UK Personal General Insurance 2009
Datamonitor
October 29, 2009 SKU: DFMN2500509
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Countries covered: United Kingdom
Introduction
This unique report provides an unrivalled analysis of the UK general insurance market with a specific focus on the personal lines sector. It segments the market by line of business and assesses underwriting profits and investment income. The research also includes an in-depth analysis of the distribution and competitive landscape and forecasts the personal lines market size to 2013.
Scope- Data on the size, structure and profitability of the total non-life market and the personal lines sector.
- Insight into the different methods of distributing personal lines insurance products and the changes in the landscape.
- Analysis of the total premiums and market share for the largest personal lines insurance groups.
- A discussion of the main factors affecting the general insurance market in the future along with forecasts of market size to 2013.
Highlights
The merger of Lloyds TSB and HBOS has meant that the newly formed Lloyds Banking Group becomes the fourth largest personal lines group following the combination of a number of insurance companies owned by the group including Lloyds TSB General Insurance, esure and St Andrew's.
Against the backdrop of an increasing COR for the total non-life market, the personal lines sector shone out at an overall level. Datamonitor's analysis of FSA Returns shows the personal lines sector (which we take to be PL motor, household, accident & health and personal financial loss) returned a COR of 103%, net of reserve developments.
Reasons to Purchase- Understand the segmentation of the UK general insurance market and the differing profitability by class of business.
- Benchmark your premium income against that of your competitors and understand the drivers of growth in their business.
- Gain insight into the future development of the market in terms of competitors, major issues and market size.
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- Overview
- Catalyst
- Summary
- Executive Summary
- The industry returned a respectable trading result with personal lines performing well at an overall level
- A respectable profit on the face of it
- Personal lines was attractive at the top level
- There have been significant changes to market positions and more changes may be on their way
- Lloyds Banking Group storms into the top 10
- Fortis and Liverpool Victoria are set to become a much larger force in personal lines
- 2009 has been a challenging year however the market is set to grow between 2009 and 2013
- 2009 has been a challenging year so far
- Total personal lines premiums are expected to grow between 2010 and 2013
- Table of Contents
- Table of figures
- Table of tables
- Market context
- Introduction
- Conditions are deteriorating for insurers
- The market contracted in 2008 as insurers continued to compete hard
- Insurers pulled capacity from suretyship insurance
- Motor and property insurance continue to dominate the UK non-life insurance market
- Lloyd's of London underwrites around £2 billion of UK insurance
- Motor, liability, property and pecuniary loss have driven the COR up in recent years
- Pecuniary loss is a strong source of underwriting profit
- Insurers are being hit by falling investment income
- A drop in investment income put additional pressure on insurers' margins in 2008
- Insurers saw an estimated trading result of 9% of NWP in 2008
- Reserve releases are propping up reported profits
- Insurers propped up their reported underwriting results with around £1 billion in reserve releases
- Insurers made significant reserve releases in motor and property insurance while strengthening reserves for liability insurance
- Personal lines insurance is attractive, at an overall level
- Personal lines continued to see muted growth but benefitted from a low COR
- The personal insurance market was worth £24.7 billion in 2008
- Household, A&H and personal pecuniary loss are compensating for the poor motor COR
- Pecuniary loss is the largest profit pool in the personal lines sector
- Insurers made significant reserve releases in personal motor insurance
- Distribution
- Introduction
- Brokers, direct insurers and banks gained market share in the personal insurance market
- Brokers continued to be the leading personal insurance distribution channel in 2008
- The direct channel grew in 2008, achieving its highest market share ever
- Banks increased their market share through significant increases in motor insurance sales
- Affinity players' market share contracted as motor premium income fell
- Other company agents and staff lost market share in 2008
- Direct Line continues as the top general insurance advertiser, though Aviva has stepped up its marketing
- The market leader, Direct Line, continued to invest in its brand and is likely to equal its 2008 outlays
- At half year, Aviva had already spent as much as its entire 2008 marketing outlay
- The aggregators have launched new campaigns in 2009 underscoring the competitive nature of the market
- Confused.com is the top spending insurance aggregator brand
- Comparethemeerkat.com has been a great success for aggregator-comparethemarket.com
- GoCompare.com launched a new campaign with fictitious opera singer Gio Compario
- Most top insurance advertisers made use of television advertising for their motor products
- Television accounted for the bulk of the top 10's insurance marketing
- Television advertising has allowed the largest insurance providers to reach a wide customer base and build brand awareness
- Direct mail was an important secondary advertising medium for most of the top 10
- Press advertising is a key secondary marketing tool for many insurers
- Though spending on motor appears to be down, it remained the focus of most advertising campaigns
- As the largest personal insurance line, motor attracts the highest spending
- Household insurance as the second largest personal insurance market attracted a substantial amount of advertising
- Competitive Dynamics
- Introduction
- RBS and Aviva continue to lead the market in personal lines
- RBS was the largest personal lines insurer in 2008
- Aviva retained its position as the UK's second largest personal general insurer in 2008
- Lloyds Banking Group has doubled its presence through the acquisition of HBOS
- AXA increased its GWP by 4.5% in 2008
- Lloyds Banking Group doubled its insurance presence after it merged with HBOS
- BUPA saw its GWP increase by 3.5% in 2008
- RSA was the 6th largest personal insurance group
- Zurich achieved significant growth in its personal lines premium income, which was chiefly driven by private motor
- Fortis has signed a transformational deal with Tesco
- Fortis has signed a transformational deal with Tesco
- Munich Re grew its personal book by 4.3% due to household, pecuniary loss and accident & health lines
- Allianz's personal pecuniary loss business saw significant growth
- Liverpool Victoria increased its presence in personal lines with the acquisition of Highway
- Future Decoded
- Fortis and Liverpool Victoria are on track to become bigger players in personal lines
- Fortis's new deal with Tesco could transform the size of the insurer
- Liverpool Victoria is aggressively growing its business
- The industry trading result will be challenging in 2009
- Profits are expected to dip in 2009
- Investment returns will fall
- Reserve releases are expected to continue in 2009
- Profits are likely to be impacted by a sharp rise in the pecuniary loss COR in 2009 and 2010
- The personal market size is forecast to reach £29 billion in 2013
- The personal market size is expected to fall further in 2009 before growing again between 2010 and 2013
- Private motor GWP is forecast to reach £12 billion in 2013
- Rates will continue to harden in order to reduce the market's high underwriting losses
- The UK private motor insurance market is predicted to be worth £12.0 billion in 2013
- Household GWP is forecast to reach £7.6 billion in 2013
- Insurers are expected to continue to raise household rates in line with inflation
- The market will reach a value of £7.6 billion in 2013
- The A&H market is forecast to reach £6.2 billion in 2013
- Persistent claims inflation will mean PMI rates rise throughout the forecast
- A&H GWP is forecast to reach £6.2 billion in 2013
- The pecuniary loss market is forecast to reach a value of £3.4 billion in 2013
- The personal pecuniary loss market is forecast to reach £3.4 billion in 2013
- APPENDIX
- Definitions
- ABI members
- Accident year combined ratio
- Bancassurers
- Brokers
- Brandassurers
- Channel
- Direct insurer/writer
- Earned premiums
- Gross premium
- Net premium
- Platform
- Reported year combined ratio
- Reserve development
- Suretyship insurance
- Written premiums
- Additional data
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- Overview
- Table 1: Annual growth in general insurance market, 2000-08 (%)
- Table 2: GWP by line of business, 2000-08 (£m)
- Table 3: UK insurance market split by ABI members and Lloyd's of London, 2008 (£m)
- Table 4: Total market combined ratio, 2004-08 (%)
- Table 5: Accident year CORs by line of business, 2004-08 (%)
- Table 6: Underwriting result by line of business, 1998-2008 (£m)
- Table 7: Underwriting result, investment income and trading result as a percentage of NWP (worldwide business of UK insurers), 2000-08
- Table 8: Underwriting result, investment income and trading result as a percentage of NWP (UK business), 2000-08
- Table 9: Personal insurance market size, 2005-08 (£m)
- Table 10: Accident year CORs by line of personal business, 2005-08 (%)
- Table 11: Underwriting result by line of personal business, 1998-2008
- Table 12: Personal general insurance GWP distribution by channel, 1999-2008
- Table 13: Top 10 personal general insurance advertisers, 2007-09 H1, (£)
- Table 14: Top 10 personal general insurance advertisers' spend by media, 2007-09 H1 (£000)
- Table 15: Top 10 personal general insurance advertisers' spend by product, 2007-09 H1 (£000)
- Table 16: GWP and market share of the top 10 UK personal general insurance groups, 2007-08
- Table 17: Forecast of personal general insurance GWP, 2009-13
- Table 18: Key variables affecting private motor insurance GWP, 2009-13
- Table 19: Forecast of private motor insurance GWP, 2009-13 (£m)
- Table 20: Key variables affecting household insurance GWP, 2009-13
- Table 21: Forecast of household insurance GWP, 2009-13 (£m)
- Table 22: Key variables affecting A&H GWP, 2009-13
- Table 23: Forecast of A&H GWP, 2009-13
- Table 24: Forecast of personal pecuniary loss GWP, 2009-13 (£m)
- Table 25: Total UK pecuniary loss underwriting account, 1998-2008
- Table 26: Total UK property underwriting account, 1998-2008
- Table 27: Total UK household underwriting account, 1998-2008
- Table 28: Total UK commercial property underwriting account, 1998-2008
- Table 29: Total UK motor underwriting account, 1998-2008
- Table 30: Total UK personal motor underwriting account, 1998-2008
- Table 31: UK commercial motor underwriting account, 1998-2008
- Table 32: UK liability underwriting account, 1998-2008
- Table 33: UK accident & health underwriting account, 1998-2008
- List of Figures
- Figure 1: The industry has experienced slow or negative growth in recent years due to strong competition
- Figure 2: Increases in the liability and property sectors were offset by falls in motor, A&H and pecuniary loss
- Figure 3: Motor and property continue to be the two largest lines of business
- Figure 4: Lloyd's of London underwrites around 5% of the UK insurance market
- Figure 5: The combined ratio for the total market bottomed out in the years 2004-06 but it has increased to 108% in 2008
- Figure 6: Motor, liability, property and pecuniary loss have seen increasing CORs
- Figure 7: Pecuniary loss and A&H are a steady source of profits
- Figure 8: Investment income as a percentage of premiums fell to an all time low in 2008 due to the financial crisis
- Figure 9: The trading result for UK business fell in 2008 however it was broadly in line with the across-the-cycle trading result
- Figure 10: Insurers have bolstered reported profits with massive reserve releases in the years 2005-08
- Figure 11: Insurers made significant reserve releases in motor and property insurance while strengthening reserves for liability
- Figure 12: Growth has been subdued in personal lines in recent years as the personal lines COR has been relatively low
- Figure 13: Personal motor is the largest line in the personal market
- Figure 14: A high COR in personal lines motor is balanced out by attractive CORs in personal pecuniary loss, household and A&H
- Figure 15: Pecuniary loss and A&H have been a consistent source of underwriting profits
- Figure 16: Insurers released over £400m of prior years' reserves in order to improve the reported underwriting result in personal motor insurance
- Figure 17: Brokers have recaptured some of the market share they have lost since 1999
- Figure 18: Aviva was the second largest advertiser in the market as it rolled out an extensive rebranding campaign
- Figure 19: Television campaigns were the largest expense for most top insurance advertisers
- Figure 20: Motor insurance received the lion's share of insurance advertising funds in the first half of 2009
- Figure 21: Zurich has invested heavily in marketing campaigns promoting its direct insurance products in 2009
- Figure 22: The merger with HBOS boosted the share held by Lloyds Banking Group
- Figure 23: Liverpool Victoria's acquisition of Highway has increased its share of the personal market to 2.3%
- Figure 24: Insurers are likely to see a sharp rise in the pecuniary loss COR judging from the effects of the last recession in 1990
- Figure 25: The personal market is expected to contract in 2009 as the creditor market shrinks
- Figure 26: Private motor insurance GWP will grow strongly over the forecast period
- Figure 27: Household GWP will rise at an average annual rate of 3%, reaching £7.6 billion in 2013
- Figure 28: The A&H sector is forecast to reach £6.2 billion in GWP by 2013
- Figure 29: Personal pecuniary loss GWP will dip in 2009 as the creditor market contracts before seeing growth thereafter
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