UK Private Motor Insurance 2010

Date: July 1, 2010
Pages: 128
Price:
US$ 4,495.00
Publisher: Datamonitor
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: U1198E4D903EN
Leaflet:

Download PDF Leaflet

UK Private Motor Insurance 2010
Introduction

UK Private Motor Insurance 2010 contains a comprehensive overview of the market. It provides the total market size, policy numbers, profitability ratios, claims costs, premium rate changes, car registrations, distribution, penetration, competitor analysis and forecast for up to 2014 for both market size and profitability ratios.

Scope
  • Detailed information and data about the current state of the market and how insurers are responding to poor profitability.
  • The findings of Datamonitor's 2010 consumer survey which assessed the opinions and purchasing trends of over 3,000 individuals.
  • An update of the latest developments in the aggregator space.
  • Financial results of the top UK, Lloyds of London and non-UK domiciled insurers in the market.
Highlights

In 2009, the non-comprehensive motor sector experienced a further decline and it now accounts for only 8.2% of all private motor policies in force. This share has fallen from 16.3% (2.9 million) in 1999 as private motor insurers have moved away from this sector of the market.

The market made little reserve releases, indicating that the pool of reserveswhich is often used to protect an insurer against prior years' claimshas all but dried up. In fact a few insurers, such as RBS, made a reserve strengthening, thus making its reported year COR higher than its accident year ratio.

Datamonitor's survey showed that over half of all car insurance policyholders surveyed are now visiting price comparison sites at renewal. This comes as no surprise considering that these websites have heavily advertised throughout the past few years and so generated sufficient traffic from consumers.

Reasons to Purchase
  • Comprehensively understand most aspects of the market and the views of market players interviewed by Datamonitor.
  • See how the industry is responding to poor profitability and rising clams costs.
  • Make conclusions based on the current purchasing trends and preferences of UK consumers buying private motor insurance.

Overview
Catalyst
Summary
Executive Summary
The private motor market shrunk slightly in 2009
The total market declined by 1% to ?9.2 billion GWP
Over the past decade, the proportion of non-comprehensive policies has fallen
Claims costs are continuing to escalate
Claims inflation has been driven by personal injury claims and credit hire costs
Although claims frequency fell slightly to 16.7% in 2009
RBS Group is the largest provider of car insurance in the UK
There were a number of exits and sales within the market
Lloyds Banking Group is no longer in the market
GMAC Financial Services is looking to sell Provident
HSBC has placed its motor insurance business into run-off
QBE has also exited that market
KGM Motor had a difficult 2009 and it is currently up for sale
Quinn Direct will write considerably less UK business as a result of being in administration
Markerstudy is looking to shed private motor business from Zenith following its acquisition in late 2009
Market growth will be stunted in 2010 followed by successive increases from 2011 onwards
Rate increases will drive market growth
Table of Contents
Table of figures
Table of tables
Market Context
Introduction
The private motor market shrunk slightly in 2009
The total market declined by 1% to ?9.2 billion GWP
Lloyd's of London insurers have a significant presence in the UK motor market
Datamonitor estimate that Lloyd's of London motor GWP increased to ?967m in 2009
The number of motor insurance policies remained static
There were 24.8 million private motor policies in force during 2009
Over the past decade, the proportion of non-comprehensive policies has fallen
The combined ratio took a turn for the worse in 2009
Private motor insurance losses pushed the 2009 accident year combined operating ratio up to 122.9%
The rate of increase in the COR was 8.2 percentage points in 2009
Reserve releases were considerably lower in 2009
The loss ratio increased in 2009, while the expense ratio fell
Claims costs are continuing to escalate
Claims inflation has been driven by personal injury claims and credit hire costs
More recent statistics show that theft related claims costs have increased significantly since 2005
On average, motor bodily injury claims are the most expensive to settle
Fraudulent claims rose during the recession and are believed to have cost ?1.9 billion in 2009
Continuous enforcement insurance should help lower the levels of uninsured driving
BIBA is calling for brokers to embrace DVLA vehicle registration data to improve data validation
Credit hire organizations have come under greater scrutiny over the past year
Over the past two years bilateral agreements between insurers have become more popular
The new low value personal injury claims process should help lower claims costs
The new process applies to road traffic accident personal injury clams of between ?1,000 and ?10,000
The changing cost structure has affected all those in the personal injury market
There are three stages for a low value personal injury RTA claim
Stage one is focused on providing early notification of claims to defendants and insurers
Stage two permits the use of medical evidence and most cases should be settled within this phase
Stage three proceeds when both parties cannot agree on quantum (settlement)
Electronic motor certificates will also save on postal and administration costs
Claims frequency remained at similar levels to 2008
Claims frequency fell slightly to 16.7% in 2009
A number of insurers have noticed a rise in car part theft related claims
RTA casualties are now thought to number 800,000 per annum
The number of road traffic accidents reported to the police fell by 4.1% in 2009
The number of accidents as a proportion of the total car parc continued to fall in 2009
Similarly, casualty rates are dropping in line with falling road traffic accidents
Premium rates hardened throughout the second half of the year
Insurers are responding to poor profitability by making rate corrections
In a bid to price more accurately, insurers are increasingly using point-of-sale validation
The AA British Insurance Premium Index recorded a large increase in premiums in Q4 2009
Comprehensive average and shoparound prices grew progressively from Q2 2009 onwards
Non-comprehensive prices showed an even larger jump in prices during 2009
Car drivers in the North West of England pay the highest premiums
Rates differ considerably between gender and age
The number of new private car registrations increased during 2009
The scrappage scheme provided a much needed boosted for the new car market
However, fewer individuals had access to motor finance to purchase new or used cars
The vast majority of cars on the road are aged between six and 13 years
Growth in the total motorcycle parc was stagnant in 2009
The number of multicar households has been static since 2005
Distribution
Introduction
Private motor insurance is mostly sold direct
The direct channel continues to be the dominant route to market
Brokered private motor insurance accounts for 31% of the market
Corporate partnerships are an important way to distribute private motor products
Banks and building societies have a market share of 6%
RBSI brands have a prominent presence in the private motor market
Direct Line is the number one private motor insurance brand
The top five direct insurers comprise over a quarter of the motor insurance market distribution
The AA was the market leader for broker-distributed private motor insurance
Bancassurers have a relatively small market presence
The top five brandassurers hold a lower market share than in 2008
Aggregator-instigated sales have increased
Half of new motor business sales are initiated through a price comparison site
The OFT is currently investigating aggregators as to whether they are misleading customer
Total advertising expenditure in the motor market fell in 2009
Direct insurers and aggregators have toned down their advertising spend
Brandassurers and bancassurers increased their marketing spends significantly in 2009
Of the top 10 advertisers, GoCompare.com, Aviva and CompareTheMarket.com increased their spending
Most of the top 10 motor advertisers focus their resources on advertising via television
Direct mail advertising was a more popular strategy with the top 11-20 motor insurance advertisers
The top four price comparison sites accounted for almost half of total TV advertising spend
Price comparison sites invest heavily in TV advertisement
GoCompare.com was the number one motor insurance TV advertiser in 2009
Brokers channel most of their advertising spend through direct mail promotion
Brokers tend to favor direct mail as a means to advertise motor insurance
Customer Focus
Introduction
Private motor penetration rates have increased to 80.1%
Penetration is lowest among people aged between 18 and 34
Penetration rises with income level
Social grade of consumers has less influence on penetration rates
Internet- and telephone-based sales account for most transactions
Private motor insurance is mostly sold via the internet
Elder consumers prefer buying their insurance over the telephone
Low income households tend to buy cover over the phone
Apart from for social grades A and E, the internet is the most used platform for arranging motor insurance
Older customers are less likely to switch car insurance provider
Retention rates are around 55% in the private motor market
Customers aged between 25-34 were most likely to shop around for alternative quotations
Retention rates appear to be highest for the lowest and highest earners
Price has to be the primary focus in marketing campaigns
Price was the most commonly cited reason for selecting a motor insurance provider
In contrast to older customers, those aged between 25-34 years of age are the most price-sensitive
Over 60% of all consumers visit price comparison websites at renewal
Price comparison websites appeal particularly to those aged between 25 and 34 years
Low income households are less likely to use aggregators at renewal
Only 41.8% actually go on to buy policy via a price comparison website
Older customers are less likely to purchase a policy after visiting a price comparison website
It is more difficult to differentiate aggregator purchasing behavior among different household incomes
Competitive Dynamics
Introduction
Most of the top 10 private motor insurers grew their market share slightly
RBS Insurance increased its GWP and market share in 2009
Aviva saw its total GWP contract but remained the second largest private motor insurance group
RSA achieved a 5% increase in GWP
LV= increased its market share significantly
Lloyds Banking Group is no longer in the market
Fortis insurance is soon to benefit from its new partnership with Tesco Bank
Fortis witnessed its private motor book decrease by 9.7% in GWP in 2009
Fortis' new five-year partnership with Tesco Bank will generate considerable new private motor business
Munich Re will continue to write the largest share of Admiral's book
AXA increased its car insurance proposition to cater for older, more experienced customers
AXA achieved significant GWP growth in its private motor insurance book
The group launched a direct AXA-branded car insurance product in 2010
AXA have partnered with Complectus to launch misfuelling insurance
There were a few exits from the market out of the top 11-20 private motor insurers
GMAC Financial Services is looking to sell Provident
Groupama plans to raise rates by 10% for its private car policies in 2010
Allianz also increased its private motor rates
Binomial, which underwrites via Sabre Insurance, increased its total motor book
Admiral Group had a strong 2009
HSBC has placed its motor insurance business into run-off
QBE has also exited that market
The largest insurers focus mainly on comprehensive car insurance
Comprehensive business accounts for the majority of the top insurers' books
RBS has the most policies in force
RBS, Aviva, RSA and Fortis performed better than the market average COR
The accident year COR of the total motor market deteriorated further in 2009
Fortis' and RSA's CORs were well below the market average in 2009
RBS and Aviva had a more testing year, but both managed to perform better than the market average
Most of the top 10 made a slight reserve release to lower their reported year COR
The lack of reserves left in the market was evident in 2009
The commission ratio increased for most of the top 10 private motor insurance groups
Non-UK domiciled insurers such as Zurich and Acromas are significant players
Zurich has transferred its UK book to Ireland
Zurich is now regulated by the Irish Financial Regulator
Zurich intends to increase rates by 20% in personal motor to improve profitability
The Acromas Group underwrites all of its private motor policies sold via the Saga brand
Quinn Direct will write considerably less UK business as a result of being in administration
Markerstudy is looking to shed private motor business from Zenith following its acquisition in late 2009
A number of Lloyds of London Syndicates increased their exposure in 2009
Lloyd's market insurers have a significant presence in the UK motor market
Datamonitor calculates that Lloyd's of London motor GWP increased to ?967m in 2009
Equity Red Star is the largest UK motor insurer in the Lloyd's of London market
Chaucer plans to up its motor rates by 14% throughout 2010
Amlin grew its motor fleet business during 2009
KGM Motor had a difficult 2009 and it is currently up for sale
Future Decoded
Introduction
Market growth will be stunted in 2010 followed by successive increases from 2011 onwards
Rate increases will drive market growth
The total UK private motor market will be worth ?10.8 billion in GWP in 2014
The COR will see some improvements as rate corrections feed into results
Premium rate increases will improving underwriting results and help lower the COR

APPENDIX

Further data
Definitions
ABI members
Bancassurers
Brokers
Brandassurers
Combined ratio
Commission expenses
Comprehensive motor insurance
Channel
Direct insurer/writer
Earned premiums
Gross premium
Net premium
Non-comprehensive motor insurance
Platform
Reserve development
Written premiums
Methodology
Datamonitor's Insurance Consumer Survey
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

LIST OF TABLES

Table 1: Private motor GWP by line of business, 2006-09p (?000s)
Table 2: UK motor insurance NWP split between ABI members and Lloyd's (?m), 2008
Table 3: Motor policies in force, 1999-2009 (000s)
Table 4: Accident and reported year COR, private motor market (%), 2005-09
Table 5: Average motor claim cost and claims inflation (?), 2003-08
Table 6: Number of claims settled, costs and average claim value for private motor theft claims, 2005-09
Table 7: Average motor claims payout and percentage of total claims by type (?), 2008
Table 8: Comprehensive and non-comprehensive claims and exposure, UK private motor (000s), 2005-09
Table 9: Total number of reported road traffic accidents in Great Britain (000s), 1998-2009
Table 10: Road traffic accidents relative to registered vehicles in Great Britain (000s), 1998-2009
Table 11: Reported deaths, seriously and slightly injured casualties from Great Britain RTAs, 2003-Q3 2009
Table 12: Average and shoparound private motor insurance prices (?), Q2 2007-Q1 2010
Table 13: Average car insurance premiums split by region (?), Q4 2009-Q1 2010
Table 14: Example of average premiums quotes by gender and age (?), Q1 2010
Table 15: New private car registrations in Great Britain by body type (000s), 2005-09
Table 16: Cars licensed by years since first registration in Great Britain (000s), 2000-09
Table 17: Total motorcycle car parc and new registrations in Great Britain (000s), 2004-09
Table 18: Great Britain households with a private car (%), 2002-08
Table 19: Private motor insurance GWP distribution by channel (all business) (%), 2005-09e
Table 20: Top 10 insurance companies distribution share, by age group (%), 2010
Table 21: Estimated aggregator-instigated private motor sales (%), 2007e -2009e
Table 22: Advertising expenditure, by channel of top insurance providers (?), 2008-09
Table 23: Advertising expenditure spent by channel of top motor insurance advertisers (?), 2009
Table 24: Top 10 motor insurance advertisers (?), 2008-09
Table 25: Top 10 motor insurance advertisers' advertising expenditure by channel (%), 2009
Table 26: Top 11-20 motor insurance advertisers' advertising expenditure by channel (%), 2009
Table 27: Top 10 motor insurance television advertisers, 2008-09 (?)
Table 28: Top 10 motor insurance direct mail advertisers (?), 2008-09
Table 29: Distribution of private motor insurance by age group and platform (%), 2010
Table 30: Distribution of private motor insurance by household income and platform (%), 2010
Table 31: Distribution of private motor insurance by social grade and platform (%), 2010
Table 32: Propensity to switch provider and likelihood of getting other quotes by age (%), 2010
Table 33: Propensity to switch motor insurance provider by household income (%), 2010
Table 34: Commonly cited reasons for selecting a car insurance provider, by age group (%), 2010
Table 35: Reasons for visiting a price comparison site, by age and household income (%), 2010
Table 36: GWP and market share of the top 10 UK private motor insurance groups, 2008-09
Table 37: GWP and market share of the top 11-20 UK private motor insurance groups, 2008-09
Table 38: Top 10 private motor insurers' comprehensive and non-comprehensive books (000s), 2008-09
Table 39: Private comprehensive and non-comprehensive vehicle years for the top 10 insurers (000s), 2009
Table 40: Top 10 motor insurance groups accident year combined ratio and underwriting results, 2009
Table 41: Top 10 motor insurance groups reported year combined ratio and underwriting results, 2009
Table 42: Commission ratios for the top 10 private motor insurers (%), 2008-09
Table 43: UK motor insurance NWP split between ABI members and Lloyd's (?m), 2008
Table 44: Motor insurance GWP for selected Lloyd's insurers with large UK motor exposure (?000s), 2008-09
Table 45: Key variables affecting private motor insurance GWP, 2010f-14f
Table 46: Private motor GWP by line of business (?m), 2006-14f
Table 47: Forecast for the accident year combined ratio, UK private motor market (%), 2005-14f
Table 48: Advertising expenditure spent by channel of top motor insurance advertisers (?), 2008
Table 49: Datamonitor's consumer survey sample size by age and income, 2010

LIST OF FIGURES

Figure 1: The RBS group maintains dominance over the motor market
Figure 2: Comprehensive private motor insurance now accounts for 88% of total premiums
Figure 3: Lloyd's of London players underwrote ?781m of motor business in 2008
Figure 4: Almost 90% of all policies in force are for comprehensive cover
Figure 5: The private motor market has been moving away from non-comprehensive cover
Figure 6: Soaring claims costs forced the private motor COR up to 122.9% in 2009
Figure 7: Both the total and private motor market saw the COR jump significantly in 2009
Figure 8: There were little reserve releases to bolster the reported year COR in 2009
Figure 9: The accident year loss ratio increased by 7.5 points in 2009
Figure 10: Meanwhile, the reported year loss ratio increased by a staggering 15.8 points in 2009
Figure 11: The average claim cost is just under ?2,200
Figure 12: Bodily injury claims are the most expensive for insurers to settle
Figure 13: The claims frequency for comprehensive policies have fallen over the past 10 years
Figure 14: The DfT now estimates that the number of road traffic accident casualties is around 800,000 per annum
Figure 15: Fewer road traffic accidents are lowering the frequency of claims
Figure 16: The number of road traffic accidents has steadily fallen since 1998
Figure 17: 2009 looks to have been another year of declining road casualties
Figure 18: Comprehensive rates grew strongly in Q4 2009
Figure 19: Rate increases were far more pronounced for non-comprehensive policies during 2009
Figure 20: Premium prices fall considerably for buyers older than 22 years of age
Figure 21: Private car sales picked up in 2009
Figure 22: Over half of the total car parc was older than six years in 2009
Figure 23: The total motorcycle car parc stalled in 2009, with historically low levels of new registrations
Figure 24: There are on average 1.14 cars per household in Great Britain
Figure 25: Direct insurers and brokers account for just under 75% of all private motor sales
Figure 26: Direct Line is the market leader for private motor insurance
Figure 27: RBSI-owned Direct Line and Churchill are the largest direct private motor insurers
Figure 28: The AA is by far the largest private motor insurance broker
Figure 29: Lloyds TSB's market dominance among bancassurers is retained, albeit by a reduced margin
Figure 30: Tesco shows a formidable lead above brandassurers
Figure 31: More than half of new private motor GWP was generated through an aggregator
Figure 32: Direct insurers, aggregators and brokers spent less on advertising during 2009
Figure 33: TV advertising was most popular among the top 10 largest motor advertisers in 2009
Figure 34: Direct mail and TV were popular advertising media for the top 11-20 motor advertisers in 2009
Figure 35: GoCompare.com's opera singer, Gio Compario, has significantly raised the profile of the website
Figure 36: Private motor penetration is highest among over-65 year olds
Figure 37: Penetration rates increase for those households earning ?30,000 and above
Figure 38: Penetration rates are slightly higher for those in the A and B social economic groups
Figure 39: The majority of customers buy their car insurance over the internet or by telephone
Figure 40: Internet-based providers should target consumers aged between 25-34 years of age
Figure 41: Telephone-based sales are most popular for the lowest and highest household incomes
Figure 42: Most social grades preferred to use the internet to arrange a car insurance policy
Figure 43: Retention rates improve significantly as age increases
Figure 44: Switching car insurance provider is most pronounced for middle income earners
Figure 45: Competitive prices will ensure new business and customer retention
Figure 46: Non-price factors appeal more to older customers when choosing a car insurance provider
Figure 47: Price comparison websites are most popular among those in their 20s and 30s
Figure 48: Low earners tend to use price comparison sites the least
Figure 49: Conversion rates on aggregators differ across age groups
Figure 50: Sales via aggregators are highest for those earning less than ?75,000
Figure 51: RBS consolidated its position as the number one UK private motor insurance group
Figure 52: The top 11-20 insurers found maintaining their market share more difficult in 2009
Figure 53: Comprehensive business is the main source of income for most of the top private motor insurers
Figure 54: RBS had 7.9 million private motor policies in-force in 2009
Figure 55: All of the top 10 private motor insurers were running a loss ratio of above 90% in 2009
Figure 56: CORs after reserve releases ranged from 111.7% to 135.5% in 2009
Figure 57: Lloyd's of London players underwrote ?781m of motor business in 2008
Figure 58: The UK private motor market will experience strong growth during 2011 and 2012
Figure 59: The COR will drop considerably from 2011 onwards
Motor Insurance: Global Industry Guide US$ 1,495.00 Nov, 2012 · 283 pages
Motor Insurance in Asia-Pacific US$ 350.00 Oct, 2012 · 31 pages
Motor Insurance in Belgium US$ 350.00 Oct, 2012 · 30 pages
Motor Insurance in Canada US$ 350.00 Oct, 2012 · 34 pages

Ask Your Question

UK Private Motor Insurance 2010
Company name*:
Contact person*:
Phone/fax*:
Email*:
Request invoice
Your enquiry: