UK Private Motor Insurance: Market Dynamics & Opportunities 2019

UK Private Motor Insurance: Market Dynamics & Opportunities 2019

Summary

This report analyzes UK private motor insurance, looking at market size as well as changes in premiums, claims, road casualties, the motor parc, regulations, and opportunities. It discusses the leading competitors and how the market is likely to change due to telematics and driverless cars, as well as providing future forecasts of market size up to 2023.

Gross written premiums (GWP) expanded by less than 1% in the private motor insurance market in 2018, following a period of stronger growth. A year of low growth for the market made it tough for insurers to increase their GWP, with competition heating up among the top five players. As claims costs continue to rise, insurers eagerly await the Civil Liability Act coming into full effect. Technology advancements - above all driverless cars - will be pivotal in this market over the next five years.

Scope

  • Measured by GWP, the private motor insurance market was worth £13.1bn in 2018.
  • Average premiums fell slightly to £477 in 2018 after peaking at £481 in 2017.
  • Direct Line remained the largest private motor insurer in 2018, holding over 12% of the market as Admiral challenged Aviva for second place.
  • Personal injury claims remain the biggest average and total cost for insurers, costing an average of £10,454 per claim and over £3.2bn per year.
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 leading competitors.


  • Executive Summary
    • Growth begins to slow in the run up to the Civil Liability Act
    • Key findings
    • Critical success factors
  • Market Dynamics
    • Introduction
    • The private motor insurance market continued to grow in 2018
      • Growth in the market slowed to 0.97% to reach £13.1bn in GWP
        • Table Figure 1: Private motor market growth slowed to less than 1% in 2018
        • Table Figure 2: Average premiums are highest for the youngest drivers
    • A multitude of factors drive premiums down
      • Premiums have begun to decrease after reaching an all-time high in 2017
        • Table Figure 3: Motor insurance premiums have begun to decline after reaching an all-time high in 2017
      • The most recent Ogden rate change has been disputed by insurers
      • IPT remains frozen at 12%
      • Premiums hit a yearly high in Q4 2018 for the fifth consecutive year
      • Renewal notice requirements have begun to have an effect
      • "Average premium" confuses consumers
        • Table Figure 4: Different sources continue to disagree on average premiums
      • Comprehensive premiums remain lower than TPFT despite lower cover
        • Table Figure 5: Comprehensive and TPFT premiums continue to behave in a similar manner
    • The motor claims landscape in 2018
      • Claims notified rose despite previous falls
        • Table Figure 6: Around one in eight motorists will make a claim on their policy
      • Average claim value rose for the third consecutive year
        • Table Figure 7: Average claims cost hit an all-time high in 2018, alongside an increase in gross claims paid
        • Table Figure 8: Personal injury continues to lead the way as the most costly claim
        • Table Number of claims settled, average cost, and gross claims paid by claim type, 2014-18
      • Bodily injury claims
    • Road traffic accidents (RTAs) and their link to claims
      • Whiplash claims continue to drive up premiums
      • Total RTAs continue to decline, while number of claims increased slightly after a sharp fall
        • Table Figure 9: CRU claims rose slightly despite data suggesting a potential fall in RTAs
      • Car occupants are the least vulnerable individuals in RTAs
        • Table Figure 10: Casualties continue to decrease across the board despite rising traffic levels
      • Car and taxi use has continued to increase
        • Table Figure 11: Number of vehicle miles rose across the review period
        • Table Figure 12: Petrol prices have been on the rise since mid-2017
      • The pay-as-you-go insurance opportunity grows as average mileage falls again
      • The UK motor parc continues to grow
        • Table Figure 13: The UK motor parc continues to grow, but at a slowing rate
  • Competitor Dynamics
    • Direct Line remains the market leader
      • Insurers battled to stay in the top five
        • Table Figure 14: Most of the leading insurers saw slow growth in line with the overall market trend
        • Table GWP and market share of the top 10 private motor insurers in the UK, 2016-18
    • Analysis of the market leaders
      • Direct Line remained number one despite minimal growth in 2018
      • Aviva remained in second place, but fell further behind in real terms
      • Ageas struggled to hold its market share
      • LV
  • The Market Going Forward
    • The Civil Liability Act has been delayed to April 2020
      • Decreasing personal injury claims may threaten implementation
    • The Civil Liability Act aims to reform personal injury motor claims
      • The Civil Liability Act seeks to cut claims costs
      • The Civil Liability Act is forecast to 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 Act
    • Predictions for the market
      • The future of the private motor insurance market is uncertain
      • Changes to claims costs remain critical to premiums and GWP
      • The forecast for the next five years
        • Table Figure 15: GWP for the private motor insurance market is set to keep increasing
    • The number of telematics policies is increasing
      • The number of young people learning to drive continues to decrease
      • Young drivers turn to telematics to lower costs
      • Dash cams are becoming the new telematics
    • Connected cars and smart roads will increase driver safety
      • Connected cars are the future of providing better insurance services
      • From 2022, all new cars must have a speed limiter
      • Smart roads will make driving safer
    • The complexity of electric vehicle systems drives up premiums
      • Electric vehicles will represent more of the motor parc
    • Fully autonomous vehicles will disrupt the motor insurance landscape
      • Driverless cars are expected to be mainstream by 2045
      • The government is supporting the development of driverless cars
      • Safety and testing of autonomous vehicles remains hazy
      • A new sub-market of dual insurance policies for autonomous vehicle
      • Car manufacturers have increased their presence in the insurance market
      • Insurers will play a crucial role in the development of autonomous vehicles
      • The 10 features for a car to be considered automated
        • Table Figure 16: There are 10 features UK insurers believe define an automated vehicle
      • Public opinion of autonomous vehicles
      • The divide between cars with and without drivers
      • The need for personal car insurance could diminish
    • 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
      • Usage-based, pay-as-you-go, and pay-per-mile car insurance are gaining traction
  • Appendix
    • Abbreviations and acronyms
    • Methodology
      • UK Top 20 General Insurance Competitor Analytics methodology
      • Forecasting methodology
        • Table Figure 17: Forecasting methodology
    • Secondary sources
    • Further reading
    • About GlobalData
      • Table Figure 18: About GlobalData

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