Dallas, TX: ReportsandReports announce Japanese UK Personal Insurance Distribution 2010 Market Research Report in its Store.
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This report provides an analysis of the distribution of personal insurance in the UK. It includes information on the advertising spend and market share of the key players and analyzes the effect of online aggregators in the personal lines sector. It also details notable deals made over the past year and explores the evolving balance between the various distribution channels.
Scope
- Insight into the latest issues affecting the personal insurance market and the impact these are having on distribution.
- Data on consumer purchasing behavior and brand loyalty in the UK household and private motor insurance markets, sorted by key demographic groups.
- The latest data on the size of the personal insurance market and premium splits by distribution channel.
- Forecasts up to 2014 of the market share of different channels in the UK private insurance space.
Highlights
As of March 2010, the internet was the most popular platform for arranging motor insurance overall, with more than half of all respondents stating that they had used the platform. This highlights consumers’ confidence in arranging the policies and other financial transactions online without assistance.
Overall, the top 10 insurance advertisers spent 1.1% less on advertising in 2008 compared to 2007, dipping from £216.4m overall to £214.0m. This was perhaps indicative of the effect the economic recession had on the insurance sector as a whole, rather than due to a specific trend.
Carole Nash insures 300,000 motorcycles, which equates to about a quarter of all licensed bikes in the UK. Since acquiring more than 17,000 policies from the AA in 2004, Carole Nash has been purchasing motorcycle books from those who do not consider them a core product.
Reasons to Purchase
- Understand consumer purchasing patterns and their attitudes to brand awareness and aggregators.
- Make decisions based on consumers’ use of different platforms for personal insurance arrangement and the shifting trends within the market.
- Gain insight into the factors driving changes in distribution and how this is linked to modern technology.
Table of Contents
Overview
Catalyst
Summary
Executive Summary
The direct channel gained market share, while brokers saw their share decline
The direct channel remains the dominant provider of private motor insurance
Banks and building societies hold the largest share of the UK home insurance market
The top 10 advertisers increased their expenditure compared to 2008
The vast majority of consumers use the internet or telephone to arrange their motor insurance cover
Half of all consumers arrange their motor insurance over the internet
Consumers aged between 25 and 34 are more likely to arrange their motor insurance online
The broker channel has been gradually growing its household insurance market share
Brokers distributed an estimated 28% of the private motor insurance GWP in 2009
Brokers hold a growing share of the home insurance market
Banks and building societies lost personal insurance market share in 2009
Bancassurers hold the largest share of the UK household insurance market
The presence of affinities has decreased in the UK home and motor insurance markets
Affinity groups and retailers saw a slight dip in their private motor market share from 2008
Fortis procures significant partnerships to provide Tesco and Toyota with home and motor insurance
Over 60% of consumers use an aggregator when purchasing motor insurance
A sizeable proportion of aggregator visitors use them for research purposes only
Table of Contents
Table of figures
Table of tables
Personal Insurance Distribution Dynamics
Introduction
The direct channel gained market share, while brokers saw their share decline
The direct channel remains the dominant provider of private motor insurance
The broker channel is the second largest distributor of private motor insurance
Corporate partnerships witnessed their share contract in the private motor market
The banks and building societies market share is diminishing
Banks and building societies hold the largest share of the UK home insurance market
The majority of home cover sales can be attributed to banks and building societies
Brokers closed the market share gap with the bancassurers in 2008 and 2009
The direct channel retains a level share of the household insurance market
Partnerships share of the UK home insurance market has declined
The vast majority of home and motor insurance policies are distributed through the top 10 groups and brands
Thirteen of the largest insurance groups hold the majority of both the home and motor insurance markets
Direct Line is particularly popular among younger consumers for private motor insurance
Older consumers are more likely to select a home insurance policy targeted at their age group
Direct Line’s and Halifax’s combined contents and buildings insurance policies are particular popular among younger consumers
Home contents insurance providers showed little age to market correlation, aside from RIAS and Saga
Consumers aged 18-24 were most likely to arrange buildings only home insurance policies through a top ten distributor
Two aggregators appeared in the top 10 advertisers in 2009
The top 10 advertisers increased their expenditure compared to 2008
RBS brands Direct Line and Churchill were two of the top three insurance advertisers in 2009
Zurich Insurance became a top 10 advertising spender after more than doubling its advertising spending in 2009
Acromas Group insurers decreased their advertising spend in 2009
Aviva resumes its high advertising spend from 2007
The top insurance advertisers spent half their budgets on television advertising in 2009
While TV advertising remains the medium eliciting the most expenditure, direct mail has increased in prominence as an advertising platform
Saga and HomeServe spent the most on direct mail advertising
Press, radio and the internet were used to a lesser extent in insurance advertising
Personal Insurance Consumers
Introduction
Home and motor insurance remain the largest potential pools of customers for personal lines insurers
The sizable market for private motor insurance included a larger and more even penetration spread than in 2008
Middle-aged and older consumers are more likely to have motor cover, perhaps necessitating a more universal strategic focus than before
Motor insurance consumers with higher incomes have higher penetration rates
The social grade of consumers has less bearing on the likelihood of arranging motor insurance
Combined household insurance is the most popular type of product sold to consumers
There is a healthy market for home insurance products
Consumers over the age of 55 are the largest target market for combined policies
Higher income households have higher penetration rates for combined home insurance and buildings only cover
Consumers belonging to socio-economic groups A and B display consistently higher penetration rates for combined household products
The vast majority of consumers use the internet or telephone to arrange their motor insurance cover
Half of all consumers arrange their motor insurance over the internet
Internet and telephone sales are becoming increasingly prevalent in the home insurance market
Internet sales strategies would prove more effective than telephone sales for younger personal insurance policy buyers
Consumers aged between 25 and 34 are more likely to arrange their motor insurance online
The telephone surpasses the internet as the most popular platform for arranging home contents insurance
Consumers aged over 64 prefer to use the phone to arrange their insurance policies, whereas other groups prefer to use the internet
Internet-based sales strategies are effective at targeting higher income households
To a point, higher income consumers are more comfortable purchasing their motor insurance cover online
Internet selling strategies for combined home insurance should remain the core method of targeting consumers with household incomes over £30,000
Consumers are generally more likely to purchase their home contents insurance over the telephone
The internet was the most popular method of motor insurance arrangement
Consumers belonging to socio-economic group E displayed the lowest tendency to purchase their motor insurance online
A and E consumers prefer to purchase their combined policy over the telephone
The telephone is the preferred platform for arranging home contents insurance policies
Insurance providers’ retention rates vary with age and type of insurance
Older consumers are generally more likely to stay with their existing insurance company
Consumers aged under 34 displayed the least loyalty to their insurance providers
Consumers aged 45-64 are more likely to stay with the same home contents insurance provider at renewal
Retention rates for combined home insurance peak with middle-aged consumers
Wealthier consumers are the least loyal to their home insurance providers
Motor insurance consumers displayed a similar level of switching among all income bands
Consumers earning less than £15,000 are least likely to change their combined insurance provider
Consumers with a household income of £75,000-99,999 are the most loyal to their home contents insurance policy providers
Price should be the primary focus in insurance marketing campaigns
Price was the most commonly cited reason for selecting a motor insurance provider
Insurance companies should emphasize competitive prices when marketing their combined policies
While price remains the dominant attraction for insurance buyers, older consumers are more likely to consider other factors
Although it remains the key factor, older consumers of motor insurance are less concerned about price
Older consumers increasingly value non-price factors when choosing their home insurance providers
Direct Insurance
Introduction
Direct insurers have a growing share of the private motor market
Direct insurers have experienced an increase in their market share in private motor cover since 2006
Direct insurers hold a level share of the household market
The top direct insurers significantly increased their overall advertising budget
Advertising spend on motor and travel insurance decreased, while expenditure on other forms of general insurance increased by varying amounts
All forms of media advertising saw increased direct insurer funding, apart from cinema campaigns
Direct Line remained the top direct insurance advertiser in 2009, albeit by a smaller margin
Direct Line still dominates most areas of motor and home insurance
The top five direct insurers comprised over a quarter of the motor insurance market
Direct insurers consistently form the top five players in the home insurance market
Direct insurers continued to launch new products in a bid to their grow market share
AXA launched a new direct motor cover product
Zurich launched its new Zurich Connect product
Fortis will rebrand itself to Ageas
RBS Insurance is to sell Direct Line and Churchill within a few years
esure has undergone a management buy-out from the Lloyds Banking Group
Brokers and Intermediaries
Introduction
The broker channel has been gradually growing its household insurance market share
Brokers distributed an estimated 28% of the private motor insurance GWP in 2009
Brokers hold a growing share of the home insurance market
The main focus of broker insurance advertising was via direct mail
The top 10 brokers allocated most of their advertising budget on private motor and home insurance marketing
Brokers continue to display a marketing strategy that is primarily focused around the direct mail platform
The AA cut its advertising spend, while RIAS significantly increased its budget
The AA dominated over other insurance brokers in both home and motor insurance
The AA was the market leader for broker-distributed private motor insurance
The broker household insurance market is dominated by AA, RIAS and Swinton
The broker sector has seen a number of big structural changes over the last year
LV Broker makes full use of its broking relationships
Brightside purchased eCar and eBike for up to £34.6m
Allianz Clear launches and incorporates a home insurance aggregator
Swinton increased its online sales effort
Castle Cover adds Zenith insurance to its panel
Carole Nash wins the Co-operative motorcycle book
Banks and Building Societies
Introduction
Banks and building societies lost personal insurance market share in 2009
Bancassurers held an estimated 5% share in the private motor market in 2009
Bancassurers hold the largest share of the UK household insurance market
Spending by the leading bancassurance advertisers decreased in 2009
Bank insurers more than tripled their spend on marketing their general/combined range, despite overall cuts to their budgets
In 2009, banks showed a slight swing toward a more contemporary mass-market advertising strategy
Half the top 10 bancassurers showed an increase in advertising budget in 2009
Banks hold a significant proportion of the home insurance market, but only have a small presence in motor insurance
Bancassurers have a diminished and negligible market presence in motor insurance
Lloyds Banking Group controls a significant share of the UK home insurance market
Barclays will continue to distribute Aviva home insurance
Despite decreased consumer confidence, bancassurers are still targeted by insurers as a means to growth
Barclays will continue to distribute Aviva home insurance
RSA will provide West Bromwich BS with household insurance policies
Affinity Groups and Retailers
Introduction
The presence of affinities has decreased in the UK home and motor insurance markets
Affinity groups and retailers saw a slight dip in their private motor market share from 2008
Affinities make up an estimated 15% of total UK household insurance GWP
The top affinity insurance advertisers increased their budget in 2009
A third of the insurance products advertised by the top 10 affinity insurance advertisers are niche lines
The top 10 affinity insurance advertisers use direct mail campaigns to effectively leverage their customer databases
While most of the top 10 affinity insurance advertisers decreased their advertising spend in 2009, their overall expenditure increased
Affinity partnerships comprise almost 10% of the general insurance market
The top five brandassurers hold a lower market share than in 2008
Affinity partnerships have the largest share in the combined policy market
A number of influential affinity partnerships were formed in the last year
Fortis procures significant partnerships to provide Tesco and Toyota with home and motor insurance
Kwik-Fit has sold off its insurance wing to Fortis
Carole Nash wins an insurance deal with Harley Davidson
Thornside to provide Sainsbury’s pet insurance
Heath Lambert wins Debenhams deal
Aggregators and Price Comparison Sites
Introduction
Over 60% of consumers use an aggregator when purchasing motor insurance
A sizeable proportion of aggregator visitors use them for research purposes only
Insurance aggregator advertising has become a four-horse race
Only negligible amounts were spent on aggregator advertising outside of the top four
More than three-quarters of the top four aggregators’ advertising budget was spent on motor insurance cover
The leading four aggregators are highly dependant on TV advertising
The aggregator market is innovative and highly competitive
MoneySupermarket.com’s revenue declined in 2009
MSN and BeatThatQuote.com have launched a new comparison site
Future Decoded
Introduction
The direct channel in the private motor insurance market is predicted to contract after 2011
The direct channel has shown consistent growth since 2007
Brokers are predicted to lose market share until 2011 and thereafter regain it
Affinity partnerships are forecast to gradually increase their market share over the next five years
As consumer confidence in the banking sector improves, bancassurers will gain market share in private motor insurance distribution
Banks and building societies are predicted to remain the dominant provider of UK household insurance
The direct channel is expected to see an increase in market share during the forecast period
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 2011
Affinity partnerships will gradually increase their market share in UK household insurance
Appendix
Definitions
Premium income measures
Earned premiums
Gross premium
Net premium
Written premiums
Distribution definitions
Bancassurers
Banks/building societies
Brandassurers
Broker
Company staff
Direct channel
‘Other’ company agents
Partnerships
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
Disclaimer
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Related Reports:
UK Personal Insurance Distribution 2009
Distribution in UK Personal General Insurance 2008
UK Commercial Insurance Distribution 2010
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