UK Household Insurance: Market Dynamics and Opportunities 2017

  • ID: 4402027
  • Report
  • Region: United Kingdom, Great Britain
  • 47 pages
  • GlobalData
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  • Ageas
  • Aviva
  • British Gas
  • Direct Line Group
  • John Lewis
  • LV=
  • MORE
UK Household Insurance: Market Dynamics and Opportunities 2017


"UK Household Insurance: Market Dynamics and Opportunities 2017", report provides an in-depth analysis of the UK household insurance market. It looks at market size and performance ratios as well as changes in premiums, claims, contextual and economic factors, regulation, and opportunities. It provides a thorough overview of the market along with future forecasts and analysis of emerging technologies and products.

High levels of competition and capacity within the household insurance space continue to shape soft market conditions, with little change in rate being achieved apart from pushing through new insurance premium tax (IPT) increases. Despite this and the new Flood Re levy introduced in 2016, profitability has been maintained due to relatively benign weather conditions.

  • UK household insurance gross written premium (GWP) contracted by 1.4% in 2016.
  • Overall claims performance over the last five years tells a positive story, with the number of claims falling year on year between 2012 and 2016, achieving a negative CAGR of 11.4%.
  • The rise of ‘Generation Rent’ presents a shifting landscape that is dampening overall market growth, and is presenting home insurers with a customer demographic that has different needs and preferences not necessarily catered to effectively by current services.
  • The next couple of years should see a shift in the development of smart home insurance, and it is therefore imperative insurers keep on top of this.
  • With the Flood Re levy set each year and new regulations around pricing transparency, insurers need to ensure their pricing strategies are in line with the risks they face.
Reasons to buy
  • Benchmark yourself against the rest of the market.
  • Ensure you remain competitive as new innovations and insurance models begin to enter the market.
  • Be prepared for how regulation will impact the household insurance market over the next few years.
Note: Product cover images may vary from those shown
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  • Ageas
  • Aviva
  • British Gas
  • Direct Line Group
  • John Lewis
  • LV=
  • MORE
1.1. Market summary
1.2. Key findings
1.3. Critical success factors
2.1. Introduction
2.2. Soft market conditions shaped 2016
2.2.1. UK household insurance GWP fell by 1.4% in 2016
2.2.2. High competition has kept rates low in the main product category
2.2.3. The requirement to notify customers of the previous year’s premium is expected to encourage shopping around
2.2.4. Combined cover is still the dominant product
2.3. Profitability is being challenged by claims and inflation
2.3.1. Claims costs fell in 2016 but average claims costs are increasing in areas
2.3.2. Claims inflation is challenging profitability
2.3.3. Underwriting profitability increased to a five-year high
2.3.4. Flood Re affected results in 2016
2.4. Home insurance demand remained constant, but underlying dynamics are shifting
2.4.1. New home registrations and completions contracted slightly in 2016, although numbers remain well below requirements
2.4.2. Mortgage approval rates in 2016 remained level with 2015, but have fallen in 2017
2.4.3. The rise of ‘Generation Rent’ presents a shifting landscape
2.4.4. Penetration rates are high among owner-occupiers, but lower for tenants
3.1. The top 10 insurers account for 72% of GWP
3.1.1. Direct Line Group leads the household insurance market
3.1.2. Lloyds Banking Group is losing ground due to soft market conditions
3.1.3. Aviva is evolving its proposition using technology
3.1.4. Ageas is looking beyond the traditional policy to target millennials
3.1.5. Allianz and LV= link up
3.2. Technology is facilitating new entrants
3.2.1. Neos aims to bring home insurance into the digital world
3.2.2. UK insurers are watching US digital insurer Lemonade
3.2.3. Insure-A-Thing is challenging the traditional business model
4. 2017 AND BEYOND
4.1. Introduction
4.2. The market is expected to grow to £6.8bn in GWP by 2021
4.2.1. Premium rates are unlikely to increase in the short term
4.2.2. Demand for home insurance will stay static as Generation Rent grows
4.2.3. A significant weather event will be required to shift rates
4.2.4. The negative economic consequences of Brexit are having an adverse effect
4.3. Generation Rent will drive a new set of products
4.3.1. Demand for propositions aimed at tenants is growing
4.3.2. Millennials have different priorities and lifestyles compared to previous generations
4.3.3. Gadget insurance is being heavily marketed towards students and millennials
4.3.4. ‘Back Me Up’ offers cover for any three items
4.3.5. Trov offers a digital locker
4.4. The evolution towards smart home insurance has started
4.4.1. Water detection is the primary focus to reduce escape of water claims
4.4.2. Security is another risk which is getting attention from insurers and tech companies
4.4.3. Other devices are driving a more connected home
4.5. Competition from new startups and retailers is growing
4.5.1. New startups like Neos will continue to disrupt the market
4.5.2. The battle to own the customer has started
4.6. There are barriers and risks to overcome before we get to smart home insurance
4.6.1. Customers are expecting cheaper policies
4.6.2. Insurers are looking at the implications of the General Data Protection Regulation
4.6.3. Cyber risk for individuals is growing
5.1. Abbreviations and acronyms
5.2. Methodology
5.2.1. Financial's 2016 and 2017 UK General Insurance Consumer Surveys
5.3. Bibliography
5.4. Further reading

List of Tables
Table 1: Household insurance GWP (£m) and annual growth rate (%), 2012-16
Table 2: Quarterly average household insurance premium rate movements, 2012-17
Table 3: AA Shoparound average home insurance premiums, Q1 2015-Q1 2017
Table 4: Household gross claims incurred (£m) by type, and number of claims notified, 2012-16
Table 5: New home registrations and completions, 2012-16
Table 6: Percentage of respondents holding any form of home insurance, 2015-16
Table 7: Top 10 UK household insurers by GWP (£000s), 2016
Table 8: UK household insurance GWP and growth rate, 2012-21f
Table 9: Percentage of respondents, by type of smart device in their home
Table 10: Percentage of respondents who would buy home insurance by brand/type of company

List of Figures
Figure 1: Household insurance GWP continues to fall
Figure 2: Average premiums have reduced in the last two quarters
Figure 3: Insurers have struggled to increase rates in the past year
Figure 4: Combined insurance remains the dominant home insurance product
Figure 5: Weather-related claims costs are at their lowest since 2013
Figure 6: The last five years have seen a significant drop in the number of claims
Figure 7: Rebuild costs have been rising since September 2016
Figure 8: The cost of replacing household items has accelerated since 2015
Figure 9: Underwriting profitability grew to its highest level since 2011
Figure 10: New home registration and completions remained constant in 2016
Figure 11: Monthly mortgage approvals have declined in 2017
Figure 12: Private tenant is the fasting growing type of tenure
Figure 13: Nearly 40% of private tenants do not have any home insurance
Figure 14: The household market will show modest growth over the next five years
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4 of 4
  • Lloyds Banking Group
  • Direct Line Group
  • Aviva
  • RSA
  • AXA
  • Ageas
  • Legal & General
  • NFU Mutual
  • Allianz
  • LV=
  • Zurich
  • Neos
  • Back-Me-Up
  • Google
  • Amazon
  • HomeServe
  • Cocoon
  • Canary
  • British Gas
  • John Lewis
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5 of 4
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