| KN66013 |
| KEY NOTE INSURANCE INDUSTRY : October 2003 |
|
|
CLICK
 TO BUY |
This report covers: insurance, industry, market,
long-term insurance, pensions, annuities, income-protection, critical-illness,
general, motor, property, accident and health, general liablility,
pecuniary-loss,
Companies covered include: Aegon UK, Allianz Cornhill,
Aviva, AXA Insurance, Barclays Life, The British United Provident Association,
Co-operative Insurance Society, Credit Suisse Group, Direct Line Insurance,
HBOS, Legal & General, Lloyds TSB, NFU Mutual, Prudential, Royal & Sun
Alliance, Standard Life Assurance, Zurich Financial,
EXECUTIVE SUMMARY
| This Market Review examines the UK market for insurance and the industry that supplies it with insurance products. Two broad sectors are covered: long-term insurance and general insurance. Long-term insurance includes life insurance, pensions, annuities, income-protection insurance and critical-illness insurance, while general insurance includes motor insurance, property insurance, accident and health insurance, general liability insurance and pecuniary-loss insurance. |
| When this report was published, in October 2003, the industry was struggling to reduce its costs and shore up its asset base. According to the Association of British Insurers (ABI), the UK market was worth £129.74bn in 2002 — a higher figure than that for 2001 but still well below the value seen in 2000. The only crumb of comfort for the industry is that premium rates for general insurance have been rising, but even in this sector there are concerns that rates may weaken after 2004. To make matters worse, the industry faces a mass of new regulations from the Financial Services Authority (FSA), which, though necessary, will increase the industry's cost base. |
| The greatest change in the market since 2000 has been that revenues from general insurance have been growing more quickly than those from long-term insurance. This effectively reverses a trend that began at least as far back as the 1980s. In the 1990s, especially, long-term insurance was by far the more attractive sector of the market for most insurers — it was growing rapidly and was not subject to the price pressures that general insurance was experiencing. Today, all that has changed. Life and pensions products are not selling as well as they did in 2000, and premium rates for general insurance have risen. Long-term insurance still represents around 77 percent of the market in value terms, but the shine has gone off the sector. |
| The main worry for general insurers — and it is a growing worry — is that claims are rising in every sector of the market. Fraud is another concern, and profitability remains weak in sectors such as motor insurance and property insurance. The most dynamic areas of the market are general liability insurance and pecuniary-loss insurance. |
| As the industry suffers from low stock-market yields and a much-reduced asset base, payouts on long-term insurance policies are being reduced by as much as 10 percent. Not surprisingly, a consumer survey commissioned by Key Note for this report found that people have very real worries about the value of their pensions when they become due. The survey also found that many more people are switching their insurer than was the case in 2001, when Key Note conducted its last major survey of attitudes towards insurance. |
| Key Note forecasts only modest growth for the market as a whole between 2003 and 2007. Premium income from general insurance is likely to grow much more rapidly than that from long-term insurance. At the same time, cost pressures are likely to force more firms to merge or to withdraw from sectors that they find unprofitable. |
TABLE OF CONTENTS
| Executive Summary |
| 1. Industry Overview |
| REPORT COVERAGE |
| ECONOMIC TRENDS |
| Population |
| Table 1.1: UK Resident Population Estimates by Sex (000), Mid-Years 1998-2002 |
| Gross Domestic Product |
| Table 1.2: UK Gross Domestic Product at Current and Constant 1995 Prices (£m), 1998-2002 |
| Inflation |
| Table 1.3: UK Rate of Inflation ( percent), 1998-2002 |
| Unemployment |
| Table 1.4: Actual Number of Unemployed Persons in the UK (million), 1998-2002 |
| MARKET SIZE |
| Table 1.5: The UK Insurance Market by Sector by Net Premium Income (£m), 1998-2002 |
| MARKET SEGMENTATION |
| Long-Term Insurance |
| Life Insurance |
| Pensions |
| Annuities |
| Income-Protection Insurance |
| Critical-Illness Insurance |
| General Insurance |
| Motor Insurance |
| Property Insurance |
| Accident and Health Insurance |
| General Liability Insurance |
| Pecuniary-Loss Insurance |
| INDUSTRY STRUCTURE |
| Lloyd's of London |
| INDUSTRY SYNOPSIS |
| Life Insurance |
| Table 1.6: Average Financial Performance of Companies Engaged in Life Insurance† (£000, percent and £), 2001/2002 |
| General Insurance |
| Table 1.7: Average Financial Performance of Companies Engaged in Non-Life Insurance† (£000, percent and £), 2001/2002 |
| INDUSTRY CONCENTRATION |
| EMPLOYMENT |
| Table 1.8: Number of UK VAT-Based Local Units Engaged in Life Insurance and Non-Life Insurance by Number of Employees, 2003 |
| DISTRIBUTION |
| Insurance Distribution Channels |
| Direct Sales Forces |
| Direct Marketing |
| Telesales |
| Independent Intermediaries |
| Independent Financial Advisers |
| Tied Agents |
| Banks/Building Societies |
| Market Shares |
| MARKET POSITION |
| KEY TRENDS |
| Practical Difficulties |
| Operational Complexity |
| Commoditisation and Niches |
| LEGISLATION |
| KEY TRADE ORGANISATIONS |
| Association of British Insurers |
| International Underwriting Association |
| Lloyd's of London |
| National Association of Pension Funds |
| 2. PEST Analysis |
| INTRODUCTION |
| POLITICAL FACTORS |
| ECONOMIC FACTORS |
| SOCIAL FACTORS |
| TECHNOLOGICAL FACTORS |
| 3. Key Note Primary Research |
| INTRODUCTION |
| SURVEY RESULTS |
| Satisfaction with the Claims Process |
| Table 3.1: Those Who Were Satisfied with the Claims Process by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.2: Those Who Were Satisfied with the Claims Process by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.3: Those Who Were Satisfied with the Claims Process by Region ( percent of respondents), 2003 |
| Perception of Value for Money |
| Life Insurance |
| Table 3.4: Those Who Consider That Their Life Insurance Policy Gives Value for Money by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.5: Those Who Consider That Their Life Insurance Policy Gives Value for Money by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.6: Those Who Consider That Their Life Insurance Policy Gives Value for Money by Region ( percent of respondents), 2003 |
| Pension |
| Table 3.7: Those Who Consider That Their Pension Policy Gives Value for Money by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.8: Those Who Consider That Their Pension Policy Gives Value for Money by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.9: Those Who Consider That Their Pension Policy Gives Value for Money by Region ( percent of respondents), 2003 |
| Motor Insurance |
| Table 3.10: Those Who Consider That Their Motor Insurance Policy Gives Value for Money by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.11: Those Who Consider That Their Motor Insurance Policy Gives Value for Money by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.12: Those Who Consider That Their Motor Insurance Policy Gives Value for Money by Region ( percent of respondents), 2003 |
| Property Insurance |
| Table 3.13: Those Who Consider That Their Property Insurance Policy Gives Value for Money by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.14: Those Who Consider That Their Property Insurance Policy Gives Value for Money by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.15: Those Who Consider That Their Property Insurance Policy Gives Value for Money by Region ( percent of respondents), 2003 |
| Medical Insurance |
| Table 3.16: Those Who Consider That Their Medical Insurance Policy Gives Value for Money by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.17: Those Who Consider That Their Medical Insurance Policy Gives Value for Money by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.18: Those Who Consider That Their Medical Insurance Policy Gives Value for Money by Region ( percent of respondents), 2003 |
| Propensity to Change Insurers |
| Life Insurance |
| Table 3.19: Those Who Had Changed Their Life Insurer in the Previous 12 Months by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.20: Those Who Had Changed Their Life Insurer in the Previous 12 Months by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.21: Those Who Had Changed Their Life Insurer in the Previous 12 Months by Region ( percent of respondents), 2003 |
| Pension |
| Table 3.22: Those Who Had Changed Their Pension Provider in the Previous 12 Months by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.23: Those Who Had Changed Their Pension Provider in the Previous 12 Months by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.24: Those Who Had Changed Their Pension Provider in the Previous 12 Months by Region ( percent of respondents), 2003 |
| Motor Insurance |
| Table 3.25: Those Who Had Changed Their Motor Insurer in the Previous 12 Months by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.26: Those Who Had Changed Their Motor Insurer in the Previous 12 Months by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.27: Those Who Had Changed Their Motor Insurer in the Previous 12 Months by Region ( percent of respondents), 2003 |
| Property Insurance |
| Table 3.28: Those Who Had Changed Their Property Insurer in the Previous 12 Months by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.29: Those Who Had Changed Their Property Insurer in the Previous 12 Months by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.30: Those Who Had Changed Their Property Insurer in the Previous 12 Months by Region ( percent of respondents), 2003 |
| Medical Insurance |
| Table 3.31: Those Who Had Changed Their Medical Insurer in the Previous 12 Months by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.32: Those Who Had Changed Their Medical Insurer in the Previous 12 Months by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.33: Those Who Had Changed Their Medical Insurer in the Previous 12 Months by Region ( percent of respondents), 2003 |
| Concerns About the Financial Health of Insurers |
| Table 3.34: Those Who Were Concerned About the Financial Health of Their Insurance Company by Sex and Age ( percent of respondents), 2001 and 2003 |
| Table 3.35: Those Who Were Concerned About the Financial Health of Their Insurance Company by Social Grade ( percent of respondents), 2001 and 2003 |
| Table 3.36: Those Who Were Concerned About the Financial Health of Their Insurance Company by Region ( percent of respondents), 2003 |
| Confidence in the Final Value of Pension/Annuity Payments |
| Table 3.37: Level of Confidence in the Final Value of Pension/Annuity Payments by Age and Sex ( percent of respondents), 2003 |
| Table 3.38: Level of Confidence in the Final Value of Pension/Annuity Payments by Social Grade ( percent of respondents), 2003 |
| Table 3.39: Level of Confidence in the Final Value of Pension/Annuity Payments by Region ( percent of respondents), 2003 |
| 4. Competitive Structure |
| THE MARKETPLACE |
| MARKET LEADERS |
| Table 4.1: The Top Ten Companies in the UK Markets for Long-Term Insurance and General Insurance by UK Net Premium Income (£m), 2001 and 2002 |
| AEGON UK PLC |
| Company Structure |
| Financial Results |
| Allianz Cornhill Insurance PLC |
| Company Structure |
| Financial Results |
| Aviva PLC |
| Company Structure |
| Financial Results |
| AXA Insurance PLC |
| Company Structure |
| Financial Results |
| Barclays Life |
| Company Structure |
| Financial Results |
| The British United Provident Association Ltd |
| Company Structure |
| Financial Results |
| Co-operative Insurance Society Ltd |
| Company Structure |
| Financial Results |
| Credit Suisse Group |
| Company Structure |
| Financial Results |
| Direct Line Insurance PLC |
| Company Structure |
| Financial Results |
| HBOS PLC |
| Company Structure |
| Financial Results |
| Legal & General Group PLC |
| Company Structure |
| Financial Results |
| Lloyds TSB Group PLC |
| Company Structure |
| Financial Results |
| NFU Mutual Insurance Society Ltd |
| Company Structure |
| Financial Results |
| Prudential PLC |
| Company Structure |
| Financial Results |
| Royal & Sun Alliance Insurance Group PLC |
| Company Structure |
| Financial Results |
| The Standard Life Assurance Company |
| Company Structure |
| Financial Results |
| Zurich Financial Services |
| Company Structure |
| Financial Results |
| Other Companies |
| MARKETING ACTIVITY |
| Main Media Expenditure |
| Table 4.2: Main Media Expenditure on Insurance by Sector (£000), Years to March 2001 and 2003 |
| 5. Long-Term Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 5.1: The UK Market for Long-Term Insurance by Net Premium Income (£m), 1998-2002 |
| Table 5.2: The UK Market for Long-Term Insurance by Sector by Net Premium Income (£m), 1998-2002 |
| Policies in Force |
| Life Insurance |
| Table 5.3: Regular-Premium Individual-Life Business in Force in the UK — Linked and Non-Linked Policies (000 policies and £m), 1998-2002 |
| Personal Pensions |
| Table 5.4: Personal Pensions in Force in the UK (000 policies and £m), 1998-2002 |
| Annuities |
| Table 5.5: Purchased Ordinary-Branch Life Annuities (Immediate) in Force in the UK (000 and £m), 1998-2002 |
| Income-Protection Insurance |
| Table 5.6: Income-Protection Policies in Force in the UK (000 policies and £m), 1998-2002 |
| Critical-Illness Insurance |
| New Business |
| Regular-Premium Business |
| Table 5.7: New Individual Regular-Premium Business by Sector (£m), 1998-2002 |
| Single-Premium Business |
| Table 5.8: New Individual Single-Premium Business by Sector (£m), 1998-2002 |
| Group Business |
| Table 5.9: New Regular-Premium and Single-Premium Group Business (£m), 1998-2002 |
| Benefits Paid |
| Table 5.10: Long-Term Insurance Benefits Paid in the UK by Sector (£m), 1998-2002 |
| SUPPLY STRUCTURE |
| Table 5.11: Breakdown of New Long-Term Insurance Business by Distribution Channel ( percent of premiums), 1998-2002 |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 5.12: The Forecast UK Market for Long-Term Insurance by Net Premium Income (£m), 2003-2007 |
| 6. Motor Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 6.1: The UK Market for Motor Insurance by Net Premium Income (£m), 1998-2002 |
| Profitability |
| Table 6.2: The UK Market for Motor Insurance — Underwriting Result (£m and percent), 1998-2002 |
| Claims |
| Table 6.3: The UK Market for Motor Insurance — Breakdown of Insurers' Outgoing Expenditure (£m), 1998-2002 |
| By Type |
| Table 6.4: The UK Market for Motor Insurance — Private Motor Claims Experience by Type of Policy (000 claims and £m), 1998-2002 |
| Table 6.5: The UK Market for Motor Insurance — Commercial and Fleet Motor Claims Experience (000 claims and £m), 1998-2002 |
| Theft Claims |
| Table 6.6: The UK Market for Motor Insurance — Private, Commercial and Fleet Motor Theft Claims Settled (000 claims and £m), 1998-2002 |
| SUPPLY STRUCTURE |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 6.7: The Forecast UK Market for Motor Insurance by Net Premium Income (£m), 2003-2007 |
| 7. Property Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 7.1: The UK Market for Property Insurance by Net Premium Income (£m), 1998-2002 |
| Profitability |
| Table 7.2: The UK Market for Property Insurance — Underwriting Result (£m and percent), 1998-2002 |
| Claims |
| Table 7.3: The UK Market for Property Insurance — Domestic Claims Experience by Type of Claim (£m), 1998-2002 |
| Table 7.4: The UK Market for Property Insurance — Commercial Claims Experience by Type of Claim (£m), 1998-2002 |
| Table 7.5: The UK Market for Property Insurance — Domestic and Commercial Claims Experience by Type of Claim (£m), 1998-2002 |
| SUPPLY STRUCTURE |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 7.6: The Forecast UK Market for Property Insurance by Net Premium Income (£m), 2003-2007 |
| 8. Accident and Health Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 8.1: The UK Market for Accident and Health Insurance by Net Premium Income (£m), 1998-2002 |
| Profitability |
| Table 8.2: The UK Market for Accident and Health Insurance — Underwriting Result (£m and percent), 1998-2002 |
| Claims |
| Table 8.3: The UK Market for Accident and Health Insurance — Breakdown of Insurers' Outgoing Expenditure (£m), 1998-2002 |
| Private Medical Insurance |
| Table 8.4: The UK Market for Private Medical Insurance by Type of Purchase (000 subscribers and £m), 1998-2002 |
| SUPPLY STRUCTURE |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 8.5: The Forecast UK Market for Accident and Health Insurance by Net Premium Income (£m), 2003-2007 |
| 9. General Liability Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 9.1: The UK Market for General Liability Insurance by Net Premium Income (£m), 1998-2002 |
| Profitability |
| Table 9.2: The UK Market for General Liability Insurance — Underwriting Result (£m and percent), 1998-2002 |
| SUPPLY STRUCTURE |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 9.3: The Forecast UK Market for General Liability Insurance by Net Premium Income (£m), 2003-2007 |
| 10. Pecuniary-Loss Insurance |
| DEFINITION |
| KEY TRENDS |
| MARKET SIZE |
| Table 10.1: The UK Market for Pecuniary-Loss Insurance by Net Premium Income (£m), 1998-2002 |
| Profitability |
| Table 10.2: The UK Market for Pecuniary-Loss Insurance — Underwriting Result (£m and percent), 1998-2002 |
| SUPPLY STRUCTURE |
| MAJOR PLAYERS |
| FORECASTS 2003 TO 2007 |
| Table 10.3: The Forecast UK Market for Pecuniary-Loss Insurance by Net Premium Income (£m), 2003-2007 |
| 11. A Global Perspective |
| THE TOP TEN INSURANCE MARKETS |
| Table 11.1: The World's Top Ten Insurance Markets by Premium Income ($m and percent), 2001 |
| 12. The Future |
| INTRODUCTION |
| The Economy |
| Table 12.1: Government Forecasts for the UK Economy (000, percent and million), 2003-2007 |
| FORECASTS 2003 TO 2007 |
| Table 12.2: The Forecast UK Insurance Market by Sector by Net Premium Income (£m), 2003-2007 |
| FUTURE TRENDS |
| Growth Sectors |
| Concerns |
| New Risks |
| A New Pattern of Claims |
| Innovation |
| Structural Change |
| 13. Further Sources |
| Associations |
| General Sources |
| Bonnier Information Sources |
| Government Publications |
| Other Sources |
Text © 2004 Key Note
| Can't find what you
need? Try our "Research on Request" market report service and define your own report research! Fixed prices - £150, £450 and £1,250 - and fixed delivery of 4, 5 and 14 days |
| Click here for full details |
Ariadne - working together with our customers
to enhance productivity and increase knowledge
© 2004
www.the-list.co.uk Ariadne
Last updated by Amanda Porteous February 2004
