Motor Insurance - UK

Published by: Mintel International Group Ltd.

Published: May. 1, 2007 - 67 Pages

Table of Contents

Issues in the Market

Key issues

Definitions

Market in Brief

More drivers and a growing car parc fuel demand

Market grows in size, but performance is still lacklustre

Figure 1: Illustration of NWP and outgoing payments vs the underwriting result for the business and domestic market, 1994-2006

The claims performance also worsened in 2006

Figure 2: Total number of private motor insurance claims and claims frequency, 1996-2006

Key underwriters

Direct insurers take business away from independent intermediaries

Figure 3: Motor insurance distribution trends, 1992-2006

Some 50% of adults have comprehensive motor cover

Online arrangement of car insurance has risen rapidly

Motorists are less likely to ‘just renew’

Broader Market Environment

Key points

Spending power will slow slightly

Figure 4: PDI and consumer expenditure, 1996-2012

Savings ratio will increase from 2006 onwards

Population rises among the 45-54s

Figure 5: UK adult population trends, 1996-2011

Internet penetration appears to have peaked

Figure 6: British Internet penetration, at home/work/place of study or elsewhere, 2002-06

Internal Market Environment

Key points

New car registrations have slowed

Figure 7: UK new car registrations, 1995-2008

Car parc is now over 31 million vehicles

Figure 8: UK car parc, 1995-2012

There are over 33 million driving licence holders in the UK

Figure 9: Full driving licence holders, by gender, 1975-2005

Almost 80% of households have at least one car

Figure 10: Household ownership of cars, 1998-2006

Competitive Context

Comprehensive or non-comprehensive?

Figure 11: Proportion of cars covered with comprehensive and non-comprehensive cover, 1995-2005

Strengths and Weaknesses in the Market

New opportunities will materialise for providers…

…but trading conditions are likely to remain difficult

Market Size and Forecast

Key points

Profitability is still elusive

Figure 12: UK motor insurance revenue account for all business and domestic market, incorporating investment income, 1994-2006

Market deficit remains a concern

Figure 13: Illustration of NWP and outgoing payments vs the underwriting result for the business and domestic market, 1994-2006

Rates have fallen in real terms

Figure 14: Domestic motor insurance exposure, gross written premiums and average premium rates, at current and constant prices, 2000-06

There are around 27 million policies in force

Figure 15: Estimate of the number of live motor insurance policies, 2007

Forecast

Figure 16: Forecast of private motor insurance market, 2006-12

NWPs will increase - but so will Outgoing payments.

Factors used in the forecast

Claims Performance and Pricing

Key points

Claims frequency starts to rise again

Figure 17: Total number of private motor insurance claims and claims frequency, 1996-2006

Net claims cost the industry £6.2 billion in 2005

Figure 18: Value of claims in the domestic motor insurance sector, 1995-2005

Average motor theft claim surpasses £1,500

Figure 19: Motor theft claims, by volume, cost, and average claim, 1995-2006

Rise in bodily injury claims

Figure 20: Number and average cost of bodily injury claims, 2000-05

Comprehensive rates rose in the last quarter of 2006

Figure 21: AA’s British Insurance Premium Index, July 1994-January 2007

Market Share

Key points

Slight increase in concentration

No change in the top three

Figure 22: Top 20 insurers for private motor risks, by GWP, 2005

Companies and Products

Key points

The two ‘super-insurers’ dictate pricing strategies

Profiles

RBS

Aviva

Zurich Financial Services

Royal & SunAlliance

Fortis

Brand Communication and Promotion

Key points

Advertising is central in the battle for motor insurance customers

More spent on insurance advertising than any other sector

Figure 32: Advertising expenditure for financial sectors, 2002-06

Nearly £180 million allocated to car insurance promotion in 2006

Figure 33: Annual advertising expenditure for insurance sectors, 2002-06

Direct mail and TV dominate

Figure 34: Motor insurance advertising expenditure, by media outlet, 2006

Direct Line is once again the top advertiser

Figure 35: Top motor insurance advertisers, 2002-06

Channels to Market

Key points

Background to the ‘direct revolution’

The changing distribution balance in detail

Figure 36: Motor insurance distribution trends, 1992-2006

Direct me to the nearest insurer

Figure 37: Distribution channel used to purchase motor insurance, 2001-07

Online is the future

Figure 38: Method used to arrange most recent motor insurance policy, 2001-07

The Consumer - Product Ownership

Key points

Penetration of comprehensive cover reaches 50%

Figure 46: Penetration of motor insurance, 2004-07

Men and those aged 45-64 provide the core of comprehensive business

Figure 47: Motor insurance coverage, by gender, age, socio-economic group and region, February 2007

Part-time workers and those with low incomes tend to favour third party insurance

Figure 48: Motor insurance coverage, by working status, gross annual household income and tenure, February 2007

Waitrose shoppers opt for full cover

Figure 49: Motor insurance coverage, by newspaper readership, new technology, Internet usage, daily commercial TV viewing and supermarket usage, February 2007

Abstract

Motor insurance providers have realised over the last year that rates need to be pushed up in order to restore some equilibrium to the sector. The current stage of the underwriting cycle is such that strong competition has meant that premium prices have been suppressed and underwriting profitability has proved elusive. Market leaders Norwich Union and RBS Insurance have taken the decision to push through significant rate rises in order to lead the market in the right direction.

Claims costs have been on the rise and this has meant that insurers have been struggling to make money in this sector. Price is the central issue for drivers looking for a new policy and this is reflected by advertising straplines produced by the main insurers. The increasing use of online aggregator websites is also arguably contributing to the price-driven market where policies are highly commoditised and it is difficult to differentiate via product innovation

Get Full Details About This Report >>

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 160,000 market research reports, company profiles and country profiles from over 600 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.