Table Of Contents
Executive Summary
Private motor and household insurance penetration has fallen over the last year
Older consumers are more likely to hold motor insurance
The market for home insurance has contracted slightly over the last year
High net worth consumers are the most likely to hold buildings and contents only policies
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The Internet is used by the majority of consumers to arrange home or motor insurance policies
Direct insurers account for a growing share of the private motor and household insurance markets
Half of the private motor policies sold in 2010 were distributed through direct insurers
Despite the dominance of household insurance in the bancassurance channel, bank and building society motor insurance GWP sales rose to 7% in 2010
A significant proportion of consumers use price comparison sites purely for research
18% of consumers have not visited an aggregator site for household or motor insurance
OVERVIEW
Catalyst
Summary
PERSONAL INSURANCE DISTRIBUTION DYNAMICS
Introduction
The direct channel distributes half of all private motor insurance policies in the UK
The direct channel's share of the private motor insurance market continues to increase
The broker channel has seen little change in its share of the motor insurance market
The share held by corporate partnerships contracted further still in 2010
The share held by banks and building societies is diminishing
Direct insurers have seen a dramatic rise in their share of the UK home insurance market
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A handful of leading insurance brands distributed the majority of insurance policies
12 major groups hold the majority of the UK home and motor insurance markets
Consumers aged 18–24 are the most likely to buy an insurance product from a top 10 brand
Less than two-fifths of consumers aged 55–65 took out home insurance policies with top 10 providers
Aviva's combined home insurance was most popular among consumers aged 18–24
Respondents aged 55–65 were the least likely to hold contents only insurance with a top 10 provider
Aviva has become the most popular provider of buildings only insurance
Three of the major aggregators were top 10 insurance advertisers in 2010
The top 10 insurance advertisers have increased their expenditure
Gocompare.com and Comparethemarket.com dramatically increased their advertising expenditure
RBS brands Direct Line and Churchill continued to spend heavily on advertising in 2010
Acromas increased its marketing budget by 10%
Half of the top 10 insurance advertisers' budget was spent on television campaigns
Television advertising remains the most popular marketing medium
Direct mail has increased in prominence as a secondary advertising medium
The radio, cinema, and outdoor marketing platforms were used to a greater extent in 2010
The press and Internet were less popular with insurance advertisers than 2009
CONSUMER FOCUS
Introduction
Age is a significant variant in terms of penetration rates of personal insurance
The take-up of motor insurance is affected by age and income more than socioeconomic grading
Consumers are most likely to purchase combined buildings and contents insurance policies
The Internet is used by the majority of consumers to arrange home or motor insurance policies
The postal method is still used by some higher income consumers when purchasing motor insurance
Consumers in lower socioeconomic groups are most likely to purchase household or personal insurance policies by telephone
Age and household income has a significant impact on retention rates in personal lines insurance
Older consumers are generally more likely to switch motor insurance provider
Lower income home contents insurance policyholders are the most likely to be on their first policy
Price is the most important factor for consumers purchasing a motor insurance policy
Convenience, reputation, and experience are also highly valued
Consumers were universally concerned about the price of their motor insurance policies
The factors that are important to consumers when selecting a provider vary from product to product
Consumers under 25 are the least concerned about price but the most concerned about insurer reputation
DIRECT INSURANCE
Introduction
Direct insurers account for a growing share of the private motor and household insurance markets
Half of the private motor policies sold in 2010 were distributed through direct insurers
Direct Line spent £56m on insurance advertising in 2010
Three-quarters of direct insurer advertising is dedicated to home or motor insurance
The top 10 direct insurer advertisers cut their budgets for all media besides direct mail and outdoor campaigns
Direct Line was the largest insurance advertiser in 2010
Direct Line and Aviva were top three insurers in both the home and motor insurance markets
Near one-third of motor insurance policies were sold by top five direct insurance providers
More than one-quarter of home insurance policies are sold by the top five direct insurers
Ageas has formed significant partnerships which will considerably increase its share of the private motor and household insurance markets
Aviva and RBS Insurance have started to merge underwriting sections in line with Solvency II
Aviva will continue to provide home insurance to Barclays customers
Ageas has strengthened its personal insurance presence via a number of notable partnerships
Kwik-Fit has sold off its insurance wing to Ageas
Esure was purchased in a management buyout and launched on brokers
RSA purchased Oak Underwriting to increase its presence in the high net worth market
BROKERS AND INTERMEDIARIES
Introduction
The proportion of household and motor insurance sold via brokers showed negligible change
Brokers distributed approximately 30% of motor insurance GWP in 2010
Brokers continue to focus their advertising budgets on the motor and home insurance markets
The proportion of advertising spend shifted towards home insurance in 2010
Brokers now concentrate increasingly on direct mail advertising
The AA remains the top advertiser, with RIAS close behind
The AA continues to dominate the personal insurance market
The AA still dominates broker-distributed private motor insurance, while Hastings is now ahead of RIAS
The AA and RIAS dominate the broker household insurance market
The personal lines broker sector has seen a number of changes
RIAS to sell its policies on aggregator sites
Castle Cover has been acquired by Ageas for £53m
One Call Insurance adjusted its business model to suit the aggregator market
Swinton has continued with its acquisition strategy
Ageas now provides travel and motor insurance to Tesco customers
BANKS AND BUILDING SOCIETIES
Introduction
Household insurance GWP dominate bancassurance channel sales
Despite the dominance of household insurance in the bancassurance channel, bank and building society motor insurance GWP sales rose to 7% in 2010
Bancassurance advertising spend increased substantially in 2010
After a noticeable decline in 2009, bancassurance advertising spend rose by 22.2% in 2010
Direct mail cross-selling dominates bancassurers' advertising, followed by TV advertising
Only four out of the top 10 bancassurers increased their advertising budget
Banks have a small presence in the motor insurance market, with the exception of Tesco Bank
Lloyds has lost its position as the largest provider of motor insurance among bancassurers
Halifax holds the largest share of the UK home insurance market
Lloyds Banking Group exited the private motor insurance market with the sale of esure
Aviva will continue to provide home insurance to Barclays customers
Royal Bank of Scotland will provide motor insurance for Sainsbury's Bank
Lloyds Banking Group is no longer in the market
AFFINITY GROUPS AND RETAILERS
Introduction
Affinity partnership presence decreased in the UK personal insurance markets in 2010
Affinity groups and retailers have experienced a continuous drop in their private motor insurance market share since 2006
Affinity group insurers primarily used direct mail marketing
Overall, 30% of the total budget of the leading affinity insurer advertisers was focused on home or motor insurance
More than three-quarters of top affinity groups' advertising insurance expenditure was spent on direct mail
HomeServe, RAC, and Sainsbury's reduced their insurance marketing budgets
The top affinity and retailer insurance providers saw their market shares decrease
RAC and Kwik-Fit retained their market shares in the motor insurance sector
Affinity groups have their largest presence in the combined policy market
Sainsbury's Bank switched its motor insurance provider
Royal Bank of Scotland will provide motor insurance for Sainsbury's Bank
Kwik-Fit has sold off its insurance wing to Ageas
John Lewis rebrands its Greenbee business
Ageas wins the 600,000-policy Age UK contract
AGGREGATORS AND PRICE COMPARISON SITES
Introduction
The main focus of aggregators is to increase their share of the motor insurance market
Aggregators target their advertising toward the commoditized car insurance sector
Television was the primary advertising medium used by price comparison sites
Only Confused.com reduced its advertising budget in 2010
Older consumers are less likely to consult aggregators
Younger consumers are more likely to purchase motor insurance through an aggregator
One-third of consumers under the age of 25 are unwilling to use aggregators to purchase household insurance policies
Moneysupermarket.com has the highest consumer conversion rate in the home and motor insurance markets
The highest proportion of consumers research and buy insurance policies from Comparethemarket.com
Price comparison sites are used less for the arrangement of household insurance
Moneysupermarket.com has the highest consumer conversion rate in terms of both home and motor insurance
Nearly 10% of Moneysupermarket.com visitors purchase policies
A significant proportion of consumers use price comparison sites purely for research
18% of consumers have not visited an aggregator site for household or motor insurance
One-third of respondents who did not use aggregators preferred the direct channel
One-quarter of consumers selected a price comparison site based on advertisements
Half of consumers who use online aggregators do so purely for research purposes
Price is the most important factor for consumers purchasing an insurance policy through an aggregator
More than two-thirds of consumers would return to aggregators to buy their insurance products
One-third of UK consumers remain unaware of the existence of cashback websites
FUTURE DECODED
Introduction
The direct channel is predicted to increase its share in the private motor insurance market over the forecast period
The direct channel is expected to continue to record the market share growth it has shown since 2007
Brokers are predicted to slowly lose market share until 2012, and thereafter level out
Affinity partnerships are forecast to witness a market contraction
As the UK comes out of recession, consumers will regain confidence in banks, and bancassurers could gain private motor insurance market share
Direct insurers are forecast to become the dominant providers of UK household insurance
The direct channel is expected to see a continuing increase in market share
Bancassurers are predicted to retain the largest share of the UK household insurance market
Brokers are expected to see a decline in market share from around 2013
Affinity partnerships are expected to see little movement in the UK household insurance market
Future trends and action points
The ECJ gender ruling is expected to affect the arrangement of private motor and medical insurance
Motor insurers have targeted household insurance as an expansion opportunity
Google's acquisition of Beat That Quote raised questions in the price comparison sector
Future conditions in the insurance aggregator market
Alternative scenarios include a potential revolution in how insurers and brokers use insurance aggregators, including a government-run price comparison system
Insurers are intending to use technology to retain a strong market presence
APPENDIX
Definitions
Distribution definitions
Premium income
Methodology
Datamonitor General Insurance Consumer Survey
Primary and secondary research
Distribution estimates and forecast methodology
Advertising and marketing spend data
Further reading
Ask the analyst
Datamonitor consulting
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