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UK Motor Breakdown Insurance Consumer Research Report 2019

  • ID: 4801608
  • Report
  • Region: United Kingdom, Great Britain
  • 82 Pages
  • IRN Research
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FEATURED COMPANIES

  • Allianz
  • AXA
  • Call Assist
  • Green Flag
  • LV
  • MIS Group UK
  • MORE

A £1.8 billion market, covering almost half of adults

Almost half of consumers (46%) own a motor breakdown policy, which means almost six-in-ten drivers (58%) have breakdown cover. The motor breakdown market is worth almost £1.8 billion, of which 76% represents the consumer market. The market grew by less than 3% in 2018. Over the coming years, the publisher anticipates the market will grow, on average, by around 2.4% each year, so that by 2023 the market will be valued at over £2 billion. A number of economic and technological factors are shaping the market, including the slow growth in the car parc; the greater reliability and sophistication of modern cars; the introduction of self-drive cars; the growth of carpooling and sharing; and the greater connectivity of cars and their ability to fault detect.

Consumers with breakdown cover show a preference for buying standalone policies, rather than buying cover bundled with other products (e.g. with packaged bank accounts or motor insurance) and they also prefer to pay for their cover annually rather than on a monthly basis

Cover holders are generally self-reliant when buying insurance (i.e. they do not feel they need professional advice) but only around half think of themselves as confident and savvy consumers when it comes to insurance. Just over half of motor breakdown cover owners show a preference for completing part or all of their customer journey online. Policyholders who are more willing to use online for all or part of their customer journey tend to be confident when buying insurance and more self-reliant.

Just over half of cover holders acquired their current cover by renewing with an existing provider

Because policyholders have renewed with an existing provider, this does not mean they have passively accepted a renewal offer. Most search for alternatives and/or haggle with an incumbent provider to get a better deal. Renewing is best thought of as an action taken only after the cover holder has tried to get a better deal; it involves switching-type action without finally leaving the current provider.

When buying insurance cover, holders have a slight bias towards focusing on cover first and price second. They also have a slight bias towards wanting to buy from well-known brands rather than buying from any provider. However, ultimately breakdown cover holders want a good deal, even if they mainly focus on the cover offered when buying a breakdown policy. Over seven-in-ten cover holders engage in some form of haggling/negotiation with providers when taking out a new policy or renewing, and there is relatively little variation based on attitudes to price, cover or brands.

Examples of key findings to come from this research, based on interviews with 938 individuals who own motor breakdown cover are:

  • 48% of consumers with motor breakdown cover are aged 45+ and 62% are from the ABC1 social grades
  • 53% of cover holders want all or part of their customer journey completed online, with 18% fully focused on an online customer journey.
  • 68% of breakdown cover holders seem to co-ordinate their breakdown and motor insurance actions
  • 80% of those renewing either search for alternative policies before renewing and/or engage in some form of negotiation with their insurer to improve a deal offered.
  • When asked what resources they had consulted before arranging insurance over the past two years, 69% of cover holders said they used a PCW and 88% said if they were looking to switch insurance provider or looking to take out a policy for the first time, they would use PCWs to compare deals
  • 52% of breakdown cover holders (peaking at 63% for cover holders aged 55+) have a bias towards focusing on cover before price when buying insurance
  • 12% of cover holders claimed on their breakdown policies over the past year.

This report examines the motivations, experiences, and opinions of the UK motor breakdown cover holder

It identifies and analyses consumer attitudes towards breakdown insurance, looks at the claims experience of drivers, and investigates why they choose one route to purchase over another. In addition, it will explore how price sensitivity is impacting the market. Essentially, the report studies the cover holder’s customer journey from the point where they recognise a requirement to make a purchase to the point when they are a customer and may run into issues like claiming or registering a complaint.

Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • Allianz
  • AXA
  • Call Assist
  • Green Flag
  • LV
  • MIS Group UK
  • MORE

1.EXECUTIVE SUMMARY

  • Almost half of consumers have breakdown cover
  • Resulting in a large but slow growing market
  • Most cover holders are risk-averse and self-reliant insurance buyers
  • Just over half show an online preference
  • The start of the customer journey is normally a Déjà vu experience
  • It’s wrong to think switching is pro-active and renewing is passive
  • It’s an online world in terms of finding breakdown deals
  • Cover is marginally more important than price
  • Owning breakdown cover is a good experience
  • If the price is not right, the customer relationship ends

2.INTRODUCTION

3.PROFILE OF THE COVER HOLDER

  • Key findings
  • Almost seven-in-ten adults own a car
  • And almost one-in-ten have use of a car they do not own
  • Meaning over three-quarters of adults are Drivers
  • 46% of adults have motor breakdown cover
  • Breakdown cover ownership strongly related to age, social grade, and income
  • Motor breakdown owners are often mature and relatively affluent
  • Motor breakdown policies primarily cover smaller cars
  • Six-in-ten cover holders buy standalone policies
  • And six-in-ten pay for their cover annually
  • Cross selling Opportunities

4.HOW COVERED CONSUMERS APPROACH INSURANCE

  • Key findings
  • Risk aversion and value perceptions
  • Confidence and self-reliance
  • Predisposition toward an online customer journey

5.THE CUSTOMER JOURNEY BEGINS

  • Key findings
  • Around eight-in-ten policyholders are repeat purchasers
  • Switching motor insurance often results in a switch of breakdown cover
  • And renewing a motor insurance policy tends to result in a breakdown cover renewal
  • Almost six-in-ten First-Time Buyers already own motor insurance
  • Almost seven-in-ten breakdown cover holders co-ordinate their acquisition actions
  • The importance of the renewal prompt
  • Renewing does not mean being passive
  • The actions taken when renewing motor insurance drives renewal actions for a breakdown
  • And renewing also means haggling for a better deal

6.BUYING A POLICY: FINDING THE RIGHT DEAL

  • Key findings
  • Price comparison websites: the prime research resource
  • PCWs are favoured because they are easy to use and give the info required
  • Motor Breakdown Insurance
  • Brokers need to improve consumer perceptions of trust
  • The PCW dominance is here to stay

7.PRICE, COVER OR BRAND

  • Key findings
  • Five buying strategies
  • Older adults have a cover bias
  • You can focus on cover or brands and still drive a hard bargain
  • But are cover holders in a position to negotiate?
  • It’s the volume of paperwork that limits knowledge

8.BEING A POLICYHOLDER

  • Key findings
  • Cover holders are a happy bunch
  • Because few have encountered any problems
  • Many cover holders now manage their cover online
  • 12% of cover holders have claimed within the last year
  • Claiming is a satisfying and smooth process

9.ENDING THE JOURNEY: CUSTOMER LOYALTY AND SWITCHING

  • Key findings
  • Loyalty to the breakdown provider is stronger than it is to the motor insurance provider
  • One-quarter of cover holders are thinking of switching
  • Switching is strongly price led

10.MARKET SIZE AND TRENDS

  • Key findings
  • A market worth £1.8 billion
  • Market Drivers
  • Three big players dominate the market
  • The market to reach over £2 billion by 2023

LIST OF FIGURES

Figure 1 Ownership of motor breakdown insurance (%) by type of consumer
Figure 2 The penetration of breakdown cover by key demographics
Figure 3 The profile of breakdown cover by key demographics
Figure 4 The penetration and profile of breakdown cover by car owned
Figure 5 How motor breakdown cover owners took out their policies
Figure 6 How motor breakdown cover was acquired by age and income
Figure 7 How motor breakdown cover is paid for by key influences
Figure 8 The cross-selling opportunities among motor breakdown cover holders
Figure 9 The % of adults with motor breakdown insurance who are risk averse
Figure 10 The % of adults with motor breakdown insurance who think insurance is a waste of money
Figure 11 How motor breakdown policyholders approach buying insurance
Figure 12 The % of adults with motor breakdown insurance who are confident insurance buyers
Figure 13 The % of adults with motor breakdown insurance who are self-reliant insurance buyers
Figure 14 The relationship between online preferences and buying confidence/advice needs
Figure 15 How the current motor breakdown policy was acquired
Figure 16 The % of cover holders who acquire their policy by switching
Figure 17 The % of cover holders who acquire their policy by renewing
Figure 18 The % of cover holders who are First-Time Buyers
Figure 19 How the last breakdown policy and motor insurance policy were acquired
Figure 20 Awareness of the renewal notice
Figure 21 Search activity of policyholders renewing by knowledge of previous year’s premium
Figure 22 Search activity of breakdown cover holders by the motor insurance actions taken
Figure 23 How breakdown cover holders acted when renewing their breakdown cover
Figure 24 The negotiating activities of cover holders who renew at renewal time
Figure 25 The resources consulted before arranging insurance over the past two years
Figure 26 The resources consulted before arranging insurance by policy acquisition
Figure 27 The % of cover holders using PCWs to find information on insurance deals
Figure 28 Policyholder attitudes towards PCWs
Figure 29 Resources consulted before arranging insurance by trust in brokers/advisors
Figure 30 Where breakdown cover holders would look to compare deals
Figure 31 The cover focus of cover holders by key demographics and attitudes
Figure 32 The price focus of cover holders by key demographics and attitudes
Figure 33 The brand focus of cover holders by key demographics and attitudes
Figure 34 Negotiation with the insurer when taking out a new policy or renewing
Figure 35 How policyholders read their policy documents
Figure 36 Why policy documentation is not read in detail
Figure 37 Can motor breakdown cover holders access policy details via portal
Figure 38 How online policyholder portals are used
Figure 39 Have cover holders made a claim in the past five years
Figure 40 The incidence of making a claim in the past year by social grade and income
Figure 41 Claimant opinion of their last motor breakdown claim
Figure 42 The time spent with the current provider
Figure 43 The average* time spent with the current provider
Figure 44 The % of cover holders thinking of switching provider over the next year
Figure 45 The factors that caused policyholders to switch provider
Figure 46 Perceived premium increases by a desire to switch provider in the next year
Figure 47 The motor breakdown market*, 2014-2018
Figure 48 The number of privately registered cars in the UK (year-end), 2014-2018*
Figure 49 Forecast of the motor breakdown market*, 2018-2023

Note: Product cover images may vary from those shown
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  • AXA
  • Allianz
  • Call Assist
  • Green Flag
  • LV
  • MIS Group UK
  • RAC Ltd.
  • The AA
Note: Product cover images may vary from those shown
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