UK Household Insurance: Market Dynamics and Opportunities 2024
Summary
This report analyzes the UK household insurance market, looking at drivers of uptake across different demographics and dwelling types. The report discusses the claims landscape in 2023 as well as the housing market and upcoming regulatory changes within insurance. Incumbent competitors are analyzed and compared, as are newcomers and insurtechs within the space. Future impactors in the market, including climate change and smart home devices, are also covered.
GlobalData anticipates that gross written premiums (GWP) in the household insurance sector will rise by 5.8% by the end of 2024, building on an 8.7% increase to GBP7.07 billion in 2023. GlobalData forecasts that GWP will continue to grow in 2024, driven by an increase in premium rates rising. Growth in 2023 was largely driven by an 11.6% rise in the average premium price across all three products. Specifically, premiums for combined, buildings-only, and contents-only insurance policies increased by 12.9%, 14.9%, and 7.1%, respectively, in 2023. However, it is crucial to note that the cost-of-living crisis/inflation continued to exert considerable pressure on consumers, resulting in 17.9% opting to cancel their policies. The housing market faced challenges due to high interest rates and inflation, leading to a decline in mortgage approvals in 2023.
Scope
- The UK household insurance market is expected to rise by 5.8% in 2024, following an 8.7% increase in 2023.
- The average premium prices for combined, buildings-, and contents-only insurance increased by 12.9%, 14.9%, and 7.1%, respectively, in 2023. Furthermore, the number of policies for all products fell due to financial constraints for consumers.
- Generation Rent remains an untapped demographic as roughly half have contents-only insurance in place.
- Identify underlying drivers of demand and premium prices for home insurance products.
- Examine the nature of the claims landscape in 2023.
- Compare the performances of market leaders throughout the year.
- Determine how insurtechs are attempting to gain traction in the market.
- Understand the progression of home insurance lines into the future.
- 1.1 Market overview
- 1.2 Key findings
- 1.3 Critical success factors
- 2.1 The UK household insurance market grew in 2023 and is expected to keep expanding in 2024
- GWP reached GBP7.07 billion in 2023
- Premium rates for 2023 have continued increasing since Q2 2022
- The share of GWP for combined insurance has increased year-on-year over the review period
- Home insurance penetration rates among tenants continue to be low
- The percentage of private renters in the UK remained stable in 2023
- The primary reason tenants refrain from buying home insurance is due to its high costs
- An increasing number of renters continue to purchase the wrong type of cover
- 2.2 Policies and regulations set by the government regarding home insurance
- The FCA aims to streamline regulatory guidelines
- The FCA’s Consumer Duty: A new era of accountability in household insurance
- The FCA launches a review of premium financing practices amid rising insurance prices
- The FCA’s dual pricing regulations are now in effect, but their full impact remains to be seen amid inflation
- The ABI calls for a reduction in IPT
- 2.3 The claims landscape in 2023
- The overall costs of claims increased in 2023 despite the number of claims notified decreasing
- Inflation and elevated rebuilding costs have diminished from their previous peaks in the industry
- Flood Re unveils transition plan to tackle climate change and flood risks
- 2.4 The housing market experiences a significant downturn due to changes in building regulation
- Mortgage approvals on the rise
- The rise of Generation Rent continues
- 3.1 Aviva strengthens its position as the leading home insurance provider in 2023
- RSA completes the sale of its household division to the Admiral Group in the UK
- Allianz releases new home insurance products
- Zurich increases its focus on HNW
- Lemonade and Aviva partnership expands
- The acquisition of Barclays’s home insurance book has boosted Aviva’s position in the industry
- SAGIC and ECH Facilities launch home insurance policy to address premium poverty gap
- 3.2 Insurtech innovations and recent updates
- Amazon discontinues insurance store in the UK only 15 months after launch
- Virgin Money returns in the home insurance market in partnership with leading insurtech Uinsure
- 4.1 The market is anticipated to grow until 2028f
- 4.2 The role of smart home devices in home insurance
- Smart home devices present opportunities for new customer acquisition
- The growing popularity of smart home devices makes cyber insurance crucial
- 4.3 Barriers exist for new alternative entrants
- 4.4 Extreme weather events will continue to impact claims
- 5.1 Abbreviations and acronyms
- 5.2 Methodology
- GlobalData’s UK Top 25 General Insurance Competitor Analytics
- GlobalData’s UK Insurance Consumer Surveys
- Forecasting methodology
- 5.3 Secondary sources
- 5.4 Further reading
- List of Tables
- Table 1: Household insurance GWP, annual growth rate, 2019–23
- Table 2: Yearly and quarterly average household insurance premium rate movements, Q1 2019–Q2 2024
- Table 3: Percentage of respondents holding any form of home insurance, 2022–23
- Table 4: Household gross claims incurred, and number of claims notified, by type, 2019–23
- Table 5: New home registrations and completions, 2019–23
- Table 6: Top 10 UK household insurers by GWP and market share, 2021–23
- Table 7: UK household insurance market forecasts, 2023–28
- List of Figures
- Figure 1: UK household insurance market GWP soared by 8.7% in 2023
- Figure 2: Home insurance premiums have been on the rise since the large dip in Q1 2022
- Figure 3: Combined insurance made up 83.2% of total home insurance GWP in 2023
- Figure 4: Roughly 40% of all renters have a home insurance product in place
- Figure 5: The share of UK renters stagnated in 2023
- Figure 6: Many have not purchased home insurance as it is too expensive
- Figure 7: Uptake of contents-only insurance has fallen, whereas a quarter of renters have the wrong insurance
- Figure 8: The overall cost of claims incurred grew by 5.3% in 2023
- Figure 9: The number of claims notified decreased by 13.9% in 2023
- Figure 10: Rebuild costs are growing at a slower pace in 2024
- Figure 11: Consumers are reluctant to change their level of cover amid the cost-of-living crisis
- Figure 12: New home registrations and completions drop in 2023, with a large decrease in registrations
- Figure 13: Mortgage approvals on an upward trend since July 2023
- Figure 14: Younger consumers are more likely to be renting due to difficulties getting on the property ladder
- Figure 15: Aviva maintains its position as the leader in the household insurance market
- Figure 16: Premiums in the household insurance market are expected to have grown in 2024f
- Figure 17: Younger consumers are far more likely to be willing to share smart home data with their insurer
- Figure 18: The uptake of smart home devices in the UK, 2023
- Figure 19: Big Tech firms hold a strong position of trust among consumers if they were to sell home insurance
- Figure 20: Forecasting methodology
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