private motor insurance in the uk key trends and ... · analysis of third-party opinion and...

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Private Motor Insurance in the UK

– Key Trends and Opportunities

to 2018

Market Intelligence Report

Reference code: FS0123MR

Published: September 2014

www.timetric.com

Timetric

John Carpenter House

7 Carmelite Street

London EC4Y 0BS

United Kingdom

Tel: +44 (0)20 7936 6400

Fax: +44 (0)20 7336 6813

http://www.timetric.com/

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Private Motor Insurance in the UK – Key Trends and Opportunities to 2018

© Timetric. This product is licensed and is not to be photocopied Published: September 2014

Executive Summary

This report is the result of extensive research into the private motor insurance market in the UK, covering

the market dynamics, outlook and competitive landscape. It provides estimates of the market size and

forecasts for the private motor insurance market, and discusses key products and distribution channels.

This report also provides an overview of the leading companies in the category, along with details of the

strategic initiatives undertaken.

Synopsis

The report provides market analysis and insights into the UK private motor insurance business;

It also provides a snapshot of market size and market dynamics;

Furthermore, the report discusses key drivers, distribution channels and the outlook for the market;

It also summarises deals, news and regulatory developments in the category.

Reasons To Buy

Gain an understanding of the UK private motor insurance market;

Learn about the performance of market drivers, distribution channels and market dynamics;

Explore types of policies and key competitors in the category;

Find out more on key deals and recent developments in the market.

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1 Market Analysis

1.1 Market Size

Table 1: UK Private Motor Insurance – Historical Statistics, 2009–2013

2009 2010 2011 2012 2013

Gross written premiums (GBP thousands)

Comprehensive

Non-comprehensive

Motorcycle

Source: Timetric analysis © Timetric

Figure 1: UK Private Motor Insurance – Gross Written Premiums (GBP Million), 2009–2013

Source: Timetric analysis, based on FSA returns © Timetric

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1.2 Market Outlook

Table 2: UK Private Motor Insurance – Forecast Statistics, 2014–2018

2014e 2015 2016 2017 2018

Gross written premiums (GBP thousands)

Comprehensive

Non-comprehensive

Motorcycle


Figure 2: UK Private Motor Insurance – Gross Written Premiums Forecast (GBP Million), 2014–

2018


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Figure 3: UK Private Motor Insurance Growth Dynamics by Product (%), 2009–2018


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Report Methodology

All Timetric insurance reports are created by following a comprehensive, four-stage methodology. This

includes market study, research, analysis and quality control.

1) Market Study

A. Standardization

Definitions are specified using recognized industry classifications. The same definition is

used for every country.

Annual average currency exchange rates are used for the latest completed year. These are

then applied across both the historical and forecast data to remove exchange rate

fluctuations.

B. Internal audit

Review of in-house databases to gather existing data:

Historic market databases and reports

Company database

C. Trend monitoring

Review of the latest insurance companies and industry trends

2) Research

A. Sources

Collection of the latest market-specific data from a wide variety of industry sources:

FSA insurance returns

Industry associations

Government statistics

International organizations

Insurance regulatory agencies

B. Expert opinion

Collation of opinion taken from leading insurance industry experts

Analysis of third-party opinion and forecasts:

Broker reports

Media

Official government sources

C. Data consolidation and verification

Consolidation of data and opinion to create historical datasets

Creation of models to benchmark data across sectors and regions

3) Analysis

A. Market forecasts

Feeding forecast data into market models:

Macroeconomic indicators

Industry-specific drivers

Analysis of insurance industry database to identify trends:

Latest insurance trends

Key drivers of the insurance industry

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B. Report writing

Analysis of market data

Discussion of company and industry trends and issues

Review of financial deals and insurance trends

4) Quality Control

A. Templates

Detailed process manuals

Standardized report templates and accompanying style guides

Complex forecasting tool used to ensure forecast methodologies are consistently applied

Quality-control checklists

B. Quality control process

Peer review

Senior-level QC

Random spot checks on data integrity

Benchmark checks across databases

Market data cross-checked for consistency with accumulated data from:

Company filings

Government sources

Related Reports

Commercial Motor Insurance in the UK, Key Trends and Opportunities to 2018

Household Insurance in the UK, Key Trends and Opportunities to 2018

Public and Products Liability Insurance in the UK, Key Trends and Opportunities to 2018

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Table of Contents

1 Executive Summary ........................................................................................................ 2

Table of Contents ................................................................................................................... 3

2 Introduction ..................................................................................................................... 8

2.1 What is this Report About? ......................................................................................................................... 8

2.2 Definitions ................................................................................................................................................... 8

2.3 Methodology ............................................................................................................................................. 10

3 Market Analysis ............................................................................................................. 12

3.1 Market Size ............................................................................................................................................... 12

3.1.1 Penetration and density .................................................................................................................... 13

3.1.2 Comprehensive private motor insurance .......................................................................................... 14

3.1.3 Non-comprehensive private motor insurance ................................................................................... 15

3.1.4 Motorcycle insurance ........................................................................................................................ 16

3.1.5 Average private motor insurance premium....................................................................................... 17

3.2 Claims ....................................................................................................................................................... 18

3.2.1 Claims review ................................................................................................................................... 18

3.2.2 Motor insurance fraud ....................................................................................................................... 19

3.2.3 Claims outlook .................................................................................................................................. 20

3.3 Market Drivers .......................................................................................................................................... 22

3.4 Market Outlook ......................................................................................................................................... 23

3.5 Distribution Channels ............................................................................................................................... 25

4 Competitive Landscape ................................................................................................ 27

4.1 Review – The Best Performers of 2013 ................................................................................................... 27

4.2 Profitability ................................................................................................................................................ 28

4.3 Product Innovation ................................................................................................................................... 30

4.4 Private Motor Insurance – SWOT Analysis .............................................................................................. 31

5 Deals and News ............................................................................................................. 32

5.1 Aviva Seeks Consultation on Cashless Compensation ........................................................................... 32

5.2 Southern Rock Insurance Company Joins the IFB .................................................................................. 32

5.3 CMA Calls for Price Cap on Vehicle Replacement Charges ................................................................... 32

5.4 RSA Reduces Personal Motor Broker Business by More Than a Third .................................................. 32

5.5 Ageas Secures a Five Year Deal with John Lewis Insurance .................................................................. 32

5.6 Zurich Brand to Disappear from PCWs .................................................................................................... 32

5.7 Esure to Offer Reduced Premiums to Drivers of AEB–Fitted Cars .......................................................... 33

5.8 Legal and General Enters Personal Lines Motor Market ......................................................................... 33

5.9 Admiral Extends Reinsurance Deals to 2016 ........................................................................................... 33

6 Regulation and Compliance ......................................................................................... 34

6.1 Regulatory Changes ................................................................................................................................. 35

6.1.1 Continuous insurance requirements ................................................................................................. 35

6.1.2 Risk selection by gender has been outlawed ................................................................................... 35

6.1.3 The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) .......................................... 35

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6.1.4 The Ministry of Justice online portal extension ................................................................................. 35

6.1.5 Fixed fees for whiplash medical reports ........................................................................................... 35

6.1.6 Competition Commission investigation ............................................................................................. 36

6.1.7 Solvency II ........................................................................................................................................ 36

7 Economic Backdrop ...................................................................................................... 37

7.1 Real GDP Growth ..................................................................................................................................... 37

7.2 Growth in Private Car Registrations ......................................................................................................... 38

7.3 RPI and Motoring Costs ........................................................................................................................... 39

7.4 GDP Per Capita and Household Disposable Incomes ............................................................................. 40

8 Company Profiles .......................................................................................................... 41

8.1 Admiral Group Plc – Company Overview ................................................................................................. 41

8.1.1 Admiral Group Plc – key facts .......................................................................................................... 41

8.1.2 Admiral Group Plc – main products .................................................................................................. 41

8.1.3 Admiral Group Plc – main competitors ............................................................................................. 41

8.1.4 Admiral Group Plc – key employees ................................................................................................ 42

8.2 Ageas (UK) Ltd – Company Overview ..................................................................................................... 43

8.2.1 Ageas (UK) Ltd – key facts ............................................................................................................... 43

8.2.2 Ageas (UK) Ltd – main products ...................................................................................................... 43

8.2.3 Ageas (UK) Ltd – main competitors .................................................................................................. 43

8.2.4 Ageas (UK) Ltd – key employees ..................................................................................................... 44

8.3 Aviva Plc – Company Overview ............................................................................................................... 45

8.3.1 Aviva Plc – key facts ......................................................................................................................... 45

8.3.2 Aviva Plc – main products ................................................................................................................ 45

8.3.3 Aviva Plc – main competitors............................................................................................................ 45

8.3.4 Aviva Plc – key employees ............................................................................................................... 46

8.4 Axa UK Plc – Company Overview ............................................................................................................ 47

8.4.1 Axa UK Plc – key facts ..................................................................................................................... 47

8.4.2 Axa UK Plc – main products ............................................................................................................. 47

8.4.3 Axa UK Plc – main competitors ........................................................................................................ 47

8.4.4 Axa UK Plc – key employees ........................................................................................................... 48

8.5 Direct Line Insurance Group Plc – Company Overview ........................................................................... 49

8.5.1 Direct Line Insurance Group Plc – key facts .................................................................................... 49

8.5.2 Direct Line Insurance Group Plc – main products ............................................................................ 49

8.5.3 Direct Line Insurance Group Plc – main competitors ....................................................................... 49

8.5.4 Direct Line Insurance Group Plc – key employees .......................................................................... 50

8.6 Esure Group Plc – Company Overview ................................................................................................... 51

8.6.1 Esure Group Plc – key facts ............................................................................................................. 51

8.6.2 Esure Group Plc – main products ..................................................................................................... 51

8.6.3 Esure Group Plc – main competitors ................................................................................................ 51

8.6.4 Esure Group Plc – key employees ................................................................................................... 52

8.7 Great Lakes Reinsurance (UK) Plc – Company Overview ...................................................................... 53

8.7.1 Great Lakes Reinsurance (UK) Plc – key facts ................................................................................ 53

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8.7.2 Great Lakes Reinsurance (UK) Plc – main products ........................................................................ 53

8.7.3 Great Lakes Reinsurance (UK) Plc – main competitors ................................................................... 53

8.7.4 Great Lakes Reinsurance (UK) Plc – key employees ...................................................................... 54

8.8 Liverpool Victoria Group – Company Overview ....................................................................................... 55

8.8.1 Liverpool Victoria Group – key facts ................................................................................................. 55

8.8.2 Liverpool Victoria Group – main products ........................................................................................ 55

8.8.3 Liverpool Victoria Group – main competitors ................................................................................... 55

8.8.4 Liverpool Victoria Group – key employees ....................................................................................... 56

8.9 Royal & Sun Alliance Insurance Plc – Company Overview ..................................................................... 57

8.9.1 Royal & Sun Alliance Insurance Plc – key facts ............................................................................... 57

8.9.2 Royal & Sun Alliance Insurance Plc – main products ...................................................................... 57

8.9.3 Royal & Sun Alliance Insurance Plc – main competitors .................................................................. 57

8.9.4 Royal & Sun Alliance Insurance Plc – key employees ..................................................................... 58

8.10 Zurich Insurance Plc – Company Overview ............................................................................................. 59

8.10.1 Zurich Insurance Plc – key facts ....................................................................................................... 59

8.10.2 Zurich Insurance Plc – main products .............................................................................................. 59

8.10.3 Zurich Insurance Plc – main competitors ......................................................................................... 59

8.10.4 Zurich Insurance Plc – key employees ............................................................................................. 60

9 Statistics ........................................................................................................................ 61

9.1 Review Period .......................................................................................................................................... 61

9.2 Forecast Period ........................................................................................................................................ 61

10 Appendix ........................................................................................................................ 62

10.1 Methodology ............................................................................................................................................. 62

10.2 Contact Timetric ....................................................................................................................................... 62

10.3 About Timetric .......................................................................................................................................... 62

10.4 Timetric’s Services ................................................................................................................................... 63

10.5 Disclaimer ................................................................................................................................................. 64

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List of Figures

Figure 1: UK Private Motor Insurance – Gross Written Premiums (GBP Million), 2009–2013 ....................................................................... 12 Figure 2: UK Private Motor Insurance – Penetration Rate (%) and Density (GBP), 2009–2013 ................................................................... 13 Figure 3: UK Comprehensive Private Motor Insurance – Gross Written Premiums (GBP Million), 2009–2013 ............................................. 14 Figure 4: UK Non-Comprehensive Private Motor Insurance – Gross Written Premiums (GBP Million), 2009–2013 ..................................... 15 Figure 5: UK Motorcycle Insurance – Gross Written Premiums (GBP Million), 2009–2013 .......................................................................... 16 Figure 6: UK Private Motor Insurance – Net Claims Paid and Incurred (GBP Million), 2009–2013 ............................................................... 18 Figure 7: Reported Road Accidents and Motor Injury Compensation Claims, 2006–2013 ............................................................................ 19 Figure 8: UK Private Motor Insurance – Gross Written Premiums Forecast (GBP Million), 2014–2018 ........................................................ 23 Figure 9: Private Motor Insurance Growth Dynamics by Product (%), 2009–2018 ....................................................................................... 24 Figure 10: UK Commissions Paid by Private Motor Insurers (GBP Million), 2009–2013 ............................................................................... 26 Figure 11: UK Market Shares of the Top 10 Private Motor Insurers (%), 2013 ............................................................................................. 27 Figure 12: Combined Operating Ratio for Total UK Private Motor Business (%), 2009–2013 ....................................................................... 28 Figure 13: Loss and Expenses Ratios for Total UK Private Motor Business (%), 2009–2013 ....................................................................... 29 Figure 14: The UK’s Insurance Regulatory Framework ................................................................................................................................ 34 Figure 15: UK Real GDP (Million) and Quarter-on-Quarter Growth (%), 2007–2014 .................................................................................... 37 Figure 16: Number of Licensed Vehicles in the UK (Millions), 2003–2013 ................................................................................................... 38 Figure 17: Motor-Related Inflation Versus Headline RPI Rate (%), 2000–2013............................................................................................ 39 Figure 18: UK Improving Living Standards (GBP), 1997–2013 .................................................................................................................... 40

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List of Tables

Table 1: Insurance Industry Definitions .......................................................................................................................................................... 9 Table 2: UK Average Private Comprehensive Motor Insurance Premiums (GBP), Q1 2012–Q2 2014 ......................................................... 17 Table 3: UK Private Motor Insurance – Market Summary, 2009–2013 ......................................................................................................... 21 Table 4: UK Private Motor Insurance – SWOT Analysis............................................................................................................................... 31 Table 5: Admiral Group Plc – Key Facts ...................................................................................................................................................... 41 Table 6: Admiral Group Plc – Main Products ............................................................................................................................................... 41 Table 7: Admiral Group Plc – Key Employees ............................................................................................................................................. 42 Table 8: Ageas (UK) Ltd – Key Facts ........................................................................................................................................................... 43 Table 9: Ageas (UK) Ltd – Main Products .................................................................................................................................................... 43 Table 10: Ageas (UK) Ltd – Key Employees ................................................................................................................................................ 44 Table 11: Aviva Plc – Key Facts .................................................................................................................................................................. 45 Table 12: Aviva Plc – Main Products ........................................................................................................................................................... 45 Table 13: Aviva Plc – Key Employees ......................................................................................................................................................... 46 Table 14: Axa UK Plc – Key Facts ............................................................................................................................................................... 47 Table 15: Axa UK Plc – Main Products ........................................................................................................................................................ 47 Table 16: Axa UK Plc – Key Employees ...................................................................................................................................................... 48 Table 17: Direct Line Insurance Group Plc – Key Facts ............................................................................................................................... 49 Table 18: Direct Line Insurance Group Plc – Main Products ........................................................................................................................ 49 Table 19: Direct Line Insurance Group Plc – Key Employees ...................................................................................................................... 50 Table 20: Esure Group Plc – Key Facts ....................................................................................................................................................... 51 Table 21: Esure Group Plc – Main Products ................................................................................................................................................ 51 Table 22: Esure Group Plc – Key Employees .............................................................................................................................................. 52 Table 23: Great Lakes Reinsurance (UK) Plc – Key Facts ........................................................................................................................... 53 Table 24: Great Lakes Reinsurance (UK) Plc – Main Products .................................................................................................................... 53 Table 25: Great Lakes Reinsurance (UK) Plc – Key Employees .................................................................................................................. 54 Table 26: Liverpool Victoria Group – Key Facts ........................................................................................................................................... 55 Table 27: Liverpool Victoria Group – Main Products .................................................................................................................................... 55 Table 28: Liverpool Victoria Group – Key Employees .................................................................................................................................. 56 Table 29: Royal & Sun Alliance Insurance Plc – Key Facts .......................................................................................................................... 57 Table 30: Royal & Sun Alliance Insurance Plc – Main Products ................................................................................................................... 57 Table 31: Royal & Sun Alliance Insurance Plc – Key Employees ................................................................................................................. 58 Table 32: Zurich Insurance Plc – Key Facts ................................................................................................................................................. 59 Table 33: Zurich Insurance Plc – Main Products .......................................................................................................................................... 59 Table 34: Zurich Insurance Plc – Key Employees ........................................................................................................................................ 60 Table 35: UK Private Motor Insurance – Historical Statistics, 2009–2013 .................................................................................................... 61 Table 36: UK Private Motor Insurance – Forecast Statistics, 2014–2018 ..................................................................................................... 61

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