UK Household Insurance: Market Dynamics and Opportunities

Publisher Name :
Date: 30-Sep-2016
No. of pages: 51

Summary

Soft market conditions endure in a UK household insurance market with high levels of competition and capacity, and a continuing shift in customer buying habits. Despite this, the market continues along a profitable path for as long as it can rely on relatively benign weather conditions.

Key Findings


  • UK household insurance gross written premium (GWP) fell by 3.8% in 2015, hampered by tough underwriting conditions in a competitive market. Home insurance premium rates are currently reported to be largely flat to slightly negative across the UK as a whole.

  • In spite of winter 2015 storms, home insurance remains profitable, with a 94.6% combined operating ratio (COR) in 2015, compared to 93.4% in 2014. The sector has been propped up by several benign weather years and has benefited from reserve releases. However, concerns remain over pricing for severe weather events.

  • The home insurance expense ratio fell in 2015 (-1.6 percentage points [pp]) as a result of a drop in commission ratio and efficiency improvements. However, at 40.6% it remains relatively high compared to motor, and has been adversely impacted in H1 2016 by the introduction of Flood Re.

  • 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. Private renters now account for around 20% of dwellings, up from just over 10% a decade ago.


Synopsis

Verdict Financial's "UK Household Insurance: Market Dynamics and Opportunities" 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, regulations, and opportunities. It provides a thorough overview of the market along with future forecasts and analysis of emerging technologies and products.

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.


Companies Mentioned


  • Lloyds Banking Group

  • Direct Line Group

  • Aviva

  • RSA

  • AXA

  • Ageas

  • Legal and General

  • NFU Mutual

  • Allianz

  • LV=

UK Household Insurance: Market Dynamics and Opportunities

Table of Contents

Executive Summary
The UK household insurance market remains highly competitive
Key findings
Critical success factors
Market Context
A soft market and changing customer behavior led to a fall in GWP in 2015
Home insurance GWP fell by 3.8% in 2015
Premium rates return to flat or slightly negative following the Insurance Premium tax hike
Changing customer behaviors are compounding the competitive nature of the market
Competition remains fierce in the home insurance sector, preventing rate increases
Combined policies continue to dominate, but home ownership trends are impacting GWP
Home insurance remains profitable due to relatively benign weather
The loss ratio rose in 2015 as a result of the soft market, but the COR remained below 100%
The expense ratio fell in 2015 as a result of a lower commission ratio and a focus on efficiency
Claims costs fell in 2015, although the average claims cost increased
Gross incurred claims fell across all categories, except fire and escape of water
Average claims cost increased, with the average winter storm claim significantly higher in 2015
Escape of water claims were the costliest peril in 2015, although technology may ultimately assist
Flood Re affected H1 2016 results, but overall the impact is expected to be small
Flood Re launched in April 2016 and is expected to benefit around 350,000 homes "over time"
Flood Re costs have increased expense ratios for insurers in H1 2016
Overall, Flood Re impacts are expected to be relatively small
Home insurance demand remained strong, but underlying dynamics are shifting
New home registrations and completions increased, although numbers remain well below historic levels and requirements
Mortgage approval rates rose by 4% in 2015, but have fallen in 2016
The rise of 'Generation Rent' presents a shifting landscape
Penetration rates are high among owner-occupiers, but lower for tenants
2016 and Beyond
Household insurance GWP is forecast to stabilize up to 2018
Premium rates are unlikely to increase in the short term
A significant weather event will be required to shift rates
Demand and profitability will be impacted by the slowdown in the economy
Household GWP is expected to stabilize from 2016 to 2018
The negative economic consequences of Brexit could have an adverse effect
Brexit will not result in substantial changes to the market's structure
The economic consequences of Brexit will have the greatest impact
FCA regulation on renewal transparency will impact the market in H2 2017
FCA regulation will increase renewal transparency and promote shopping around
Between 11% and 18% more home insurance customers could shop around
The impact will largely be evident from H2 2017
A major weather event will reveal Flood Re's market impact
A significant weather event will reveal the extent to which Flood Re can plug the pricing gap
Stakeholders need to remain aware of the ultimate aim for premiums to fully reflect flood risks
The growth of 'Generation Rent' will impact product development
Renting will remain the fastest growing type of tenure
Home insurers need to build propositions targeted to the needs and behaviors of this customer segment
Technology-enabled product and service offerings have the potential to transform home insurance in the longer term
Consumer appetite for smart home technology is increasing in the wake of a growing number of products
There have been two significant developments in UK-connected home insurance in 2016
In spite of benefits, connected home insurance will not take off in the short term
Insurers will continue to seek opportunities to develop and test connected home use
There is growing interest in pay-as-you-go, highly tailored micro-insurance policies

Appendix
Abbreviations and acronyms
Supplementary data
Definitions
Combined operating ratio
Compound annual growth rate
Gross written premium
Methodology
Primary and secondary research
Verdict Financial's 2015 UK General Insurance Consumer Survey
Bibliography
Further reading
About Verdict Financial
Disclaimer

List of Tables

Table 1: Household insurance GWP and annual growth rate, 2011-15
Table 2: Quarterly average household insurance premium rate movements, 2012-16
Table 3: AA Shop around average home insurance premiums, Q1 2015-Q2 2016
Table 4: Top 10 household insurers' market shares, 2014-15
Table 5: UK household insurance GWP split by type of policy, 2012-15
Table 6: Household insurance performance ratios, 2011-15
Table 7: Household insurance underwriting result, 2004-14
Table 8: Household insurance expense ratio breakdown, 2011-15
Table 9: Gross incurred and number of household insurance claims by peril, 2011-15
Table 10: Average household insurance claims cost by peril, 2014-15
Table 11: New home registrations and completions, 2011-15
Table 12: UK household insurance GWP and growth rate, 2011-20f
Table 13: UK dwelling stock by tenure, 2004-14

List of Figures

Figure 1: Household insurance GWP continues to fall
Figure 2: Premium rates have been on a general decline since 2012
Figure 3: IPT and Flood Re have led to premium increases in an otherwise soft market
Figure 4: Combined insurance accounts for almost 75% of GWP
Figure 5: A relatively high loss ratio pushed up the household insurance COR in 2015
Figure 6: Household insurance has been profitable since 2004, with the exception of major weather events in 2007 and 2010
Figure 7: A fall in commission ratio was behind the reduced home insurance expense ratio in 2015
Figure 8: Gross incurred claims continued to fall, with relatively benign weather largely behind the drop in 2015
Figure 9: New home registrations and completions are increasing
Figure 10: Monthly mortgage approvals generally rose in 2015, but declined in H1 2016
Figure 11: Private tenants form the fastest growing type of tenure, while home ownership has stagnated
Figure 12: Almost one third of private tenants have no form of home insurance
Figure 13: Home insurance GWP will recover slightly to 2020
Figure 14: Recent examples of home insurance innovation
Figure 15: Some of the obstacles to more widespread implementation of connected home insurance

  • Asia Pacific Makeup Market To Grow Owing To Impactful Promotion And Progress Of Distribution Networks
    The Asia Pacific makeup market is one of the most assorted and active markets in the cosmetics industry throughout the world and is projected to grow at a CAGR of 7.1% between 2013 and 2019. The makeup market in Asia Pacific is assessed to be worth US$22.31 billion by 2019. The world-wide market was at an approximation of US$14.76 [...]
  • Growing Demand in Emergent Markets To Boost Bakery Ingredients Market
    The baking ingredients market is predictable to grow at a CAGR of 5.2% from 2015 to reach an estimated value of US$ 15.19 billion by 2020. Evolving economies throughout the globe have been displaying demand for bakery ingredients at a greater rate in agreement with the economic growth. Numerous companies have been occupied on refining [...]
  • Packaging Sector Driven By Innovation
    The financial development in numerous emerging nations has significantly influenced the progress of quite a lot of sectors, the packaging industry being one of them. The swell in transport undertakings outfitting to a substantial number of industries such as manufacturing, consumer goods, food and beverages, and others rest essentially on sturdy and resilient packaging solutions [...]
  • Global Eyewear Market To Gain From Increased Demand For Disposable Contact Lenses
    The global eyewear market was worth US$ 102.66 billion in 2015 and is predictable to reach US$ 184.03 billion by 2024. The rising population and upsurge in the number of optical disorders are likely to propel the industry in the near future. Moreover, the increasing cognizance amongst people as regards to the prominence of eye [...]
  • Global mHealth Market To Become A Multi-Billion Dollar Industry By 2020
    The mHealth market is in its embryonic stage and is projected to produce substantial profits with amassed awareness level and encouraging regulatory guidelines particular to the quality and practicality of mobile-based medical devices. The global mHealth market is projected to touch US$ 49.12 billion by 2020 rising at a CAGR of 47.6% from 2013 to 2020. Monitoring services [...]
  • Non-Life Insurance in Uruguay, Key Trends and Opportunities to 2020
    Published: 23-Feb-2017        Price: US 1450 Onwards        Pages: 114
    Synopsis Timetric's 'Non-Life Insurance in Uruguay Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Uruguayan non-life insurance segment, and a comparison of the Uruguayan insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and ret......
  • Non-Life Insurance in Denmark, Key Trends and Opportunities to 2020
    Published: 21-Feb-2017        Price: US 1450 Onwards        Pages: 125
    Synopsis Timetric's 'Non-Life Insurance in Denmark Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Danish non-life insurance segment, and a comparison of the Danish insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retention......
  • Targeting the Over-50s with Life Insurance
    Published: 15-Feb-2017        Price: US 3450 Onwards        Pages: 49
    Summary The UK's over-50s population is growing, which means the customer segment is a growing opportunity for insurance providers. Those over 50 are often treated and targeted as one segment, but the market is highly diverse, and a "one size fits all" strategy should be avoided. Individual lifestyles differ due to a number of factors such as whether individuals are retired, whether they have dependent children living at home, their health, and their financial freedom......
  • Non-Life Insurance in Switzerland, Key Trends and Opportunities to 2020
    Published: 14-Feb-2017        Price: US 1450 Onwards        Pages: 130
    Synopsis Timetric's 'Non-Life Insurance in Switzerland Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Swiss non-life insurance segment, and a comparison of the Swiss insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retenti......
  • Non-Life Insurance in Japan, Key Trends and Opportunities to 2020
    Published: 07-Feb-2017        Price: US 1450 Onwards        Pages: 130
    Synopsis Timetric's 'Non-Life Insurance in Japan, Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Japanese non-life insurance segment, and a comparison of the Japanese insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retentions during the r......
  • Non-Life Insurance in Saudi Arabia, Key Trends and Opportunities to 2020
    Published: 31-Jan-2017        Price: US 1450 Onwards        Pages: 113
    Synopsis Timetric's 'Non-Life Insurance in Saudi Arabia, Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Saudi Arabian non-life insurance segment, and a comparison of the Saudi Arabian insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retent......
  • Non-Life Insurance in Serbia, Key Trends and Opportunities to 2020
    Published: 31-Jan-2017        Price: US 1450 Onwards        Pages: 124
    Synopsis Timetric's 'Non-Life Insurance in Serbia Key Trends and Opportunities to 2020' report provides a detailed outlook by product category for the Serbian non-life insurance segment, and a comparison of the Serbian insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retentions during the rev......
  • Non-Life Insurance Global Industry Almanac 2016
    Published: 31-Jan-2017        Price: US 2995 Onwards        Pages: 629
    Summary Global Non-Life Insurance industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value 2011-15, and forecast to 2020). The profile also contains descriptions of the leading players including key financial metrics and analysis of competitive pressures within the market. Key Findings - Save time carrying out entry-level research by identifying the size, growth, major segments, and leading player......
  • Non-Life Insurance Global Group of Eight (G8) Industry Guide 2016
    Published: 31-Jan-2017        Price: US 1495 Onwards        Pages: 235
    Summary The G8 Non-Life Insurance industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value 2011-15, and forecast to 2020). The profile also contains descriptions of the leading players including key financial metrics and analysis of competitive pressures within the market. Key Findings - Save time carrying out entry-level research by identifying the size, growth, major segments, and leading player......
  • SERVICES
    Value for Money
    We believe in "optimum utilization of available budget and resources". While servicing our clients' (your) market research requirements, we keep the same approach in focus to help you get the best value for your $$s.
    Ever Growing Inventory
    Ranging from the smallest feasible / required data (datasheets, data facts, SWOT analysis, company profiles, etc) to full research reports that help you make decisions, our inventory is updated almost on a daily basis with the latest industry reports from domain experts that track more than 5000 niche sectors.
    One Stop Solution
    Need a custom research report on medical devices market? Require all available business intelligence on 3D printing industry? Exploring F&B sector of a particular country/region? RnRMarketResearch.com is your one-stop-solution to all market intelligence needs. We not only offer custom research and consulting services, we also "bundle" reports to meet your needs and help you fetch the data analysis you require for your business.
    Dedicated Client Engagement
    Not limited to only "finding" relevant reports for you, our client engagement team dedicates its efforts to understand your "business need" and accordingly maps available research data to help you move forward. Call "your" client engagement executive any time of your day and get your questions answered in order to make the correct business decision.
    Saving Time and Efforts
    Simply share your research requirement details with us and let us do all the hard work to find required intelligence for you. When you add up our "one stop solution" and "dedicated client engagement" services mentioned above, you obviously know the time and effort saving you do by working with us.
    Payment Flexibility
    Working with Fortune 500 organizations, we understand the importance of being flexible for payments. Share your payment terms with us and we will surely match up to them to ensure you get access to required business intelligence data without having to wait for the payment to be done.
    Post-Purchase Research Support
    Have questions after reading a report / datasheet bought through us? Not sure about the methodology used for data available in the research? Talk to us / Share your questions with us and if required, we will connect you with the analyst(s)/author(s) of the report(s) and ensure you get satisfactory answers for the same. Need more data / analysis / report(s) on the topic of your research/project? The RnRMarketResearch.com team is here for you 24X7 to support you with your post-purchase requirements. Subscription Offers & Packages (Get in touch with us for more details - sales@rnrmarketresearch.com / +1 888 391 5441 )
    • Ad Hoc
    • Pay - as - you - go / Bucket Subscriptions
    • Fixed Cost for #of reports
    • Customize / Personalize as per your needs