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UK Motor Insurance Consumer Research Report 2021

  • ID: 5308970
  • Report
  • March 2021
  • Region: United Kingdom
  • IRN Research

In 2021, 71% of consumers said they owned car insurance, which is the same percentage as in 2019. This means around 37 million consumers own motor insurance. The penetration of consumers who own motor insurance tends to rise with age, social grade and household income.

A new customer journey begins each year. Each year, over 90% of motor insurance policyholders are existing policyholders and their choice comes down to either renewing with an existing provider (around half renew each year) or switching from one provider to another (around four-in-ten switch each year). Less than 10% of consumers embarking on a new customer journey each year are new market entrants - i.e., buying motor insurance for the first time. Even if renewing, policyholders generally still embark on a new customer journey: over eight-in-ten of policyholders renewing still search for alternatives policies and/or negotiate for a revised deal from their provider before they agree to renew.

Just over one-in-five policyholders have made a claim on their motor insurance within the past five years, with just under one-in-ten claiming within the past year. Comparing claimants who have claimed in the past year with those who claimed 2 to 5 years ago, shows a drop in satisfaction among those claiming in the past year, based on the fact that outcomes worsened slightly, and the process seemed harder. One feature of the motor insurance market in the Pandemic has been the greater use of digital technologies and artificial intelligence to assess claims and damage to a car (if involved in a road traffic accident). Policyholders claiming in the past year are the most likely to have encountered the automated claims handling systems widely used by the main providers during the Pandemic: this could have lowered the satisfaction of these policyholders.

One-third of motor insurance policyholders have been impacted by COVID-19 when it comes to their motor insurance. The most common actions/experiences centre on premiums - either switching provider/policy to save money or being offered a rebate by their provider. The policyholders most impacted by COVID-19 tend to be younger professional policyholders, aged under the age of 45, from the AB social grades, who have made a recent claim.

Other findings from the report, include:

  • Motor insurance policyholders are price-focused. A large majority put price first when evaluating a policy and cover second. However, the final price paid, and the level of cover achieved by policyholders is often the outcome of policyholder/insurance provider negotiation: almost seven in ten policyholders negotiate with their provider before buying a policy.
  • When looking for insurance deals at the start of a customer journey, price comparison websites (PCWs) are by far the most popular resource. When it comes to purchasing, policyholders tend to buy their policies either directly from the provider or via PCWs. Other purchase channels show little usage.
  • When buying insurance, consumers continue to see each car in the home as a distinct item to insure, so few have multi-car cover and few opt for multicover policies (e.g., motor insurance bought in a bundle with other insurance mainly home insurance).
  • Less than one-in-ten policyholders have a telematics insurance policy and penetration has changed little between 2019 and 2021, but there has been an increase in a willingness to get a telematics policy among policyholders without a policy at the moment.
  • Many policyholders bundle extra cover with their motor insurance policy: along with their motor insurance, almost four-in-ten take out motor legal protection and almost one-in-five breakdown cover.
  • Motor insurance policyholders show a liking for the security of high levels of insurance cover rather than being content with the bear minimum of protection. While most like to buy online (which often is done without advice) they also show a relatively high willingness to get advice (mainly online).

This report examines the motivations, experiences and opinions of the UK motor insurance customer. It will identify and analyse consumer attitudes towards motor insurance, look at the claims experience of drivers, and investigate why they choose one route to purchase over another. In addition, it will explore how price sensitivity is impacting the market and how COVID-19 has affected behaviours and experiences. Similar research was run in 2019 and comparisons between results in 2019 and 2021 are also made

Note: Product cover images may vary from those shown

EXECUTIVE SUMMARY

  • Seven-in-ten consumers own car insurance.
  • The insured prefer standalone, mainstream policies.
  • Motor insurance policyholders like to minimise their risks.
  • The customer journey merry-go-round
  • Policyholders like to discover deals online, mainly via PCWs.
  • Policies are purchased via PCWs or direct.
  • Motor insurance purchases are price focused.
  • Brands are important but are not everything.
  • Most policyholders have a good experience.
  • Less than one-in-ten have claimed in the past year.
  • The claims process seems to run smoothly for most.
  • Almost one-third have been impacted by COVID-19.

INTRODUCTION

PROFILE OF THE INSURED DRIVER

  • Just over seven-in-ten adults own motor insurance
  • Car ownership and insurance cover strongly related to age, social grade and income.
  • Young drivers the least likely to have insurance cover.
  • Motor insurance policyholders like to minimise their risks.

THE TYPES OF INSURANCE OWNED

  • Standalone or packaged?
  • Multi-car cover still only a niche sector of the market
  • Telematics insurance, a slow burn but there is growth potential.
  • Young males the most likely to have a telematics policy.
  • Many policyholders opt to take add-ons.
  • Young, affluent risk minimisers the most likely to have a dash cam.
  • Most policyholders pay for their insurance annually.

THE CUSTOMER JOURNEY MERRY-GO-ROUND

  • Most policy buyers are repeating a purchase.
  • The renewal prompt often starts the policy buying process.
  • With four-in-ten switching provider, loyalty is in short supply.
  • And the revolving door of switching continues to turn.
  • Switching is strongly price led.
  • Most of those renewing also start a new journey.
  • Young, managerial policyholders the most likely to search before renewing.
  • Almost half of those renewing without searching still try and get a better deal.

BUYING A POLICY: FINDING THE RIGHT DEAL

  • PCWs increase their dominance of the research space.
  • Confident Buyers focus the most on PCWs.
  • PCWs facilitate switching.
  • Ease of use and information the key positives of PCWs
  • The PCW dominance is here to stay.
  • Policies are purchased either directly or via PCWs.

POLICY ACQUISITION: PRICE NEGOTIATION

  • By their nature, policyholders are price sensitive.
  • Brands are important but they are not everything.
  • The final price/cover offer is the result of a negotiated settlement.
  • But do consumers have the armoury to negotiate adequately?
  • The volume of paperwork the main limit to knowledge.

BEING A POLICYHOLDER

  • A generally pain free experience.
  • Online policy management now becoming the norm.
  • 22% of policyholders have claimed within the past five years.
  • The claims process goes smoothly for most claimants, resulting in high levels of satisfaction.

IMPACT OF COVID-19

  • One-third of policyholders have been impacted by COVID-19

List Of Figures

Figure 1 Drivers and motor insurance policyholders in the UK
Figure 2 Penetration of Drivers and motor insurance policyholders by key demographics
Figure 3 The percentage of Drivers* who have motor insurance by age and social grade.
Figure 4 Attitudes to buying insurance by motor insurance policyholders.
Figure 5 How motor insurance was taken out 2019/2021
Figure 6 How cars are covered 2019/2020
Figure 7 The ownership of telematics insurance 2021
Figure 8 The penetration of telematics insurance
Figure 9 Protection extras owned and if they were acquired with motor insurance.
Figure 10 Dash cam ownership by key policyholder characteristics
Figure 11 How policyholders pay for their insurance 2019/2021
Figure 12  How the current insurance for the main car was acquired.
Figure 13 The time spent with the current provider.
Figure 14 The percentage of policyholders thinking of switching provider over the next year.
Figure 15 The factors that caused policyholders to switch provider.
Figure 16 Search activity of policyholders renewing by knowledge of previous year’s premium.
Figure 17 Key characteristics of policyholders who search before renewing.
Figure 18 The activities of policyholders who renew at renewal time.
Figure 19 The resources consulted before arranging insurance over the past two years.
Figure 20 Information resources consulted by insurance attitudes.
Figure 21 Information resources consulted by method of policy acquisition.
Figure 22 Policyholder attitudes towards PCWs
Figure 23 Where policyholders would look to compare deals.
Figure 24 Where the last motor insurance policy was acquired from.
Figure 25 The price focus when buying motor insurance by policyholder characteristics.
Figure 26  Did policyholders buy from a well-known insurer / provider rather than cheaper alternatives.
Figure 27 Negotiation with the insurer when taking out a new policy or renewing.
Figure 28  How policyholders read their policy documents, 2021.
Figure 29 Why policy documentation is not read in detail.
Figure 30 How online policyholder portals are used.
Figure 31 The incidence of claims on motor insurance by key characteristics
Figure 32 Claimant opinion of their last motor insurance claim
Figure 33 The impact of COVID-19 on motor insurance policyholders

Note: Product cover images may vary from those shown

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