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UK Motor Insurance market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Motor Insurance - UK market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

This Report explores the UK domestic car insurance market. It includes discussion of the size of the market, including a forecast for the value of premiums over the next five years. Key market drivers and regulatory changes are discussed, as well as the performance and activities of major players and challengers in the industry.

Expert analysis from a specialist in the field

Written by Douglas Kitchen, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The car insurance market experienced a turbulent 2019, with many providers posting a reduced income, and profit. Despite this there are positive signs for the market over the next five years. With greater clarification over the Ogden rate, providers will be more confident in their pricing strategies. Additionally, the move toward more flexible products is long overdue. Douglas Kitchen
Financial Services Analyst

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What's included

What's included

Table of contents

Table of contents

  1. Overview

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

          • The market
            • Total car insurance premiums fall in 2019
              • Figure 1: Gross written personal motor insurance premiums (UK domestic business only), 2015-19
            • Premiums forecast to return to growth over the next five years
              • Figure 2: Forecast of the value of gross written personal motor insurance premiums (UK domestic business only), 2014-24
            • New car registrations decline for the third consecutive year
              • Figure 3: Number of new car registrations and used car sales, 2013-19
            • Average premiums reach the highest level since 2017
              • Figure 4: Average premium for comprehensive car insurance policies, quarterly data, Q1 2015-Q4 2019
            • Rising claims costs are a growing challenge in the market
              • Figure 5: Volume and gross value of private car claims settled, Q1 2015-Q3 2019
            • Insurers left dissatisfied by the Ogden rate change
              • Companies and brands
                • Admiral is the UK’s largest motor insurer
                  • Rising claims costs hit profits at Hastings and Ageas
                    • More flexible solutions enter the market
                      • Honcho launches in a bid to challenge traditional PCWs
                        • Insurers struggle for trust and differentiation
                          • Figure 6: Attitudes towards and usage of selected brands, February 2020
                        • The consumer
                          • Rising car insurance penetration
                            • Figure 7: Car insurance ownership, 2017, 2018 & 2019, November 2019
                          • People prefer to remain with their existing provider
                            • Figure 8: Behaviour at last car insurance policy renewal or arrangement, November 2019
                          • Smartphones and tablets are niche channels when managing a policy
                            • Figure 9: Preferred methods of interacting with insurers, November 2019
                          • Price and quality are the key purchasing factors
                            • Figure 10: Motor insurance purchase drivers, November 2019
                          • A protected no claims bonus stands out as the most important feature
                            • Figure 11: Most important policy features, November 2019
                          • Policy-related actions are most popular when saving on car insurance
                            • Figure 12: Actions taken to reduce the cost of car insurance, November 2019
                          • The majority enjoy looking for a good deal
                            • Figure 13: Attitudes towards car insurance, November 2019
                          • What we think
                          • Issues and Insights

                            • Providers will have to be selective in who they reward for loyalty
                              • The facts
                                • The implications
                                  • Younger drivers force the development of new insurance models
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Total car insurance premiums fall in 2019
                                          • New car registrations decline for the third consecutive year
                                            • Average premiums reach the highest level since 2019
                                              • Rising claims costs a growing challenge in the market
                                                • Insurers left dissatisfied by the Ogden rate change
                                                  • The FCA steps up efforts to tackle the ‘loyalty penalty’
                                                  • Market Size and Forecast

                                                    • Marginal fall in car insurance premiums for the second consecutive year
                                                      • Figure 14: Gross written personal motor insurance premiums (UK domestic business only), 2015-19
                                                    • Premiums expected to return to growth over the next five years
                                                      • Figure 15: Forecast of the value of gross written personal motor insurance premiums (UK domestic business only), 2014-24
                                                    • Forecast methodology
                                                    • Market Drivers

                                                      • Marginal car parc growth in 2019
                                                        • Figure 16: Number of licensed cars, Great Britain, 2010-19
                                                      • New and used car sales decline for the third consecutive year
                                                        • Figure 17: Number of new car registrations and used car sales, 2013-19
                                                      • Average annual premium falls …
                                                        • Figure 18: Average premium for comprehensive car insurance policies, annual data, 2012-19
                                                      • … but premiums track upwards in the second half of 2019
                                                        • Figure 19: Average premium for comprehensive car insurance policies, quarterly data, Q1 2015-Q4 2019
                                                      • Claims costs rise whilst the number of claims settled falls
                                                        • Figure 20: Volume and gross value of private car claims settled, Q1 2015-Q3 2019
                                                      • The number of younger drivers dramatically rises in 2018
                                                      • Regulatory and Legislative Changes

                                                        • Government raises the Ogden discount rate but by less than expected
                                                          • FCA proposes remedies to tackle the ‘loyalty penalty’
                                                            • New claims system to minimise whiplash pay-outs set for release
                                                            • Companies and Brands – What You Need to Know

                                                              • Admiral is the UK’s largest motor insurer
                                                                • Direct Line sees premium income decline in 2019
                                                                  • Rising claims costs hit profits at Hastings and Ageas
                                                                    • More flexible solutions enter the market
                                                                      • Honcho launches in a bid to challenge traditional PCWs
                                                                        • Insurers struggle for trust and differentiation
                                                                        • Market Share

                                                                          • Admiral expands its influence
                                                                            • Direct Line Group saw premium income decline in 2019
                                                                              • Allianz becomes the UK’s third largest motor insurer
                                                                                • Aviva’s premium income falls
                                                                                  • Rising claims costs impact profits at both Hastings and Ageas
                                                                                    • Figure 21: Selected leading personal motor insurance underwriters (UK-domiciled), by gross written premiums, 2017-18 (UK business only)
                                                                                • Launch Activity and Innovation

                                                                                  • The trend toward improving flexibility continues
                                                                                    • By Miles partners with Tesla
                                                                                      • Cuvva looks set to enter the monthly subscription market
                                                                                        • BGL enters the short-term car insurance market
                                                                                          • New fintech partnerships help brands extend their influence
                                                                                            • Direct Line partners with Drover …
                                                                                              • … while Allianz teams up with Wrisk
                                                                                                • New reverse-auction marketplace app launces
                                                                                                  • Comparethemarket.com hopes to save those paying the ‘loyalty penalty’
                                                                                                  • Advertising and Marketing Activity

                                                                                                    • Total advertising spend falls for the second consecutive year
                                                                                                      • Figure 22: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, 2016-19
                                                                                                    • LV= was the largest spender on car insurance advertising in 2019
                                                                                                      • PCWs drastically increase their adspend
                                                                                                        • Churchill replaces the iconic ‘nodding dog’
                                                                                                          • Figure 23: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, by advertiser, 2017-19
                                                                                                        • TV accounts for the majority of advertising expenditure
                                                                                                          • Figure 24: Total above-the-line, online display and direct mail advertising expenditure on car insurance, breakdown recovery, motorcycle insurance and van insurance, by media type, 2019
                                                                                                        • Nielsen Ad Intel coverage
                                                                                                        • Brand Research

                                                                                                            • Brand map
                                                                                                              • Insurers struggle for trust and differentiation
                                                                                                                • Figure 25: Attitudes towards and usage of selected brands, February 2020
                                                                                                              • AA’s dominance in breakdown recovery is reflected in awareness and usage
                                                                                                                • Figure 26: Key metrics for selected brands, February 2020
                                                                                                              • AA and Aviva more closely associated with rewarding loyalty
                                                                                                                • Figure 27: Attitudes, by brand, February 2020
                                                                                                              • Churchill and Direct Line stand out as fun brands
                                                                                                                • Figure 28: Brand personality – macro image, February 2020
                                                                                                              • Ageas struggles to stand out on positive attributes
                                                                                                                • Figure 29: Brand personality – micro image, February 2020
                                                                                                              • Brand analysis
                                                                                                                • Aviva’s loyalty strategy appears to be working
                                                                                                                  • Direct Line and Churchill stand out through their strong reputations and fun image
                                                                                                                    • Negative perceptions about Ageas’s accessibility and affordability
                                                                                                                    • The Consumer – What You Need to Know

                                                                                                                      • Rising car insurance penetration
                                                                                                                        • People prefer to remain with their existing provider
                                                                                                                          • Smartphones and tablets are niche channels when managing a policy
                                                                                                                            • Price and quality are the key purchasing factors
                                                                                                                              • A protected no claims bonus stands out as the most important feature
                                                                                                                                • Policy-related actions are most popular when saving on car insurance
                                                                                                                                  • The majority enjoy looking for a good deal
                                                                                                                                  • Car Insurance Ownership

                                                                                                                                    • Car insurance ownership grows
                                                                                                                                      • Figure 30: Car insurance ownership, 2017, 2018 & 2019, November 2019
                                                                                                                                    • Comprehensive car insurance accounts for the vast majority of policies
                                                                                                                                      • Figure 31: Car insurance ownership, insurance holders only (rebase), November 2019
                                                                                                                                    • One fifth of younger millennials own third party cover
                                                                                                                                      • Figure 32: Car insurance ownership, insurance holders only (rebase), by generation, November 2019
                                                                                                                                  • Renewal and Arrangement Behaviour

                                                                                                                                    • 40% stayed with existing provider after shopping around
                                                                                                                                      • Figure 33: Behaviour at last car insurance policy renewal or arrangement, November 2019
                                                                                                                                    • Younger customers are less likely to shop around
                                                                                                                                      • Figure 34: Behaviour at last car insurance policy renewal or arrangement, by generation, November 2019
                                                                                                                                  • Preferred Methods of Interacting with Insurers

                                                                                                                                    • Smartphones and tablets remain niche channels for most customers
                                                                                                                                      • Figure 35: Preferred methods of interacting with insurers, November 2019
                                                                                                                                    • Recent switchers prefer online channels
                                                                                                                                      • Figure 36: Preferred methods of interacting with insurers when renewing/taking out a policy, by renewal behaviour, November 2019
                                                                                                                                  • Motor Insurance Purchase Drivers

                                                                                                                                    • Price and quality the key drivers when choosing motor insurance
                                                                                                                                      • Convenience and innovation matter more for newer drivers
                                                                                                                                        • Figure 37: Motor insurance purchase drivers, November 2019
                                                                                                                                      • Loyal customers look for more than just price
                                                                                                                                        • Figure 38: Motor insurance purchase drivers, by behaviour at last car insurance renewal, November 2019
                                                                                                                                    • Important Policy Features

                                                                                                                                      • A protected no claims bonus is by far the most policy important feature
                                                                                                                                        • 30% would prioritise a fair premium commitment
                                                                                                                                          • Figure 39: Most important policy features, November 2019
                                                                                                                                        • A singular focus on price can come at the cost of other benefits
                                                                                                                                          • Figure 40: Most important policy features, by motor insurance purchase drivers, November 2019
                                                                                                                                      • Potential Actions to Reduce the Cost of Motor Insurance

                                                                                                                                        • Policy related actions are the most popular …
                                                                                                                                          • … while younger drivers consider alternative methods
                                                                                                                                            • Figure 41: Actions taken to reduce the cost of car insurance, November 2019
                                                                                                                                          • Reluctant switchers are less likely to take action to save
                                                                                                                                            • Figure 42: Actions taken to reduce the cost of car insurance, by renewal behaviour, November 2019
                                                                                                                                        • Attitudes towards Motor Insurance

                                                                                                                                          • Trying to find a good deal is an enjoyable pursuit
                                                                                                                                            • Consumers are keen on rewards for driving an electric car
                                                                                                                                              • Figure 43: Attitudes towards car insurance, November 2019
                                                                                                                                            • Policyholders are looking for reasons to stay loyal
                                                                                                                                              • Figure 44: Attitudes towards car insurance, by renewal behaviour, November 2019
                                                                                                                                            • Insurance apps hold most appeal for working parents
                                                                                                                                              • Figure 45: Motor Insurance – CHAID – Tree output, November 2019
                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                              • Abbreviations
                                                                                                                                                • Consumer research methodology
                                                                                                                                                  • CHAID analysis methodology
                                                                                                                                                    • Figure 46: Motor Insurance – CHAID – Table output, November 2019
                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                    • Figure 47: Best and worst-case forecast for the value of gross written premiums for personal motor insurance (UK business only), 2019-2023
                                                                                                                                                  • Forecast methodology

                                                                                                                                                  About the report

                                                                                                                                                  This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                  • The Consumer

                                                                                                                                                    What They Want. Why They Want It.

                                                                                                                                                  • The Competitors

                                                                                                                                                    Who’s Winning. How To Stay Ahead.

                                                                                                                                                  • The Market

                                                                                                                                                    Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                  • The Innovations

                                                                                                                                                    New Ideas. New Products. New Potential.

                                                                                                                                                  • The Opportunities

                                                                                                                                                    Where The White Space Is. How To Make It Yours.

                                                                                                                                                  • The Trends

                                                                                                                                                    What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                  Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

                                                                                                                                                  Description