to enhance customer service
- Graph 17: respondents influenced by ability to manage account in different ways – any rank, by age, 2024
- Interest in insurance policy features
- Policy-specific loyalty rewards pique most interest
- Graph 18: interest in insurance policy features, 2024
- Promote loyalty rewards to older customers to improve trust and retention
- Graph 19: interest in loyalty rewards related to policy, by age, 2024
- Adding retail and leisure rewards will offer tangible benefits to younger customers
- Graph 20: interest in retail/leisure discounts or rewards, by age, 2024
- Expand device supplier partnerships to promote savings and wellbeing benefits
- Graph 21: interest in free/discounted smart devices, by age, 2024
- Data sharing
- Half of policyholders would consider sharing data to receive tailored recommendations
- Educate older customers on the benefits of sharing data
- Graph 22: willingness to share data for personalised policy recommendations, by age, 2024
- Policyholders are most willing to share location data
- Graph 23: types of data considered to be shared with an insurer, 2024
- Highlight security and privacy measures to convince younger customers to share location
- Graph 24: respondents who would consider sharing location data, by age, 2024
- Partner with health and wellbeing brands to boost sharing of tracker data
- Graph 25: respondents who would consider sharing health/fitness tracker data, by age, 2024
- Level of comfort with insurers using AI
- Policyholders remain wary of AI use for insurance purposes
- Graph 26: comfort with insurance companies using AI, 2024
- Building trust in AI processes is key
- Promote time savings and reduced stress with an AI-streamlined claims process
- Attitudes towards insurance innovation
- Policyholders do not view insurers as innovative
- Graph 27: attitudes towards innovations in insurance, 2024
- Basics first, innovation second
- Doing the basics right is a must for older policyholders
- Promote sustainability practices to retain younger policyholders
- Graph 28: respondents who think insurers should design policies that encourage sustainability, by age, 2024
- On-demand insurance strongly appeals to young, professional parents
- Promote convenience of flexible cover to time-starved, cost-burdened parents
- Attitudes towards purchasing insurance
- Broker importance on the wane, while there is strong interest in policies from non-insurers
- Graph 29: attitudes towards purchasing insurance, 2024
- Alternative payments appeal to young and vulnerable customers
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Innovation And Marketing Trends
- Competitive strategies
- Markerstudy Group modernises contact services by introducing AI
- Aviva’s protection insurance now distributed through NatWest’s UK brands
- Qover travel insurance is now available to Yonder members
- Launch activity
- Embri expands offering to cover bikes and high-end tech
- AXA UK enhances digital claims service
- Blink Parametric and Gigasure launch travel assistance app
- Lemonade launches new Buildings and Contents policy
- ICEYE aims to help insurers improve customer resilience and response during floods
- Advertising and marketing activity
- General insurance adspend rises…
- Graph 30: total above-the-line, online display and direct mail advertising expenditure on financial services, by category – percentage, 2022/23-2023/24
- …driven by car and travel insurance
- Graph 31: total above-the-line, online display and direct mail advertising expenditure on general insurance, by top 5 sub-categories, 2022/23-2023/24
- Insurance adverts are the most visible
- Graph 32: financial products or services seen advertised in the last 12 months, 2024
- Marshmallow appeals to niche car insurance group
- The AA continues its “It’s OK, I’m with the AA” campaign
- Aviva launches new iteration of its ‘Make it Click’ campaign
- Petplan captures the emotional journey of pet ownership
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APPENDIX
- Supplementary data
- Above-the-line, online display and direct mail advertising expenditure on general insurance – sub-categories
- Report scope and definitions
- Report scope
- Market definitions
- Abbreviations and terms
- Methodology
- Consumer research methodology
- CHAID analysis – methodology data
- CHAID analysis – methodology data table
- Nielsen Ad Intel coverage
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