UK Private Motor Insurance: Market Dynamics & Opportunities 2017

  • ID: 4382220
  • Report
  • Region: United Kingdom, Great Britain
  • 63 pages
  • GlobalData
1 of 5


  • Admiral
  • Ageas
  • Allianz
  • Aviva
  • Direct Line
  • LV=
  • MORE
UK Private Motor Insurance: Market Dynamics & Opportunities 2017


Private motor insurance market grew significantly in gross written premiums (GWP) in 2016. This was due to increasing premiums, which reached a record high because of an insurance premium tax (IPT) rise, increasing car repair costs, and the change of the personal injury discount rate from 2.5% to -0.75%. The latter move resulted in higher claims costs for insurers, which impacted their profitability; they responded by raising premiums.

The last decade has been challenging for the private motor insurance market. Regulators and insurers have fought to reduce claims costs and pass on savings to customers, but with little luck as the market has adjusted to the post-LASPO era. Premiums have been rising and have hit record highs due to rises in IPT and the change of the personal injury discount rate. The market is now seeing a wave of tighter legislation to reduce claims costs. Reforms aim to disrupt the role claims management companies (CMCs) and solicitors play in encouraging claims and confront the UK’s whiplash epidemic. However, with current political and economic uncertainty the next few years will be a pivotal time.

In 2015, comprehensive policies accounted for 93.2% of the market, whereas non-comprehensive and motorcycle held 5.5% and 1.3% shares respectively as per our UK General Insurance Competitor Analytics. Providers have been exiting the non-comprehensive motor insurance market for some time. Since the majority of claims costs associated with motor insurance come from third-party involvement in a claim, it is no longer viable for insurers to offer basic third-party cover as opposed to fully comprehensive cover. This has resulted in non-comprehensive policies losing market share in the private motor insurance space.

Critical success factors include:
  • Utilize big data to help customers save on premiums - With premiums rising, insurers should look towards non-standard motor insurance policies such as telematics, car sharing, and usage-based policies to help customers reduce their premiums.
  • Insurers must learn from LASPO - As claims costs begin to fall from the impact of new reforms, insurers must collectively ensure that market overcapacity does not lead premiums to fall unsustainably low and compromise market profitability in anticipation of savings.
  • Prepare for driverless cars - Insurers must consider how insurance will change with driverless technology. Insurers must begin to design dual policies that cover both the driver and the vehicle being in control. Collaboration with car manufacturers is also key if insurers are to remain competitive as driverless vehicles begin to enter the motor parc.
The report "UK Private Motor Insurance: Market Dynamics & Opportunities 2017" 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, how the market is likely to change due to telematics and driverless cars, and provides future forecasts of market size up to 2021.

Companies mentioned in this report: Admiral, Aviva, Direct Line, LV=, Allianz, Ageas.

  • GWP for the private motor insurance market grew by 12.4% to £12.2bn in 2016.
  • Bodily injury claims are the highest cost for motor insurers, with the average claim costing £10,799.
  • Direct Line and Aviva are the leading private motor insurers, with market shares of 12.4% and 12.1% respectively in 2015.
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.
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  • Admiral
  • Ageas
  • Allianz
  • Aviva
  • Direct Line
  • LV=
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1.1. The success of the Civil Liability Bill and a review of the discount rate are crucial to reduce premiums
1.2. Key findings
1.3. Critical success factors

2.1. Introduction
2.2. The private motor insurance market continued to grow in 2016
2.2.1. The private motor market grew by 12.4% to reach £12.2bn in GWP in 2016
2.2.2. Comprehensive policies make up the majority of the private motor market
2.2.3. The Lloyd’s of London market accounts for 1.4% of private motor insurance GWP
2.3. Motor insurance premiums have reached an all-time high
2.3.1. Comprehensive and non-comprehensive premiums are both following an upwards trend
2.3.2. IPT has risen to 12%
2.3.3. The requirement to notify customers of last years’ premium will encourage shopping around
2.4. The discount rate has increased the cost of claims
2.4.1. The discount rate was changed from 2.5% to -0.75%
2.4.2. Insurers’ profits have been hit by the rate change
2.4.3. The Ogden rate change has impacted profitability
2.4.4. Insurers’ results highlight the impact of the discount rate change on profits
2.4.5. The MoJ is consulting on how the discount rate should be set going forward
2.5. Gross claims paid continued to increase in 2016
2.5.1. Claims notified remained steady in 2016
2.5.2. Personal injury motor claims are on the rise
2.5.3. Bodily injury claims have the highest cost for motor insurers
2.5.1. Whiplash claims account for up to 80% of motor personal injury claims numbers
2.5.2. Fraud remains a significant issue
2.5.3. Motor personal injury claims remain high, while RTA claims are in decline
2.5.4. Most RTA casualties are car occupants, but these are the least vulnerable road users
2.5.5. The number of pedal cyclist casualties has reached a five-year low
2.5.6. Car and taxi use reached an all-time high
2.5.7. The UK motor parc continues to grow

3.1. Direct Line and Aviva hold the largest shares of private motor
3.1.1. Direct Line and Aviva currently lead the private motor market
3.1.2. Direct Line has been the top private motor insurer for the past three years
3.1.3. Aviva offers standard insurance in addition to short-term, learners, and telematics policies
3.1.4. Ageas offers four car insurance policies, which can be purchased through brokers
3.1.5. LV= and Allianz are combining to form a joint venture in personal insurance
3.1.6. Mobile network providers are entering the telematics market
3.1.7. Start-ups are entering the insurance space with telematics, car sharing, P2P, and usage-based policies

4.1. The Civil Liability Bill aims to reform personal injury motor claims
4.1.1. The benefits of LASPO did not fully materialize
4.1.2. Initial proposals aimed to increase the small claims track limit and remove general damages for minor soft tissue injuries
4.1.3. The MoJ has published its first response to the consultation on reforms
4.1.4. The Prisons and Courts Bill was scrapped due to the snap general election
4.1.5. The Queen’s Speech following the election introduced a Civil Liability Bill
4.1.6. There has been a split reaction to the Civil Liability Bill
4.1.7. The Civil Liability Bill will save customers an estimated £35 on motor insurance premiums
4.1.8. The small claims limit will increase to £5,000 for RTA claims
4.1.9. A tariff system is being introduced for RTA-related soft tissue injury claims
4.1.10. Claims will not be settled without a MedCo medical evidence report
4.2. Proposed reforms will impact motor insurance profitability
4.2.1. Tariffs and the small claims track limit increase will have a significant impact
4.2.2. The increase in the small claims track could affect 70-80% of claims
4.2.3. Legal costs could be reduced by up to 50%
4.2.4. The introduction of tariffs could reduce whiplash claims costs by £1bn
4.3. New legislation could lead to falling premiums and market GWP
4.3.1. The future of the private motor insurance market is uncertain
4.3.2. Unless claims costs fall, motor insurance premiums and GWP will remain high
4.4. Telematics policies are still mainly held by under 25s
4.4.1. Technology will take time to penetrate the market
4.4.2. There are over 750,000 live telematics policies in the UK, but penetration is low
4.4.3. Most telematics policies are held by under 25s, but popularity is increasing across all ages
4.4.4. Telematics policies are predicted to be opt-out by 2025
4.4.5. Average speed could be used to assess risk instead of speed limits
4.4.6. Dash cams could be the new telematics
4.5. Driverless cars are estimated to become mainstream in 2045
4.5.1. The government is supporting the development of driverless cars
4.5.2. Motorists with driverless cars will be required to have dual insurance policies
4.5.3. Autonomous car manufacturers are entering the insurance market for driverless cars
4.5.4. Motor insurers are looking to partner with driverless car manufacturers
4.5.5. More than half of new UK cars are now sold with autonomous features
4.5.6. Electric cars will hold a greater share of the motor parc in the future
4.5.7. There will be a divided motor parc as autonomous features gain popularity
4.5.8. The need for personal car insurance could diminish
4.6. Usage-based, car sharing, and P2P policies are being launched
4.6.1. The majority of new, innovative policies target millennials
4.6.2. Guevara launched P2P insurance in the UK, but it has yet to take off
4.6.3. Motor insurers are beginning to see the opportunity in car sharing
4.6.4. Usage-based pay-as-you-go and pay-per-mile car insurance policies are a growing concept
4.6.5. The insurance industry is concerned how the GDPR will impact underwriting

5.1. Abbreviations and acronyms
5.2. Bibliography
5.3. Further reading

List of Tables
Table 1: Quarterly change in market average and Shoparound premiums, Q1 2012-Q2 2017
Table 2: Number of claims settled, average cost, and gross claims paid by claim type, 2013-16
Table 3: New tariff amounts for RTA soft tissue injury claims compared to 2015 average payment for PSLA, by injury duration

List of Figures
Figure 1: The private motor insurance market has grown, primarily due to rising premiums in 2016
Figure 2: Motor insurance premiums have reached an all-time high
Figure 3: Premiums for comprehensive policies are continuing to rise
Figure 4: Non-comprehensive premium rises have been amplified by IPT and discount rate changes
Figure 5: The number of claims notified fell in 2016 after rising over the previous four years
Figure 6: The number of claims settled decreased in 2016 but average claims cost increased, causing a rise in gross claims paid
Figure 7: Personal injury motor claims settled are above pre-LASPO levels
Figure 8: Damage claims are the most frequent claim type, but bodily injury claims are the biggest cost
Figure 9: The number of RTAs has been in long-term decline but is beginning to stabilize
Figure 10: The majority of RTA casualties are car occupants
Figure 11: Car usage has increased as petrol has become cheaper
Figure 12: Brexit caused the value of sterling to drop, causing petrol prices to rise
Figure 13: The UK motor parc grew to 30.8 million in 2016, 8.6% of which were newly registered vehicles
Figure 14: The top five motor insurers account for 48.5% of the total market
Figure 15: Direct Line uses a plugin box for its telematics policy offering
Figure 16: The introduction of the Civil Liability Bill will deliver significant cost savings for motor personal liability claims
Figure 17: The future of the private motor insurance market is uncertain
Figure 18: Marmalade is a start-up specifically targeting young drivers
Figure 19: Cuvva offers usage-based, short-term, and learner motor insurance policies
Figure 20: By Miles will save infrequent drivers money by only charging them for the distance they drive
Note: Product cover images may vary from those shown
3 of 5


4 of 5
  • Admiral
  • Aviva
  • Direct Line
  • LV=
  • Allianz
  • Ageas
Note: Product cover images may vary from those shown
5 of 5
Note: Product cover images may vary from those shown