Targeting 30-44 year old Consumers in UK Motor Insurance 2003

TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 3
Insurance Consumers 3
Consumer Awareness 4
Consumer Purchasing Behavior 6
Customer Retention and Attrition 7
CHAPTER 2 INTRODUCTION 27
What is this report about? 27
A note on indexing 29
Who is the target reader? 29
How to use this report 29
CHAPTER 3 INSURANCE CONSUMERS 31
Introduction 31
Key findings 31
Insurance market context 32
Private motor drives personal insurance GWP 32
30-44 year olds in context 33
30-44 year old age group accounts for 22.6% of total population 33
30-49 year olds spend more on insurance products than any other age group 35
Motor insurance consumers in context 38
Vehicle registrations approach 30 million 38
Number of no-car households is falling steadily 40
30-49 year olds are most likely to hold a UK driving license 42
General insurance cover 46
Motor insurance is the most commonly held insurance type among 30-44 year olds 46
Key target for insurers is the £40,000-£49,999 income band 51
Married consumers have a greater tendency to be insured 53
Home ownership has a positive impact on likelihood of insurance ownership 55
CHAPTER 4 CONSUMER AWARENESS 57
Introduction 57
Key findings 57
Sources of information used to find an insurer 58
Directories and previous dealings remain popular in motor insurance 58
Advertising spend by competitor 63
Motor insurance advertising boomed in 2002 63
Advertising awareness among 30-44 year olds 77
30-44 year olds are most aware of advertising by Churchill and Direct Line 77
Consumer brand awareness 91
Direct Line is the first name on 30-44 year old consumers’ lips 91
Direct Line zooms ahead in motor insurance recognition 96
CHAPTER 5 CONSUMER PURCHASING BEHAVIOR 108
Introduction 108
Key findings 108
Selection criteria 108
Pricing is the driving factor for 30-44 year olds in choosing motor insurance 109
Distribution channels and platforms used by 30-44 year old consumers 112
Motor insurance customers tend to contact providers direct 112
Competitor shares of 30-44 year old consumers 122
Direct Line accelerates ahead of motor competitors 122
CHAPTER 6 CUSTOMER RETENTION AND ATTRITION 129
Introduction 129
Key findings 129
Customer switching among 30-44 year olds 129
30-44 year olds are most fickle motor insurance customers 130
Attrition by competitor 133
Churn highest among most established motor providers 133
Likelihood of shopping for alternative quotes amongst 30-44 year olds 134
Motor insurance consumers are likely to look around 134
Likelihood of competitors’ policyholders shopping around 140
Churchill’s customers most likely to shop around for motor insurance 140
Number of quotes obtained by 30-44 year olds 143
Motor insurance consumers tend to compare many quotes 143
Number of alternative quotes, by competitor 145
AA and CIS are best positioned to minimise shopping around in motor insurance 145
Customer satisfaction among 30-44 year olds 147
Indifference prevails among 30-44 year old motor insurance customers 147
CHAPTER 7 SUMMARY 149
30-44 year old consumer profile matrix 150
Key observations 151
CHAPTER 8 APPENDIX 152
Research methodology 152
MFS Financial Services (MFS) methodology and contacts 152
MFS survey data 154
Insurance Consumers 154
Consumer Awareness 155
Consumer Purchasing Behavior 163
Consumer Retention and Attrition 166
Definitions 167
Bibliography 167
Future readings 168
Do you need more information? 168
Datamonitor Financial Services Consulting 168
SPP writing team 170


LIST OF TABLES
Table 1: Private insurance GWP in UK, 1997-2002e 30
Table 2: Age structure of UK population, 2001 31
Table 3: Household expenditure by age of head of household, UK 2001 33
Table 4: Vehicle registrations in UK, 1991-2001 36
Table 5: Households owning cars in UK, 1990-2001 38
Table 6: Full driving license holders in UK by age, 1975-2001 40
Table 7: Full driving license holders in UK by age and sex, 1975-2001 42
Table 8: Insurance cover by age group and type 45
Table 9: Household and motor insurance expenditure by age of head of household, 2001/2 47
Table 10: Insurance cover among 30-44 year olds, by income 50
Table 11: Insurance ownership among 30-44 year olds, by marital status 51
Table 12: Insurance ownership among 30-44 year olds, by household tenure 53
Table 13: Sources of information used to find a motor insurer, by age 58
Table 14: Sources of information used by 30-44 year olds to find a motor insurer, by income 60
Table 15: Advertising expenditure by motor insurers, by medium, 2002 62
Table 16: Change in advertising expenditure by motor insurer, 2001-2 66
Table 17: Prompted awareness of general insurance advertising by 30-44 year olds 79
Table 18: Prompted awareness among 30-44 year olds of general insurance advertising, by income 82
Table 19: Prompted awareness of general insurance advertising among 30-44 year olds, by marital status 87
Table 20: Unprompted awareness of general insurers among 30-44 year olds 92
Table 21: Prompted awareness among 30-44 year olds of direct motor insurance providers 97
Table 22: Prompted awareness among 30-44 year olds of direct motor insurance providers, by income 101
Table 23: Prompted awareness among 30-44 year olds of direct motor insurance providers, by marital status 104
Table 24: Motor insurance distribution via channel, by age group 112
Table 25: Motor insurance distribution via channel among 30-44 year olds, by income 114
Table 26: Motor insurance distribution via platform, by age group 117
Table 27: Motor insurance distribution via platform among 30-44 year olds, by income 119
Table 28: Proportion of motor insurance customers aged 30-44, by competitor 121
Table 29: Indexed share of 30-44 year old motor insurance customers, by income 125
Table 30: Incidence of customer switching, motor insurance by age group 128
Table 31: Incidence of 30-44 year old customer switching in motor insurance, by income 130
Table 32: Likelihood of shopping around for motor insurance quotations, by age group 133
Table 33: Likelihood among 30-44 year olds of shopping around for motor insurance quotations, by income 135
Table 34: Likelihood among 30-44 year olds of shopping around for motor insurance quotations, by marital status 137
Table 35: Likelihood of shopping around for motor insurance quotations, by competitor 139
Table 36: Number of quotes obtained by 30-44 year old motor insurance customers 141
Table 37: Number of alternative motor insurance quotes obtained by 30-44 year olds, by competitor 144
Table 38: 30-44 year old customer satisfaction, motor insurance 145
Table 39: 30-44 year old consumer profile matrix 147
Table 40: Relative likelihood of general insurance ownership among 30-44 year olds 151
Table 41: Sources of information used by 30-44 year olds to find a general insurer 152
Table 42: Relative likelihood of 30-44 year olds choosing a source for motor insurance 153
Table 43: Relative awareness of general insurers’ advertising campaigns by 30-44 year olds 154
Table 44: Relative awareness of general insurance advertising among 30-44 year olds, major competitors by income band 154
Table 45: Relative awareness of general insurance advertising among 30-44 year olds, major competitors by marital status 155
Table 46: Relative unprompted awareness of general insurers among 30-44 year olds 156
Table 47: Unprompted awareness among 30-44 year olds of general insurers, by income 157
Table 48: Unprompted awareness among 30-44 year olds of general insurers, by marital status 158
Table 49: Relative prompted awareness among 30-44 year olds of direct motor insurers 159
Table 50: Relative awareness of direct motor insurance providers among 30-44 year olds, major competitors by income band 159
Table 51: Relative awareness of direct motor insurance providers among 30-44 year olds, major competitors by marital status 160
Table 52: Selection criteria for choosing a motor insurance provider by age, relative shares 160
Table 53: Selection criteria for choosing a motor insurance provider by income, relative shares 161
Table 54: Motor insurance distribution channels among 30-44 year olds, relative share 161
Table 55: Motor insurance distribution platforms among 30-44 year olds, relative share 162
Table 56: Relative share of 30-44 year old motor insurance customers, by competitor 162
Table 57: Relative share of 30-44 year old motor insurance customers, by income 162
Table 58: Relative likelihood of switching by 30-44 year olds, motor insurance 163
Table 59: Relative levels of attrition of 30-44 year olds by motor insurance competitor 163
Table 60: Relative likelihood among 30-44 year olds of shopping around for motor insurance quotations at next renewal 163


LIST OF FIGURES
Figure 1: Over 60% of all 30-44 year olds have building, contents or motor insurance 3
Figure 2: Direct Line leaves competitors in its wake for spontaneous awareness among 30-44 year olds 5
Figure 3: Price is overwhelmingly the most important factor for 30-44 year olds purchasing motor insurance 6
Figure 4: 30-44 year olds demonstrate relative propensity to switch motor insurer 7
Figure 5: The household market outperformed other personal insurance products in 2002 26
Figure 6: 30-44 year old age group accounts for 22.6% of total population 28
Figure 7: Household expenditure greatest for 30-49 year olds 29
Figure 8: General insurance weekly expenditure peaks in 30-49 age group 31
Figure 9: Vehicle registrations continue on upward trend 32
Figure 10: Growth in one-car ownership responsible for the increase in vehicle registrations 34
Figure 11: 30-49 year olds are more likely to hold a UK driving license than any other age group 36
Figure 12: Male driving license holders outnumber females in every age group 38
Figure 13: 30-59 year olds are the prime insurance group 41
Figure 14: 30-44 year olds are most likely to have motor insurance 43
Figure 15: Over 60% of all 30-44 year olds have building, contents or motor insurance 44
Figure 16: Amongst 30-44 year olds, the £40,000-£49,999 income band has highest likelihood of being covered by household and motor insurance 46
Figure 17: Single 30-44 year olds are least likely to have insurance policies 48
Figure 18: Mortgage holders most likely to own insurance policies 50
Figure 19: 30-44 years are most likely to consult directories to select a motor insurance provider 53
Figure 20: Frequency of Internet usage for motor insurance selection wanes with increasing age 54
Figure 21: Mailshots and television have equal influence in all income bands in motor insurance 56
Figure 22: More Th>n and Zurich FS vastly increased their motor insurance advertising budgets in 2002 62
Figure 23: AA spent more on press advertising than any other motor insurer in 2002 65
Figure 24: AA spent over twice as much as its nearest competitor on radio advertising 66
Figure 25: Five motor insurers accounted for 85.6% of television advertising spend in 2002 68
Figure 26: Almost all motor insurers spent money on direct mail 70
Figure 27: 30-44 year old consumers are most aware of advertising by providers with largest budgets 73
Figure 28: Swinton is more likely to have awareness of its advertising among 30-44 year olds than any other age group 75
Figure 29: AA’s relative recognition is driven by income 77
Figure 30: General insurance advertising awareness becomes more varied with income 78
Figure 31: AA and RAC record comparable advertising awareness levels across income bands 81
Figure 32: Churchill advertising is recognized most by all except married 30-44 year old consumers 82
Figure 33: Direct Line leaves competitors in its wake for spontaneous awareness among 30-44 year olds 86
Figure 34: Esure has highest spontaneous awareness among 30-44 year olds compared with other age groups 88
Figure 35: Direct Line is the most recognized direct motor insurance provider 91
Figure 36: 30-44 year olds have above average likelihood of recalling all featured motor providers 93
Figure 37: All income bands recall Direct Line first in motor insurance 95
Figure 38: 30-44 year olds with higher incomes have better recognition of certain motor insurance providers 97
Figure 39: Direct Line has highest awareness across all marital statuses 99
Figure 40: Price is overwhelmingly the most important factor for 30-44 year olds purchasing motor insurance 104
Figure 41: All income bands seek value for money in motor insurance quotes 106
Figure 42: Direct approach still favored in motor insurance 107
Figure 43: 30-44 year olds value personal contact less than older consumers 108
Figure 44: Direct approach comparable across all income bands, but use of employer increases with earnings 110
Figure 45: Telephone is most used platform by 30-44 year olds for motor insurance arrangement 112
Figure 46: Internet and post distribution show opposing trends 113
Figure 47: Likelihood of face-to-face contact declines with income 115
Figure 48: Direct Line is the most popular motor insurance provider among 30-44 year olds 117
Figure 49: Direct Line owns most 30-44 year olds in every income band 119
Figure 50: Admiral and Cornhill more likely to insure wealthiest consumers 121
Figure 51: Motor insurance customers twice as likely to have switched as household insurance customers aged 30-44 124
Figure 52: Motor insurance consumer loyalty increases with age 125
Figure 53: Middle income earners tend to switch insurers more frequently 126
Figure 54: 30-44 year old customer attrition in motor insurance highest at Norwich Union 128
Figure 55: Motor insurance customers have high likelihood of looking around for alternative quotes at next renewal 129
Figure 56: 30-44 year olds demonstrate propensity to switch motor insurer 130
Figure 57: Likelihood of seeking new motor insurance quote spread evenly across all income bands 131
Figure 58: Marital status has minimal effect on likelihood of switching motor insurance quote 133
Figure 59: Churchill has most volatile motor insurance customers 135
Figure 60: 30-44 year old motor insurance consumers look around 138
Figure 61: AA and CIS have highest motor insurance loyalty levels among 30-44 year olds 140
Figure 62: Indifference is a common theme among 30-44 year old motor insurance consumers 142