Motor Insurance - UK : Market Research Report

Motor Insurance - UK

Published by: Mintel International Group Ltd.

Published: May. 1, 2009 - 101 Pages

ISSUES IN THE MARKET: Key issues; Abbreviations
MARKET IN BRIEF: Underwriting profitability is a major issue…; …which is not helped by rising claims costs…; …but the motor insurance industry is recession-resistant; The number of cars in the UK continues to rise; RBS is the market leader; The sector lacks differentiation - price is key; Direct sales are rising, but so too are aggregators; Car insurance is a high-ownership product; Drivers go direct
INTERNAL MARKET ENVIRONMENT: Key points; The number of cars in the UK continues to grow…; …although new car registrations have fallen; Used car sales are also down; The number of driving licence holders has increased; Multiple car ownership has also increased; The impact of rising personal injury claims; Fraudulent claims are also up…; …with the recession leading to yet more fraud?; Premiums set to rise in 2009 as a result; Issues around age discrimination
BROADER MARKET ENVIRONMENT: Key points; Disposable incomes are being squeezed; Changing economic circumstances changing motoring habits?; Consumer spending falling as a result; Internet penetration has increased; Petrol prices have increased significantly; The average cost of motoring increased in 2008; Low base rate may increase appeal of car finance; Anti-car policies and public transport improvements; Car tax changes will hit two thirds of motorists
COMPETITIVE CONTEXT: Key points; Motor insurance is compulsory…; …but uninsured drivers are a problem…; …but the police are taking a tougher stance
SWOT ANALYSIS
MARKET SIZE AND FORECAST: FORECAST
CLAIMS EXPERIENCE: Key points; The total number of private motor claims fell by 7% in 2008; The value of claims incurred has steadily increased; The number and value of theft claims continues to fall; Personal injury claims are still costing; A more collaborative approach to claims management
MARKET SHARE: Key points; RBS leads the market by a long way; A highly fragmented marketplace
COMPANIES AND PRODUCTS: COMPANY PROFILES
BRAND COMMUNICATION AND PROMOTION: Key points; Motor insurance adspend remains flat in 2008; Car insurance makes up the vast majority of advertising; Direct Line was the biggest advertiser in 2008; When it comes to advertising motor insurance, the TV is king
CHANNELS TO MARKET: Key points; Direct sales have grown significantly since 2000; Aggregators have taken a more commanding position…; …though this does not necessarily benefit insurers; The telephone is still crucial
THE CONSUMER - PRODUCT OWNERSHIP: Key points; Half the population have comprehensive insurance; Ownership of comprehensive cover continues to rise; Men are more likely to have a policy in their own name; Younger drivers more likely to be ‘fronted’ or have third party cover; ABs are more likely to have comprehensive cover; Homeowners and multi-car households valuable targets
THE CONSUMER - DISTRIBUTION TRENDS: Key points; Most people buy direct from an insurance company…; …but aggregators have become increasingly influential; Aggregators are used more by younger people…; …and high earners; The type of policy makes no difference; The telephone is still king in motor insurance; Rapid growth in online sales; Younger people more likely to use the internet; Aggregators should target households with children…; …and avoid advertising in popular tabloids; Most people that arrange direct with an insurer use the telephone
APPENDIX - PRODUCT OWNERSHIP
APPENDIX - DISTRIBUTION TRENDS
APPENDIX: RESEARCH METHODOLOGY

Abstract

The motor insurance market has been suffering from an underwriting loss for a number of years now. Fuelled by the growth of price comparison sites, the market is highly price sensitive and suffers from a distinct lack of customer loyalty. On the plus side, however, the motor insurance sector is well-insulated against the economic downturn due to the fact that motor insurance is a legal requirement. As the number of cars in the UK continues to grow, the sector should prosper, giving motor insurers time to focus on of the issues of pricing, customer retention and distribution.

Some 19% of motorists used an aggregator to arrange their last car insurance policy (compared to 12% in 2008). Clearly, price comparison sites present a big challenge for providers. Either a new pricing structure is needed in relation to the aggregator model, or a longer-term focus is required in their relationship. In addition, the rising cost of personal injury claims is a big issue for insurers, adding to the need to increase premiums. The problem is that while big premium rises are needed to increase profitability, in such a fiercely competitive and price-led industry, no one wants to be the first mover for fear of the business they will lose as a result.

This report explores the many issues that are at work in the motor insurance sector, its strengths and weaknesses are assessed, and its size defined in terms of gross written premiums and underwriting profit. Distribution channels are explored (in particular the role of intermediaries) before taking a look at the key players in the market, both in terms of their market share and brand perceptions. The report concludes with a detailed analysis of the consumer’s view of the market, compiled from the research Mintel has conducted on the private motor insurance market.

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Motor Insurance - UK

Table of Contents

Abstract