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UK Private Motor Insurance: Market Dynamics & Opportunities 2018

UK Private Motor Insurance: Market Dynamics & Opportunities 2018

Summary

UK Private Motor Insurance: Market Dynamics & Opportunities 2018, report analyzes the UK private motor insurance market, looking at market size as well as changes in premiums, claims, road casualties, the motor parc, regulations, and opportunities. It discusses competitors in the market and how the market is likely to change due to telematics and driverless cars, and provides future forecasts of market size up to 2022.

The private motor insurance market grew in gross written premiums (GWP) in 2017. This was due to increasing premiums, which have reached a record high because of rising insurance premium tax (IPT), increasing car repair costs, and the change of the Ogden discount rate from 2.5% to -0.75% in March 2017. The latter move resulted in higher claims costs for insurers, which they responded to by raising premiums. Implementation of the Civil Liability Bill has been delayed to April 2020 due to Brexit. This means the market is further away from reforms that will reduce claims costs and allow insurers to pass on savings to customers. The delay will not, however, impact upon another review of the Ogden discount. The rate is hoped to rise to between 0% and 1%, which should provide some reprieve to the insurance industry in the meantime.

Scope

  • GWP for the private motor insurance market grew by 7.9% to reach £13.1bn in 2017.
  • Bodily injury claims are the highest cost for motor insurers, with the average claim costing £10,272.
  • Direct Line and Aviva are the leading private motor insurers, with market shares of 12.3% and 10.0% respectively in 2017.
Reasons to buy
  • Ensure you remain competitive as new innovations and insurance models begin to enter the market.
  • Be prepared for how regulation will impact the private motor insurance market over the next few years.
  • Benchmark yourself against competitors.


  • Executive Summary
    • The Civil Liability Bill
    • Key findings
    • Critical success factors
  • Market Dynamics
    • Introduction
    • The private motor insurance market continued to grow in 2017
      • The private motor market grew by 7.9% to reach £13.1bn in GWP in 2017
        • Table Figure 1: The private motor market has grown, primarily due to rising premiums in 2017
      • Non-comprehensive policies are becoming less widespread
      • The Lloyd's of London market accounts for 1.3% of private motor insurance GWP
    • Motor insurance premiums have reached an all-time high
      • Motor insurance premiums have continued to rise
        • Table Figure 2: Motor insurance premiums reached an all-time high in 2017
      • Comprehensive and non-comprehensive premiums are decreasing
        • Table Figure 3: Premiums for comprehensive policies are beginning to decrease
        • Table Figure 4: Non-comprehensive policies are also in decline
        • Table Quarterly change in market average and Shoparound premiums, Q1 2012-Q1 2018
      • IPT has remained at 12% despite concerns
      • The requirement to notify customers of the previous year's premiums will encourage shopping around
    • The Ogden rate continues to increase the cost of claims
      • Changes to calculating the Ogden discount rate are set to benefit insurers
    • The number of motor claims notified fell in 2017
      • Claims notified decreased in 2017
        • Table Figure 5: The number of claims notified fell for the second consecutive year in 2017
        • Table Figure 6: Average claims cost and gross claims paid increased in 2017
      • Recorded personal injury motor claims fell by over 100,000 in 2017/18
        • Table Figure 7: Personal injury motor claims settled are above pre-LASPO levels
      • Bodily injury claims pose the highest cost for insurers
        • Table Figure 8: Bodily injury claims are the biggest cost despite being less frequent
        • Table Number of claims settled, average cost, and gross claims paid by claim type 2013-17
    • Whiplash claims remain a problem
      • Whiplash claims were reported to fall in 2017, but remain an issue
      • Motor personal injury claims remain high, while RTA claims are in decline
        • Table Figure 9: The number of RTAs is in long-term decline
      • Most RTA casualties are car occupants, but these are the least vulnerable road users
      • The number of pedestrian casualties increased in 2017
        • Table Figure 10: The majority of RTA casualties are car occupants
      • Car and taxi use has continued to increase
        • Table Figure 11: Car usage has increased despite petrol prices beginning to rise
        • Table Figure 12: Brexit caused the value of sterling to drop, causing petrol prices to rise
      • The UK motor parc continues to grow
        • Table Figure 13: The UK motor parc grew to 31.2 million in 2017, 8.1% of which were newly registered vehicles
  • Competitor Dynamics
    • Direct Line and Aviva hold the largest shares of private motor
      • Direct Line and Aviva currently lead the private motor market
        • Table Figure 14: Direct Line remains the leading provider of private motor insurance
        • Table Market share of the top 10 private motor insurers in the UK, 2016-17
      • Direct Line has been the top private motor insurer for the past two years
      • Aviva offers standard insurance in addition to short-term, learners, and telematics policies
        • Table Figure 15: Aviva Drive has a dash-cam feature that automatically detects a collision
      • Ageas offers four car insurance policies, which can be purchased through brokers
      • LV
      • Mobile network providers are entering the telematics market
      • Chatbots are a new way to get a quote
  • The Market Going Forward
    • The Civil Liability Bill has been delayed to April 2020
      • The implementation of the Civil Liability Bill has been delayed due to Brexit
      • Implementation of the Civil Liability Bill could also depend on future claims trends
    • The Civil Liability Bill aims to reform personal injury motor claims
      • The Civil Liability Bill seeks to cut claims costs
      • The Civil Liability Bill would save customers £35 on motor insurance premiums
      • The small claims limit will increase to £5,000 for RTA claims
      • A tariff system is being introduced for RTA-related soft tissue injury claims
        • Table New tariff amounts for PSLA soft tissue injury claims compared to the 2015 average payment for PSLA, by injury duration
      • Claims will not be settled without a MedCo medical evidence report
      • There has been a positive reaction to the Civil Liability Bill
    • New legislation could lead to falling premiums and market GWP
      • The future of the private motor insurance market is uncertain
      • Unless claims costs fall, motor insurance and GWP will remain high
        • Table Figure 16: GWP for the private motor insurance market is forecasted to keep increasing
    • Telematics policies are growing in popularity
      • Technology will take time to penetrate the market
      • The number of young people learning to drive is decreasing
      • There are almost 1 million telematics policies in the UK, but penetration is low
      • Dash-cams are becoming the new telematics
      • Connected cars are the future of providing better insurance services, particularly claims
    • Driverless cars are expected to become mainstream by 2045
      • The government is supporting the development of driverless cars
      • Motorists with driverless cars will be required to have dual insurance policies
      • Autonomous car manufacturers are entering the insurance market for driverless cars
      • Motor insurers are looking to partner with driverless car manufacturers
      • Insurers could play an important role in reducing the risk of driverless cars
      • The 10 features for a car to be considered automated
        • Table Figure 17: There are 10 features that UK insurers believe define an automated vehicle
      • More than half of new UK cars are sold with autonomous features
      • Electric cars will hold a greater share of the motor parc in the future
        • Table Charging speeds using 3.7kW, 7kW, and 22kW chargers for electric vehicles, and where they can be found
      • There will be a divided motor parc as autonomous features gain popularity
      • The need for personal car insurance could diminish
      • Smart roads will make driving safer
    • Usage-based, car sharing, and P2P policies are being launched
      • The majority of new, innovative policies target millennials
      • Motor insurers are beginning to see the opportunity in car sharing
        • Table Figure 18: Admiral offers short-term motor insurance policies
      • Usage-based pay-as-you-go and pay-per-mile car insurance policies are a growing concept
        • Table Figure 19: By Miles will save infrequent drivers money by only charging them for the distance they drive
  • Appendix
    • Abbreviations and acronyms
    • UK Top 20 General Insurance Competitor Analytics methodology
    • Forecasting methodology
      • Table Figure 20: Forecasting methodology
    • Bibliography
    • Further reading
    • About GlobalData
      • Table Figure 21: About GlobalData

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