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UK Household Insurance 2011 Product Image

UK Household Insurance 2011

  • ID: 1952320
  • September 2011
  • Region: United Kingdom, Great Britain
  • Datamonitor

FEATURED COMPANIES

  • Admiral Group plc
  • AXA
  • Bank of England
  • CMS Energy Corporation
  • Fortis
  • Hutchison 3G UK Limited
  • MORE

This report provides a comprehensive analysis of the household insurance market. It provides in-depth data and analysis of the size and profitability of the market. There is also analysis into consumer trends and the success of various distribution methods by demographic group. It details the number of claims in household insurance and their total value as well as the premium prices of policies.

Scope of the report:

- Insight into the latest issues affecting the household insurance marketplace and the impact these issues are having on growth and profitability.
- Latest findings from The 2011 General Insurance Consumer Survey including distribution, purchasing and retention patterns.
- Analysis of market size and the profitability for the market as a whole as well as the top 10 insurers.
- Forecasts up to 2015 of the market share by GWP and profitability of the UK household insurance marketplace.

Highlights:

- The household insurance market benefited from a solid increase in gross written premiums and a decrease in gross claims costs. Profitability in the market, however, decreased as insurers increased their provisions for unexpired risk reserves.

- READ MORE >

FEATURED COMPANIES

  • Admiral Group plc
  • AXA
  • Bank of England
  • CMS Energy Corporation
  • Fortis
  • Hutchison 3G UK Limited
  • MORE

OVERVIEW
-Catalyst
-Summary

EXECUTIVE SUMMARY
-Gross written premiums for the market rose in
?Gross written premiums increased by 1.4% in
-Claims costs decreased in
?Total claims costs reduced by 7.4% in
?Gross claims are forecast to increase further as unemployment rises
-12 major groups hold the majority of the UK home insurance market
-The vast majority of customers have some form of household insurance
-Customers living in rental accommodation are becoming a valuable market segment
-Gross written premiums are forecast to grow slowly until

MARKET CONTEXT
-Introduction
-Gross written premiums for the market rose in
?Gross written premiums increased by 1.4% in
-The reported year combined ratio increased in
-Premium rates have remained volatile in 2010 and
?The contents only shoparound premium has risen in 2010 and
?Buildings only insurance has seen the largest increase in premiums
?Premiums in the combined household insurance market have begun to stabilize in 2011
-Claims costs decreased in
?Total claims costs reduced by 7.4% in
?Burst pipes were the main cause of weather-related claims
?Household fire damage claims costs fell to £332m in
?The average claims cost for accidental damages increased in
?The number of theft claims decreased in
?Insurers paid out less in subsidence claims in 2010 but claim numbers have increased significantly

MARKET ISSUES
-Risk of burglary decreased in 2010 but has increased in
?Insurers' risk exposure from burglaries decreased in
?The increased number of burglaries in 2010/11 will lead to higher theft claims costs
?Gross claims are expected to increase further as unemployment risesIndustry figures highlight a clear correlation between a change in the unemployment rate and a change in the number of gross burglary claims: as the number of unemployed increases, there is a subsequent increase in the number of theft claims in the UK. As the economic recovery continues to struggle and unemployment figures begin to rise once again, insurers can expect to see an increase in the number of theft claims, causing claims inflation. According to the Office for Budget Responsibility's Economic and Fiscal Outlook 2011, unemployment is forecast to increase further throughout 2011 and will begin dropping by 2012 as output growth returns. Accordingly, the increase in unemployment will lead to a rise in theft claims throughout 2011, before dropping off in 2012.
-The slow growth in the number of households limited premium growth in 2010
?Growth in the number of households has slowed to 0.1%
?There will be an increase in the number of contents only policies purchased
?The number of new mortgages being issued is steadily increasing
-Government spending cuts are set to impact flood insurance cover

DISTRIBUTION DYNAMICS
-Direct insurers have seen a dramatic rise in their share of the UK home insurance market
?(Untitled sub-section)
-A handful of leading insurance brands distributed the majority of insurance policies
?12 major groups hold the majority of the UK home insurance market
?Less than two-fifths of consumers aged 55–65 took out home insurance policies with the top 10 providers
?Aviva's combined home insurance was most popular among consumers aged 18–
?Respondents aged 55–65 were the least likely to hold contents only insurance with a top 10 provider
?Aviva has become the most popular provider of buildings only insurance
-Three of the major aggregators were top 10 insurance advertisers in
?The top 10 insurance advertisers have increased their expenditure
?RBS brands Direct Line and Churchill continued to spend heavily on advertising in
?Acromas increased its marketing budget by 10.3%
-Half of the top 10 insurance advertisers' budget was spent on television campaigns
?Television advertising remains the most popular marketing medium
?Direct mail has increased in prominence as a secondary advertising medium
?The radio, cinema, and outdoor marketing platforms were used to a greater extent in 2010
?The press and the Internet were less popular with insurance advertisers than in
-Aggregators increased their advertising expenditure in
?Gocompare.com and Comparethemarket.com dramatically increased their advertising expenditure

CONSUMER DATA
-Introduction
-Combined insurance cover accounts for almost half of policies written
?The vast majority of respondents have some form of household insurance
?Respondents over the age of 55 were the most likely to be insured
?Households with a higher income are the most likely to have some form of household insurance
?Consumers belonging to socio-economic groups A and B are the most likely to hold household insurance policies
?Consumers with combined policies are the most price conscience but insurer reputation is important
-The use of the Internet in arranging a household policy is increasing across all policy types
-Contents cover is most popular among the younger age groups
?Older consumers are most likely to use the telephone to purchase home contents insurance
?Consumers with an income of between £75,000 and £99,999 are most likely to use the phone to arrange their contents cover
?Insurers are most likely to be able to poach customers between the ages of 25 and 34
?Consumers were more likely to change provider in 2011, compared to
?Customers living in rental accommodation are becoming a valuable market segment
-Buildings only cover is most popular among the highest income bracket
?Internet arrangement is a popular method for arranging buildings insurance
?High income consumers are mostly like to use the Internet to arrange their home buildings cover
?Older consumers are less likely to change their building insurance provider
?The propensity to stay with the current provider increases with household income
-Combined household policies remain best suited to the majority of the market
?Many younger consumers rely on face-to-face advice when organizing a combined policy
?The Internet is the most popular means of arranging a policy across all income groups
?Consumers between the ages of 25 and 34 were the most likely to change their policy
?Respondents with a household income of over £100,000 were the most likely to change provider
-Customers are taking a multi-channel approach when choosing their provider

COMPETITVE DYNAMICS
-Introduction
-Gross written premiums in the market grew by 1.4% in
?Market share among the top 10 insurers dropped by 0.1% in
?Allianz grew its market share aggressively in
-Lloyds Banking Group achieved the lowest accident year combined operating ratio in
-Competitors have increased their presence in the online sphere
?Swiftcover provides AXA with an opportunity to reduce costs
?Legal & General launches on Gocompare.com
?Aviva has re-entered the aggregator market
?RBS Insurance will offer high-net-worth household policies to Coutts clients

FUTURE DECODED
-Gross written premiums are forecast to grow slowly until
?Claims costs inflation is forecast to rise steadily over the forecast period
?Insurers' exposure to sovereign debt means they will have to rely on underwriting profitability
?Weak consumer confidence will limit the growth potential of premiums
?Market concentration will increase, putting pressure on premiums
?Slow growth in the housing market will limit the growth in policy numbers
?The presence of aggregators may lead to policy commoditization
-Increased competition will lead to a higher combined operating ratio in the future

APPENDIX
-Supplementary data
?General Insurance Consumer Survey 2011 demographics
?Contents only cover: socio-economic group data
?Buildings only cover: socio-economic group data
?Combined buildings and household cover: socio-economic group data
-Definitions
?Premium income measures
?Distribution definitions
?Other
-Methodology
?Primary and secondary research
?Gross written premium and combined operating ratio estimates and forecast methodology
?Advertising and marketing spend data
-Further reading
-Ask the analyst
-Disclaimer

TABLES
-Table: Gross written premiums in the household insurance market (£bn), 2006–10
-Table: Combined operating ratio (%), 2006–10
-Table: Contents only policy quarterly premium changes (%), April 2008–July 2011
-Table: Buildings only policy quarterly premium changes (%), April 2008–July 2011
-Table: Combined policy quarterly premium changes (%), April 2008–July 2011
-Table: Gross incurred UK property claims spilt by peril (£m), 2006–10
-Table: Escape of water claims by category (£m), 2006–10
-Table: Fire damage values (£m), 2006–10
-Table: Accidental damage claims by value (£) and volume (000s), 2006–10
-Table: Theft claims by volume (000s) and value (£), 2006–10
-Table: Subsidence claims by value (£) and volume (000s), 2006–
-Table: Characteristics associated with risk of burglaries in the UK, highest and lowest
-Table: Breakdown of burglaries in England and Wales according to loss (000s) 2001/02–2010/
-Table: Percentage changes in unemployment rate and gross burglary claims costs, 2006–
-Table: Number of households in the UK (000s), 2005–09/10
-Table: Breakdown of households according to ownership type (000s), 1998–2009/10
-Table: Number of mortgages in the UK, 2006–
-Table: Household insurance GWP distribution by channel, 2006–10e
-Table: With which of these insurance companies are you insured for your home insurance? (top 10 responses split by age)
-Table: With which of these companies are you insured for your combined contents and buildings insurance? (top 10 responses split by age)
-Table: With which of these insurance companies are you insured for your home contents only insurance? (top 10 responses split by age)
-Table: With which of these insurance companies are you insured for your home buildings only insurance? (top 10 responses split by age)
-Table: Top 10 personal general insurance advertisers (£), 2007–
-Table: Top 10 personal general insurance advertisers by medium (£), 2007–10
-Table: Advertising expenditure among the top four aggregators (£000s), 2007–10
-Table: Which of the following types of insurance are you covered by? (multiple responses allowed)
-Table: Which of the following types of insurance are you covered by? Responses split by age
-Table: Which of the following types of insurance are you covered by? Responses split by household income
-Table: Which of the following types of insurance are you covered by? Responses split by socio-economic group
-Table: Why did you take out your home insurance with your current provider?
-Table: How did you arrange the home insurance policy you currently have? Split by policy type
-Table: How did you arrange the home contents insurance policy you currently have? Responses split by age
-Table: How did you arrange the home contents insurance policy you currently have? Responses split by household income
-Table: When you last renewed your home contents insurance, did you change company or stay with the same one? Responses split by age
-Table: When you last renewed your home contents insurance, did you change company or stay with the same one? Responses split by household income
-Table: How did you arrange the home buildings insurance policy you currently have? Responses split by age
-Table: How did you arrange the home buildings insurance policy you currently have? Responses split by household income
-Table: When you last renewed your home buildings insurance, did you change company or stay with the same one? Responses split by age
-Table: When you last renewed your home buildings insurance, did you change company or stay with the same one? Responses split by household income
-Table: How did you arrange the combined contents and buildings insurance policy you currently have? Responses split by age
-Table: How did you arrange the combined contents and buildings insurance policy you currently have? Responses split by household income
-Table: When you last renewed your combined contents and buildings contents insurance, did you change company or stay with the same one? Responses split by age
-Table: When you last renewed your combined contents and buildings insurance, did you change company or stay with the same one? Responses split by income
-Table: Before you took out your most recent insurance policy, did you take any of the following actions?
-Table: Market share by GWP of the 10 largest insurers in the UK, 2009–
-Table: Market share by GWP of the 11–20 largest insurers in the UK, 2009–10
-Table: Insurers' COR breakdown by loss and expense ratio,
-Table: Household gross written premiums (£m), 2010–15f
-Table: Combined operating ratio (%), 2005–15f
-Table: Breakdown of respondents by age
-Table: Breakdown of respondents by income
-Table: Breakdown of respondents by gender
-Table: How did you arrange the home contents insurance policy you currently have? Responses split by socio-economic group
-Table: When you last renewed your contents insurance, did you change company or stay with the same one? Responses split by socio-economic group
-Table: How did you arrange the home building insurance policy you currently have? Responses split by socio-economic group
-Table: When you last renewed your buildings insurance, did you change company or stay with the same one? Responses split by socio-economic group
-Table: How did you arrange the home combined contents and buildings insurance policy you currently have? Responses split by socio-economic group
-Table: When you last renewed your combined contents and buildings insurance, did you change company or stay with the same one? Responses split by socio-economic group

FIGURES
-Figure: GWPs increased by 1.4% to £7.6bn in
-Figure: The RBS Group also holds the largest market share in the home insurance sector
-Figure: Almost half of all respondents had a combined household policy
-Figure: GWPs increased by 1.4% to £7.6bn in
-Figure: The reported year COR rose in 2010 for the first time since
-Figure: Shoparound contents cover experienced a large premium increase in Q1
-Figure: Buildings only policies have been historically underpriced
-Figure: Combined policy premiums have begun to stabilize in
-Figure: Gross incurred UK property claims spilt by peril (£m), 2006–10
-Figure: There has been a significant increase in claims costs due to burst pipes in
-Figure: Damage caused by fire decreased in
-Figure: The average value of accidental claims increased in
-Figure: The cost of theft claims increased by 2.3% in
-Figure: The number of subsidence claims increased in
-Figure: Young homeowners are the most likely to be burgled
-Figure: There was a significant increase in the number of thefts in 2010/
-Figure: There is a positive correlation between the changes in unemployment and gross burglary claims
-Figure: Growth in the housing market slowed in
-Figure: There has been a steady increase in the number of private renters in recent years
-Figure: The mortgage market has begun to recover since
-Figure: The direct channel has continued to see growth in the household insurance market
-Figure: The RBS Group also holds the largest market share in the home insurance sector
-Figure: Younger consumers are more likely to opt for a prominent provider when purchasing home insurance
-Figure: Four of the top 10 combined home insurance providers are banking institutions
-Figure: Bancassurers comprise six of the top 10 home contents only insurers
-Figure: Aviva and Halifax have the largest share of consumers aged under 25 in terms of home buildings only insurance
-Figure: Direct Line was the largest insurance advertiser in
-Figure: The proportion of TV advertising expenditure increased slightly in
-Figure: Gocompare.com has the largest advertising expenditure
-Figure: Almost half of all respondents had a combined household policy
-Figure: Respondents between the ages of 55 and 65 were the most likely to hold household insurance
-Figure: Those with a household income of over £100,000 were most likely to have household insurance
-Figure: Household insurance penetration was highest in social groups A and B
-Figure: Consumers still view reputation and convenience as important factors when selecting a household insurance policy
-Figure: The use of the Internet in arranging policies is most suited to combined policies
-Figure: The Internet remains the most popular method of arranging a policy among younger purchasers
-Figure: It is vital that insurers offer contents packages to cover high net worth households
-Figure: Customers between the ages of 25 and 34 are the most likely to change provider
-Figure: Consumers with an income of between £75,000 and £99,999 were most likely to have changed provider
-Figure: The Internet is a popular channel for arranging buildings insurance
-Figure: High income earners tend to prefer the Internet when arranging a home building policy
-Figure: The propensity to change provider tends to increase with age
-Figure: The propensity to stay with the current provider increases with household income
-Figure: Young consumers rely heavily on face-to-face meetings to arrange combined household cover
-Figure: The Internet is the most popular means of arranging a policy across all income groups
-Figure: Respondents between the ages of 25 and 34 were the most likely to have changed their policy at the renewal date
-Figure: Respondents with a household income of over £100,000 were the most likely to change their policy provider
-Figure: Consumers use a multi-channel approach to research their insurance policies
-Figure: Royal Bank of Scotland (RBS) is the largest household insurer in terms of GWP,
-Figure: Allianz, esure, and Munich RE achieved double digit growth in GWPs in
-Figure: Lloyds Banking Group has the lowest COR
-Figure: GWPs are forecast to reach £8.9bn by
-Figure: The COR is forecast to drop to 95.5% in 2011 as the market rebounds from 2010's severe winter
-Figure: How did you arrange the home contents insurance policy you currently have? Responses split by socio-economic group
-Figure: When you last renewed your contents insurance, did you change company or stay with the same one? Responses split by socio-economic group
-Figure: How did you arrange the home building insurance policy you currently have? Responses split by socio-economic group
-Figure: When you last renewed your buildings insurance, did you change company or stay with the same one? Responses split by socio-economic group
-Figure: How did you arrange the home combined contents and buildings insurance policy you currently have? Responses split by socio-economic group
-Figure: When you last renewed your combined contents and buildings insurance, did you change company or stay with the same one? Responses split by socio-economic group



- Admiral Group plc
- AXA
- Bank of England
- CMS Energy Corporation
- Fortis
- Hutchison 3G UK Limited
- Metro AG
- Nationwide Building Society
- Onex Corporation
- Royal Bank of Scotland Group PLC
- RSA Insurance Group plc
- Zurich Financial Services

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