UK Personal General Insurance 2008 : Market Research Report

UK Personal General Insurance 2008

Published by: Datamonitor

Published: Feb. 18, 2009 - 13 Pages

Overview: Catalyst; Summary
Executive Summary: Total general insurance GWP declined marginally in 2007; The general liability market witnessed the largest contraction; The pecuniary loss market grew in 2007; Banks and building societies are the largest distribution channel for home insurance; The majority of home insurance is distributed via banks and building societies; Around 15% of home insurance premium income is distributed via the partnerships channel; A number of aggregators as well as LV= entered the top 10 advertisers in 2008; RBSI's biggest brands, Direct Line and Churchill, were the biggest insurance advertisers in 2008; Three aggregators appeared in the top 10 advertisers in 2008, highlighting their importance to the market; The private motor market is forecast to achieve the strongest growth in GWP in the personal lines market between 2008 and 2013; The UK personal general insurance market is forecast to grow at a CAGR of 3.3% between 2008 and 2013; The individual accident and health market will reach £4.2 billion in GWP in 2013; Table of Contents; Table of figures; Table of tables; Market Context; Introduction; Total general insurance GWP declined marginally in 2007; Premium income in the motor insurance market increased for the first time since 2003; The property insurance market recorded a fall in premium income in 2007; The accident and health market experienced a marginal decline in GWP during 2007; The general liability market witnessed the largest contraction; The pecuniary loss market grew in 2007; The private motor, household and personal pecuniary loss markets increased in size in 2007, while the individual accident and health market contracted; The total general insurance market recorded a loss of £934m in 2007; The accident and health market experienced a marginal contraction in GWP and a decline in underwriting profitability in 2007; The group accident and health market outperformed the individual market in 2007; The health insurance market recorded GWP growth while the accident insurance market witnessed a contraction in 2007; The accident and health market witnessed its underwriting profitability decrease substantially in 2007; Premium income in the UK motor insurance market grew by 2.2% in 2007; The UK private motor insurance market saw an increase in premium income in 2007; Premium income in the private motor sector reached £9.7 billion in 2007; The motorcycle market was the only part of the private motor segment to witness a decrease in 2007; The private comprehensive and private non-comprehensive markets both grew in 2007; Profitability in the motor market continued to decline in 2007; Underwriting losses in the private motor market declined in 2007; Underwriting profitability declined in the pecuniary loss market despite an increase in GWP; Premium income in the pecuniary loss market increased by 2.2% in 2007; The pecuniary loss market witnessed its underwriting profit decrease by 19.4% in 2007; The household insurance market recorded a significant underwriting loss in 2007 due to the summer floods; Household insurance GWP increased in 2007, while commercial property GWP fell; The property insurance market experienced a significant underwriting loss in 2007 due to the summer floods; Household underwriters suffered large losses in 2007 due to high volumes of flood claims; Customer Focus; Introduction; The direct channel is the primary route to market for private motor insurers; The direct channel continues to be the dominant route to market for private motor insurance; The broker channel is the second largest distribution channel for private motor insurance; Corporate partnerships also play a strong role in the distribution of private motor insurance; Banks and building societies have a market share of 7%; Banks and building societies are the largest distribution channel for home insurance; The majority of home insurance is distributed via banks and building societies; Brokers accounted for an estimated 26% of home insurance premium income in 2008; The direct channel accounts for around a quarter of home insurance premium income; Around 15% of home insurance premium income is distributed via the partnerships channel; A number of aggregators as well as LV= entered the top 10 advertisers in 2008; RBSI's biggest brands, Direct Line and Churchill, were the biggest insurance advertisers in 2008; Three aggregators appeared in the top 10 advertisers in 2008, highlighting their importance to the market; LV= entered the top 10 after almost doubling its advertising spending in 2008; Norwich Union Direct's advertising spend declined the most in 2008; The top insurance advertisers devoted the bulk of their budgets to TV advertising in 2008; The top 10 insurance advertisers collectively spent more than £128.6m on TV advertising in 2008; Saga spent the most on direct mail, highlighting its importance in cross-selling; Other media such as radio and press played a smaller role; Competitive Dynamics; Introduction; AXA, BUPA, Fortis and RSA saw strong growth in personal lines premium income in 2007; RBSI retained its position as the UK's largest personal general insurer in 2007; Norwich Union remained the second largest UK personal insurance group in 2007 despite a decline in GWP; RSA achieved significant growth in its personal lines business in 2007 due to the Paymentshield account; AXA's personal lines business grew by 13.3% in 2007, driven by personal pecuniary loss, private motor and travel insurance; Zurich witnessed a marginal increase in its personal lines book in 2007; BUPA recorded strong GWP growth in the UK personal lines insurance market in 2007; St Andrew's witnessed a fall in its personal lines premium income; Fortis witnessed its personal lines premium income increase by 10% in 2007; Three of the of the top 10 UK personal insurers did not underwrite any commercial business in 2007; The majority of the top 10 accident and health insurers witnessed their profitability decline in 2007; The average loss ratio of the top 10 UK accident and health insurers decreased by one percentage point in 2007, with five insurers witnessing an improvement in their ratios; The average loss ratio of the top 10 UK accident and health insurers improved marginally in 2007; New Hampshire and ACE witnessed significant improvements in their loss ratios in 2007; Norwich Union, ComInsofAmerica, SimplyHealth and Standard Life saw their loss ratios deteriorate in 2007; The average expense ratio of the top 10 UK accident and health insurers decreased by 1.2 percentage points in 2007, as five insurers saw improvements in their ratios; The average expense ratio of the top 10 UK accident and health insurers decreased to 31.0%; ACE, Norwich Union and Simply Health achieved the largest improvements in their expense ratios; AXA, ComInsofAmerica and Standard Life saw the largest increase in their expense ratios; The rest of the top 10 UK accident and health insurers saw marginal changes in their expense ratios; The average combined ratio improved by 2.2 percentage points, with ACE and New Hampshire seeing the two largest decreases in 2007; The average combined ratio of the top 10 accident and health insurers decreased by 2.2 percentage points to 90.2%; Five of the top 10 UK accident and health insurers recorded improvements in their combined ratios in 2007; Four of the top 10 UK accident and health insurers witnessed increases in their combined ratios; Four of the top 10 liability insurers saw an improvement in profitability in 2007; Five of the top 10 liability insurers witnessed an improvement in their loss ratios in 2007; The average loss ratio of the top 10 UK liability insurers decreased by 10.9 percentage points in 2007; NFU Mutual and QBE saw the largest increase in their loss ratios; AXA, Zurich and RSA achieved significant improvements in their loss ratio; New Hampshire achieved an improvement in its loss ratio and premium income growth; All of the top 10 liability insurers recorded an increase in their expense ratios in 2007; The average expense ratio of the top 10 liability insurers increased by 3.2 percentage points in 2007; New Hampshire possessed the lowest expense ratio in 2007; Norwich Union, Zurich, RSA and Allianz recorded the highest increases in their expense ratios in 2007; The average combined ratio of the top 10 UK liability insurers improved by 7.7 percentage points, with AXA, Zurich and RSA seeing the largest decreases in 2007; The average combined ratio of the top 10 liability insurers decreased by 7.7 percentage points to 94.4%; NFU Mutual saw the largest increase in its combined ratio in 2007, which was significantly higher than its peers; Four of the top 10 UK liability insurers managed to improve their combined ratios significantly; Six of the top 10 motor insurers witnessed profitability increase in 2007; The motor insurance market recorded a heavy underwriting loss in 2007 and motor insurers made significant reserve releases; The motor insurance market recorded an accident year combined ratio of 113.2% in 2007; Motor insurers have increasingly relied on reserve releases in recent years; The average loss ratio of the top 10 UK motor insurers increased in 2007; The average loss ratio of the top 10 motor insurers rose by 0.9 percentage points in 2007; Four insurers saw their loss ratios increase; Six of the top 10 motor insurers recorded a decline in their loss ratios in 2007; The average expense ratio of the top 10 UK motor insurers decreased marginally, with Allianz recording the largest reduction in 2007; The average expense ratio of the top 10 UK motor insurers decreased by 0.1 percentage points to 27.4%; RSA, Norwich Union and UKI saw the largest increases in their expense ratios; Half of the top 10 UK motor insurers achieved an improvement in their expense ratios; The average combined ratio of the top 10 UK motor insurers increased moderately; The average combined ratio of the top 10 motor insurers increased by 0.7 percentage points; Four insurers recorded an increase in their combined ratio; Six of the top 10 insurers recorded a reduction in their combined ratios in 2007; Half of the top 10 pecuniary loss insurers witnessed an increase in profitability; The average loss ratio of the top 10 UK pecuniary loss insurers decreased in 2007; The average loss ratio of the top 10 UK pecuniary loss insurers decreased by 2.3 percentage points in 2007; Only three of the top 10 UK pecuniary loss insurers improved their loss ratios in 2007; Allianz and Norwich Union saw the largest loss ratio increases in 2007; Six of the top 10 pecuniary loss insurers saw an increase in their expense ratios; The average expense ratio of the top 10 UK pecuniary loss insurers rose by 1.1 percentage points in 2007; Four of the top 10 UK pecuniary loss insurers achieved significant improvements in their expense ratios; AXA, UKI, St Andrews and Landmark saw the largest increases in their expense ratios in 2007; The average combined ratio of the top 10 UK pecuniary loss insurers improved moderately; The average combined ratio of the top 10 pecuniary loss insurers decreased by 1.2 percentage points; UKI and Direct Line were the only two players that achieved an improvement in their combined ratios and GWP growth; AXA saw the largest increase in its combined ratio among the top 10 UK pecuniary loss insurers; All top 10 property insurers witnessed profitability decrease in 2007 due to the summer floods; All top 10 property insurers saw their loss ratios increase in 2007 due to the summer floods; The average loss ratio of the top 10 UK property insurers increased by 23.1 percentage points; St Andrews, Direct Line, Lloyds TSB and Zurich experienced significant increases in their loss ratios; Six insurers returned loss ratios that were below the market average in 2007; The average expense ratio of the top 10 property insurers increased in 2007, with NIG and Direct Line recording the largest individual increases; The average expense ratio of the top 10 property insurers rose by one percentage point in 2007; Churchill, Lloyds TSB and St Andrews achieved expense ratio reductions; Seven of the top 10 property insurers witnessed their ratios deteriorate in 2007; All top 10 property insurers saw their combined ratio increase in 2007; The average combined ratio of the top 10 property insurers rose by 24.1 percentage points in 2007; Four insurers saw their combined ratios increase by more than 30 percentage points; Churchill and Allianz recorded moderate increases to their combined ratios; Future Decoded; Introduction; The private motor market is forecast to achieve the strongest growth in GWP in the personal lines market between 2008 and 2013; The UK personal general insurance market is forecast to grow at a CAGR of 3.3% between 2008 and 2013; The household insurance market is forecast to grow at a CAGR of 3.0% between 2008 and 2013; The individual accident and health market will reach £4.2 billion in GWP in 2013; The personal pecuniary loss market is forecast to grow by a CAGR of 2.0% between 2008 and 2013; The individual accident and health market is forecast to grow at a marginal rate between 2009 and 2013; Continuing premium rate increases will drive marginal growth in the individual accident and health market; The individual A&H market is forecast to see marginal growth despite an expected drop in subscribers; Private motor GWP is forecast to reach £12.7 billion by 2013 under neutral conditions; Conditions in the private motor market are forecast to allow for further increases in premium rates; The UK private motor insurance market is predicted to be worth £12.7 billion in 2013; The household insurance market is forecast to reach £9 billion in GWP by 2013; Premium rate increases are expected to drive growth in household GWP; The market will reach a peak of £9 billion in 2013; Personal pecuniary loss GWP is forecast to grow at a CAGR of 2.0% between 2008 and 2013; The personal pecuniary loss market is forecast to reach £5.1 in GWP by 2013
APPENDIX: Definitions; Definitions for lines of business; Accident & health; Motor; Property; Financial/Pecuniary loss business; Liability business; Total personal; Total commercial; Premium income measures; Gross Premium; Written premiums; Distribution definitions; Banks/building societies; Brokers; Company staff; Direct; 'Other' company agents; Utilities/retailers/affinity groups; Methodology; Market size; Changes in market size information; Market size methodology; Lloyd's players and underwriting result figures; Further reading; Ask the analyst
Datamonitor consulting: Disclaimer
List of Tables: Table 1: Total general insurance GWP by line of business, 2003-07; Table 2: Personal GWP split by line of business, 2003-07; Table 3: Total general insurance underwriting results by line of business, 1997-2007 (£m); Table 4: Accident and health GWP split between individual and group, 2003-07; Table 5: Accident and health GWP by sector, 2003-07; Table 6: Total UK accident and health underwriting account, 1997-2007 (£m); Table 7: Total motor market GWP by private and commercial segment, 2003-07; Table 8: Private motor insurance premium income by line of business 2003-07; Table 9: Total UK motor underwriting account, 1997-2007 (£m); Table 10: Total UK private motor underwriting account, 1997-2007 (£m); Table 11: Pecuniary loss market GWP by line of business, 2003-07; Table 12: Total UK pecuniary loss underwriting account, 1997-2007 (£m); Table 13: Property insurance GWP split between household and commercial business, 2003-07; Table 14: Total UK property underwriting account, 1997-2007 (£m); Table 15: Total UK household underwriting account, 1997-2007 (£m); Table 16: Private motor insurance GWP distribution by channel (All business), 2004-08e; Table 17: Household insurance GWP distribution by channel (All business), 2004-08e; Table 18: Top 10 personal general insurance advertisers, 2006-08, (£); Table 19: Top 10 personal general insurance advertisers' spend by media, 2006-08 (£); Table 20: Top 10 personal insurance competitors by GWP and market share, 2007; Table 21: Split between personal and commercial business for the top 10 personal insurers, 2007; Table 22: Premium income compared to change in loss ratio for the top 10 UK accident and health insurers, 2006-07; Table 23: Premium income compared to change in expense ratio for the top 10 UK accident and health insurers, 2006-07; Table 24: Premium income compared to change in combined ratio for the top 10 UK accident and health insurers, 2006-07; Table 25: Change in premium income compared to change in loss ratio for the top 10 UK liability insurers, 2006-07; Table 26: Change in premium income compared to change in expense ratio for the top 10 UK liability insurers, 2006-07; Table 27: Change in premium income compared to change in combined ratio for the top 10 UK liability insurers, 2006-07; Table 28: Combined ratio and accident year combined ratio, total motor market, 2003-07; Table 29: Premium income compared to change in loss ratio for the top 10 UK motor insurers, 2006-07; Table 30: Premium income compared to change in expense ratio for the top 10 UK motor insurers, 2006-07; Table 31: Premium income compared to change in combined ratio for the top 10 UK motor insurers, 2006-07; Table 32: Premium income compared to change in loss ratio for the top 10 UK pecuniary loss insurers, 2006-07; Table 33: Premium income compared to change in expense ratio for the top 10 UK pecuniary loss insurers, 2006-07; Table 34: Premium income compared to change in combined ratio for the UK top 10 pecuniary loss insurers, 2006-07; Table 35: Premium income compared to change in loss ratio for the top 10 UK property insurers, 2006-07; Table 36: Premium income compared to change in expense ratio among the top 10 property insurers, 2006-07; Table 37: Premium income compared to change in combined ratio among the top 10 property insurers, 2006-07; Table 38: Forecast of personal general insurance GWP, 2003-13f (£m); Table 39: Key variables affecting individual A&H insurance GWP, 2008e-13f; Table 40: Forecast of individual A&H GWP, 2003-13f (£m); Table 41: Key variables affecting private motor insurance GWP, 2008e-13f; Table 42: Forecast of private motor insurance GWP , 2003-13f (£m); Table 43: Key variables affecting household insurance GWP, 2008e-13f; Table 44: Forecast of household insurance GWP, 2003-13f (£m); Table 45: Forecast of UK pecuniary loss GWP, 2003-13f (£m)
List of Figures: Figure 1: The motor and pecuniary loss insurance markets grew in 2007 however the accident and health, property and general liability sectors contracted; Figure 2: Private motor and household markets experienced growth in 2007; Figure 3: The total general insurance market plunged into a loss of £934m in 2007; Figure 4: Growth in both the individual and group accident and health sectors slowed in 2007; Figure 5: The individual and group health insurance sectors grew in 2007 however the accident insurance market contracted; Figure 6: The accident and health market witnessed a significant decline in profitability in 2007; Figure 7: In 2007 the private motor market expanded for the first time in a number of years; Figure 8: The private comprehensive and private non-comprehensive markets grew in 2007 however the motorcycle market contracted; Figure 9: The motor insurance market continued to make an underwriting loss in 2007; Figure 10: Underwriting losses in the private motor market declined in 2007; Figure 11: The pecuniary loss market saw its underwriting profit decrease in 2007; Figure 12: Household insurance GWP continued to rise in 2007 while commercial property insurance GWP declined; Figure 13: The property insurance market moved into a significant loss in 2007; Figure 14: The household insurance market moved into a significant underwriting loss in 2007 due to the summer floods; Figure 15: The direct channel continues to be the number one route to market for private motor insurance; Figure 16: Banks lost market share in the home insurance market as mortgage linked sales declined in 2008; Figure 17: Three aggregators now feature in the top 10 insurance advertisers; Figure 18: The top 10 general insurance advertisers devoted the majority of their spending to TV advertising in 2008; Figure 19: RBSI was the largest personal general insurance group in 2007; Figure 20: UKI, Churchill and St Andrews did not write any commercial lines business in 2007; Figure 21: New Hampshire and ACE recorded the largest improvements in their loss ratios in 2007; Figure 22: ACE and Norwich Union saw the largest improvement in their expense ratios in 2007; Figure 23: ACE achieved the largest decrease in its combined ratio, which was accompanied by GWP growth in 2007; Figure 24: Half of the top 10 UK liability insurers saw their loss ratios improve in 2007; Figure 25: All of the top 10 liability insurers recorded an increase in their expense ratios in 2007; Figure 26: AXA, Zurich and RSA recorded the largest improvements in their combined ratios in 2007; Figure 27: Motor insurers have become increasingly reliant on reserve releases to bolster their reported profitability; Figure 28: Six insurers recorded a decline in their loss ratio in 2007; Figure 29: Allianz's expense ratio improved significantly in 2007; Figure 30: A number of insurers saw their combined ratios increase in 2007; Figure 31: The majority of the top 10 pecuniary loss insurers experienced a moderate increase to their ratios in 2007; Figure 32: Norwich Union and GEFI both achieved significant decreases in their expense ratios; Figure 33: Half of the top 10 UK pecuniary loss insurers achieved an improvement in their combined ratios in 2007; Figure 34: All top 10 property insurers saw their loss ratio increase in 2007 due to the summer floods; Figure 35: Lloyds TSB was the only insurer to improve its expense ratio and achieve GWP growth at the same time in 2007; Figure 36: All top 10 property insurers saw their combined ratio increase in 2007; Figure 37: The private motor market is forecast to achieve the strongest growth in the personal lines market between 2008 and 2013; Figure 38: The individual A&H market is forecast to grow to £4.2 billion in 2013; Figure 39: Private motor GWP is predicted to grow significantly over the forecast period; Figure 40: Total household GWP is forecast to steadily increase, reaching £9 billion in 2013; Figure 41: The personal pecuniary loss market is forecast to reach £5.1 billion in GWP by 2013

Abstract

Introduction

The report analyzes the performance of the personal general insurance sector, providing data on market sizes and profitability for individual accident and health, private motor, personal pecuniary loss and household insurance. Competitor strategies and performance are also analyzed. Finally, the report provides GWP forecasts for the main personal general insurance lines until 2013.

Scope

Information on premium income and underwriting profitability for the main personal insurance lines
Insight into insurance advertising strategies of the top 10 personal insurance advertisers
Analysis of key competitors' performance and competitive strategies
Develop your future business plans from an informed viewpoint with Datamonitor's GWP forecasts for the market

Highlights

When looking specifically at the personal lines market, it achieved a moderate increase in GWP, growing by 2.3% 2007. This growth can be attributed to an increase in premium income derived from three business lines: private motor, household, and personal pecuniary loss.

channels. A number of affinity partnerships, such as Tesco and Marks & Spencer, have also been able to leverage their strong brands and frequent contact with consumers to drive significant volume in motor insurance sales.

In terms of business units, RSA's direct brand, More Th>n, contributed towards the growth in RSA's personal lines business, with NWP up by 8% in 2007 and new business sales up by 10%. The insurer reported that online sales were particularly positive, with web sales of household insurance up by 160% and web sales of motor up 30% on 2005 levels.

Reasons to Purchase

Access information on the performance of the market in terms of GWP and profitability
Benchmark your own performance against the major competitors in the general insurance market
Develop your future business plans with the help of Datamonitor's GWP forecasts for the main personal general insurance lines

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2/14/2012 - 31

UK Personal General Insurance 2008

Table of Contents

Abstract