Market Developments in UK Household Insurance 2009

리서치사	Datamonitor
발행일	2009년 03월	상품코드	83796
페이지 정보	51 pages
가격	US $ 2,795 ￦ 3,330,200 PDF by E-mail (Single User License) US $ 6,988 ￦ 8,326,200 PDF by E-mail (Corporate Use License)

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Abstract

Summary

Introduction

This brief analyses the issues affecting the market and also provides data on the market size, structure and profitability. It discusses the impacts of the credit crunch on the market and the growing use of aggregators. It also includes data and insight on market growth, premium rates, claims costs, underwriting profit and includes market forecasts.

Scope of this research

Insight into the effects of the credit crunch, including the major changes to the competitor rankings.
Data on market growth, premium rate changes, claims costs and underwriting profits.
Forecasts of the future size of the market, its underwriting profit and the drivers that will affect the market going forward.

Research and analysis highlights

The merger of Lloyds TSB and HBOS Group to form Lloyds Banking Group has created a home insurance powerhouse Datamonitor estimates that the new group becomes the third largest home insurance underwriting group, given the combination of Lloyds TSB Insurance and St. Andrew' s and esure.

The growing use of aggregators has served to increase consumers' focus on the price of home insurance. Interviewees commented that aggregators were a large part of the reason for the lack of price movement in 2008.

Key reasons to purchase this research

Understand which of your competitors pose the greatest threat, which competitors are gaining market share and which are losing market share.
Gain insight into the future direction of the sector, including market size and underwriting profitability and the major issues affecting the market.

DATAMONITOR VIEW

CATALYST
SUMMARY

ANALYSIS

The credit crunch is having a major impact on the home insurance market
- Lloyds Banking Group and Santander have gained significant market share from the credit crunch
- Insurance providers may need to consider launching low cost policies
- Insurers are likely to be faced with an increasing number of fraudulent claims
- Some banks have seen their home insurance sales fall due to lower mortgage volumes

Aggregators are presenting opportunities and challenges for market participants
- Aggregators are becoming a more important route to market
- Use of aggregators will increase during the recession
- Some home insurance providers have launched products to be used specifically on aggregators
- Aggregators went on a huge marketing drive in 2008
- A number of interviewees feel that aggregators are holding down price movements

The Pitt review could see government and insurers work more closely together to combat flood risk
- The summer floods in 2007 are estimated to have cost the market approximately £3 billion in total
- The Pitt report recommended a greater level of collaboration between the government and insurers

Growth in the household insurance market was muted by strong competition in 2008
- The market is estimated to have grown by 2% to £7.8 billion in 2008
- Combined insurance policies account for the majority of home insurance GWP

There was marginal price growth in 2008 with prices for combined and contents policies coming under particular pressure in H2
- The price of combined insurance policies came under pressure in the last two quarters of 2008
- The market for contents insurance policies became much more competitive in the third and fourth quarters of 2008
- Insurers have been pushing up the price of buildings insurance policies

There is a vast potential market for household insurance
- There is a potential market of 21.4m households in England
- The number of households in England grew by 1.1% in 2008 providing home insurers with new business opportunities

2008 was a far better year for claims costs
- Claims costs fell by a quarter in 2008
- Escape of water claims increased by 13.7% to £662m in 2008
- Claims relating to flood and storm damage fell significantly in 2008
- Domestic fire claims costs increased in 2008
- Accidental damage claims costs declined to £397m in 2008
- The average value of a theft claim rose by 7.4% to £1,086 in 2008
- 2008 was a good year for subsidence claims

The market returned to a profit in 2008
- The market returned an underwriting profit in 2008

The market continues to grow and returns profits until 2012 under the neutral scenario
- Premium rate increases are expected to drive growth in household GWP
- The market will reach a peak of £9 billion in 2013
- Household insurers make an underwriting profit until 2012 under the neutral scenario

Competition restricts premium rate increases in the pessimistic scenario
- Competitive pressures are forecast to keep rate increases low throughout the forecast period
- GWP is forecast to rise marginally under the pessimistic scenario due to competitive pressures
- The market moves into an underwriting loss as early as 2010 under the pessimistic scenario

The market sees better margins under the optimistic scenario
- A stronger focus on restoring margin to the market will lead to strong growth in premium income
- The market experiences stronger growth in 2009 and 2010, attaining a value of £9.3 billion by 2013
- Underwriting profits improve substantially in the optimistic scenario, peaking in 2011 at £212m

APPENDIX

Datamonitor Consumer Survey
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

TABLES

Table: UK home lending volume and value, 2004 - 08
Table: Estimated aggregator-instigated home insurance sales, 2007e-2008e
Table: UK household insurance GWP, 2004 - 08e (£m)
Table: Estimated split of household insurance GWP by type of cover, 2008 (£m)
Table: Average household insurance premium rates, January 2007-09 (£)
Table: The size and tenure of households in England, 2008 (000s)
Table: The number of households in England, 2005-08 (000)
Table: Trends in household tenure for England, 1998 - 2008, (000s)
Table: UK domestic property insurance claims by peril, 2004 - 08 (£m)
Table: Escape of water claims cost and number of claims for escape of water in the UK, 2004 - 08
Table: Gross claims incurred for domestic property weather claims, 2004 - 08 (£m)
Table: UK claims incurred by fire, domestic and total, 2004 - 08, (£m)
Table: Accidental damage claims costs and the number of claims for accidental damage in the UK, 2004 - 08
Table: Number of household theft and average theft claims cost in the UK, 2004 - 08
Table: Number of burglaries in England and Wales, 2001/02 to 2007/08
Table: UK unemployment, Q4 2004 - Q4 2008
Table: Household types by risk of burglary in the UK, 2005/6 to 2007/8
Table: Average subsidence claims cost compared to claims costs and number of claims for subsidence in the UK, 2004 - 08
Table: Key variables affecting household insurance GWP, neutral scenario, 2009 - 13
Table: Forecast of household insurance GWP, neutral scenario, 2009 - 13 (£m)
Table: Forecast of UK household insurance underwriting result, neutral scenario, 2009 - 13 (£m)
Table: Key variables affecting household insurance GWP, pessimistic scenario, 2009 - 13
Table: Forecast of UK household insurance GWP, pessimistic scenario, 2009 - 13 (£m)
Table: Forecast of UK household insurance underwriting result, pessimistic scenario, 2009 - 13 (£m)
Table: Key variables affecting household insurance GWP, optimistic scenario, 2009 - 13
Table: Forecast of UK household insurance GWP, optimistic scenario, 2009 - 13
Table: Forecast of UK household insurance underwriting result, optimistic scenario, 2009 - 2013 (£m)
Table: Breakdown of consumer survey respondents by household income and age
Table: Breakdown of consumer survey respondents by socio-economic group

FIGURES

Figure: Lloyds Banking Group has become the number one distributor of home insurance while Santander has become the ninth biggest distributor
Figure: Tesco Personal Finance launched a “no frills” home insurance package in June 2008
Figure: Banks saw their opportunity for mortgage related home insurance sales plummet in 2008
Figure: Aggregator-instigated home insurance sales doubled in 2008
Figure: Aggregators were focused on building their brand in 2008
Figure: Strong competition meant the home insurance market saw marginal growth in 2008
Figure: Combined insurance policies account for the majority of home insurance GWP
Figure: There was a strong element of price competition in the last two quarters of 2008
Figure: Contents insurance prices came under real pressure in the last two quarters of 2008
Figure: The market average price of buildings insurance grew strongly in the fourth quarter of 2008
Figure: Home insurance providers can target a potential market of 6.7m rented households and 14.6m owner occupied households in England
Figure: The number of households in England continues to grow
Figure: The private rented sector is a growing market for household insurance providers
Figure: Weather related claims decreased significantly in 2008 as claims volumes returned closer to normal levels
Figure: Flood and storm related claims fell significantly in 2008
Figure: Domestic fires accounted for almost a third of total fire claims costs in 2008
Figure: The number of theft related household insurance claims fell to 328,000 in 2008
Figure: The number of burglaries in England and Wales increased marginally in 2007/08
Figure: Older homeowners are the least likely to be burgled
Figure: Insurers benefited from low subsidence claims costs in 2008
Figure: Datamonitor estimates that the household insurance market will have recorded a profit of over £100m in 2008
Figure: Household GWP will rise at an average annual rate of 3%, reaching £9 billion in 2013 under the neutral scenario
Figure: The market is forecast to be profitable for most of the forecast period, under the neutral scenario
Figure: GWP growth will be lower due to smaller premium rate increases under the pessimistic scenario
Figure: Under the optimistic scenario GWP is predicted to rise to £9.3 billion in 2013
Figure: The market is predicted to be profitable throughout the forecast period under the optimistic scenario