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MP66092

MAPS GENERAL INSURANCE 2002

Overview

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This report covers: General Insurance,household insurance,buildings insurance,contents insurance,motor insurance,mortgage protection insurance,travel insurance,health insurance,accident insurance,

Companies covered include: CGNU,Royal & Sun Alliance,AXA,Zurich Financial Services, Cornhill,Churchill,BUPA,Groupama,

Editor: Simon Taylor
ISBN: 1-86111-378-1

Table of Contents
Executive Summary
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TABLE OF CONTENTS

Executive Summary

1. Introduction

2. Strategic Overview

Market Dynamics and Segmentation

Market Sectors Covered

Current Status of the Market

Table 1: The Largest General Insurers (£m), 1999

Figure 1: The Largest General Insurers (£m), 1999

Total Industry Value and Growth

Figure 2: UK Total Premium Income by Class (£bn), 1995-2000e

Largest Sectors and Market Share

Market with Highest Growth Rate

Market with Lowest Growth Rate

Distribution

Table 4: UK Sources of Total General Insurance Business Premiums ( percent and £bn), 1995-2000

Table 5: UK General Insurance Sources of Personal Lines Business ( percent and £bn), 1995-2000

Competitive structure

Table 6: Recent Mergers and Acquisitions in the UK General Insurance Industry, 1998-2000

Advertising

Table 7: Top General Insurance Advertising Spend (£m), April 1999/2000-March 2000/2001

The Consumer

Unemployment and Earnings

Table 8: UK Claimant Unemployment and Average Earnings Growth Rate ( percent), 1997-2000

Prices, Interest Rates and Savings

Table 9: Consumer Expenditure, Retail Prices (1995=100), 1997-2000

Market forecasts

Corporate governance

Table 11: Asset Holdings of Insurance Companies ( percent), 1998

Figure 3: Asset Holdings of Insurance Companies ( percent), 1998

3. Motor Insurance

Background

Consumer trends

Table 12: Exposure and Total Claims for Private Cars (000 and percent), 1996-2000

Table 13: Yearly Expenditure on Motor Insurance(£ per household), 1995-2000

Table 14: Annual Expenditure on Motor Insurance by Income Decile (£ per household), 1998/1999 and 1999/2000

Marketing activity

Advertising

Table 15: Top Motor Insurance Advertising Expenditure (£m), April 2000-March 2001

Figure 4: Top Motor Insurance Advertising Expenditure (£m), April 2000-March 2001

4. Household Insurance

Buildings Insurance

Contents Insurance

Market size

Table 16: Concentration in the Property Insurance Market ( percent) , 1999

Figure 5: Concentration in the Property Insurance Market ( percent), 1999

Table 17: UK Property Underwriting Results (£m), 1995-2000

Table 18: Property Insurance Total Claims for Major Perils (£m), 1995-2000

Figure 6: Property Insurance Claims for Major Perils (£m), 1995-2000e

Distribution

Table 19: Sources of Personal Household Insurance Premiums ( percent and £bn), 1995-2000

Consumer trends

Table 20: Yearly Expenditure on Household Insurance (£ per household and percent), 1995-2000

Table 21: Annual Expenditure on Structure Insurance by Income Decile (£ per household), 1998/1999 and 1999/2000

Table 22: Annual Expenditure on Contents Insurance by Income Decile (£ per household), 1998/1999 and 1999/2000

Table 23: Annual Expenditure on Combined Structure and Contents Insurance by Income Decile (£ per household), 1998/1999 and 1999/2000

Table 24: Annual Expenditure on Mortgage Protection Insurance by Income Decile (£ per household), 1999/2000

Marketing

Figure 7: Top Home Insurance Brands Advertised (£m), April 2000-March 2001

Pecuniary loss: Mortgage payment protection Insurance and mortgage indemnity insurance

Table 26: UK Pecuniary Loss Underwriting Results (£m), 1995-2000

Table 27: Largest Insurers in Miscellaneous and Pecuniary Loss (£m), 1999

Suppliers of household insurance

Table 28: Largest Domestic Household Insurers (£m), 1999

5. Travel Insurance

Market shares

Consumer trends

Table 29: Visits Abroad by UK Residents (millions), 1981, 1991, 1996-2000e

Table 30: Annual Expenditure on Travel Insurance (£ per household), 1996/1997- 1999/2000e†

Table 31: Annual Expenditure on Travel Insurance by Income Decile (£ per household), 1998/1999

Marketing activity

Distribution

6. Accident and Health

Personal accident

Permanent medical insurance

Long-Term Care

Table 32: Projections for the Cost of Long-Term Care (£bn) 1995-2051

Sickness Insurance

Market shares

Table 33: Market Concentration in the Accident and Health Market ( percent), 1999

Table 34: UK Accident and Health Underwriting Results (£m) 1995-2000

Market size

Table 36: Market Share of Premiums by Insurer ( percent), 1998

Consumer trends

Table 37: Annual Expenditure on Medical Insurance (£ per household), 1994/1995-1999/2000

Table 38: Annual Expenditure on Medical Insurance by Income Decile (£ per household), 1998/1999 and 1999/2000

Table 39: Annual Expenditure on Personal Accident Insurance by Income Decile (£ per household), 1999/2000

MARKETING ACTIVITY

Distribution

Table 40: Largest Accident and Health Insurers (£m), 1999

7. General Liability

Market shares

Table 41: Largest Third-Party Liability Insurers (£m), 1999

Table 42: UK General Liability Underwriting Results (£m), 1995-2000e

8. An International Perspective

Insurance density

Table 43: Non-Life Insurance Density in the 10 Largest Insurance Markets (£ per head), 1995 and 1998

The importance of life and non-life business

Table 44: The Importance of Life and Non-Life Business by Region ( percent), 1998

9. PEST Analysis

Political factors

General Insurance Standards Council

Economic factors

Social factors

Technological factors

10. Consumer Dynamics

Overview

Table 45: Ranked Comparison of 1998 and 2001 Questionnaire Answers

Use of television advertising and of Ceefax/Teletext

Table 46: Television Advertising and Ceefax/Teletext ( percent respondents), 2001

Television

Ceefax and Teletext

Use of newspaper/magazine advertising, or the Internet

Table 47: Newspaper Advertising and The Internet ( percent respondents), 2001

Newspapers and Magazines

Internet

Reference to company reputation or personal recommendation

Table 48: Company Reputation and Personal Recommendation ( percent respondents), 2001

Reputation

Word of Mouth

Attraction of incentives and Need for face-to-face contact

Table 49: Promotions and Incentives; Need for Face-to-Face Contact ( percent respondents), 2001

Promotions or Incentives are Important

Face-to-Face Contact

Use of telephone to organise insurance or electronic purchase of insurance

Table 50: Organising Insurance Over the Telephone; Electronic Purchase ( percent respondents), 2001

Organising Insurance Over the Telephone

Electronic Insurance

Renewal without review and clearly laid-out packages

Table 51: Renewal Without Reviewing; Clearly Laid-Out Packages ( percent respondents), 2001

Renewal Without Checking

Guarantee of No Hidden Clauses

Small print to be clearly laid out

Table 52: Clauses Laid Out Clearly; Don't Know/None of These ( percent respondents), 2001

Small Print Laid Out Clearly

Don't Know/None of These

11. Company/Supplier Profiles

CGNU

Corporate Strategy

Strengths and Weaknesses

Innovations

Appointments

Advertising

Significant Advertising Campaigns

Distribution

Profitability

Future Company Developments

Royal & Sun alliance

Corporate Strategy

Strengths and Weaknesses

New-Product Development

Brand Development

Innovations

Appointments

Advertising

Significant Advertising Campaigns

Distribution

Profitability

Future Company Developments

AXA

Corporate Strategy

New-Product Development

Brand Development

Appointments

Advertising

Distribution

Profitability

Zurich financial services

Corporate Strategy

Appointments

Distribution

Profitability

Cornhill (Allianz)

Corporate Strategy

Strengths and Weaknesses

Appointments

Advertising

Significant Advertising Campaigns

Distribution

Profitability

Direct line insurance/privilege

Corporate Strategy

Strengths and Weaknesses

New-Product Development

Brand Development

Appointments

Advertising

Distribution

Profitability

Churchill (Winterthur/ Credit suisse)

Corporate Strategy

Strengths and Weaknesses

Appointments

Advertising

Significant Advertising Campaigns

Distribution

Profitability

BUPA

Corporate Strategy

Appointments

Advertising

Distribution

Profitability

Groupama

Corporate Strategy

Strengths and Weaknesses

Appointments

Distribution

Profitability

12. The Future

Market size

Table 53: UK Net Written Premiums, General Business by Class (£bn), 2001-2005

Table 54: UK General Business Net Written Premium by Class ( percent), 2001 -2006

Consumer issues

Table 55: Forecast Change in Average Earnings, Unemployment, Retail Price Index, Interest Rates, 2001-2005

Supplier issues

Suppliers

Table 56: UK Sources of Total General Insurance Business ( percent), 2001-2006

Demographic changes

Population Trends

Table 57: Population of the UK, by Gender and Age ( percent and million), 1991-2026

Forecasts of Motor Insurance

Table 58: Yearly Forecast Annual Expenditure on Motor Insurance Premiums (£ per household), 2000-2006

Forecasts of Household Insurance

Table 59: Yearly Forecast Expenditure on Household Insurance (£ per household), 2000-2005

Forecasts of Travel Insurance

Table 60: Forecast Travel Insurance Market Size (£m), 2001-2005

Figure 8: Forecast Travel Insurance Market Size (£m), 2001-2005

Forecasts of Medical Insurance

Table 61: Yearly Expenditure on Medical Insurance (£ per household), 2000/-2006

Market dynamics

Political

Economics

Social

Technology

Internet

Table 62: Forecast for Users of Insurance Companies on the Internet (millions), 2000-2006

Advertising

Prospects

13. Further Sources

Trade Associations

Companies

Trade Journals

Marketing/National Press

Miscellaneous Sources

General Sources

Bonnier Information Sources

Government and Official

Key Note Research

The Key Note Range of Reports

EXECUTIVE SUMMARY

Risk has rarely been so pervasive in peacetime, as today, and this report demonstrates the role general insurance plays in preserving the fabric of society.

With the aid of a survey of 1,116 adults undertaken, between 10th and 15th May 2001, Key Note summarises the issues that the buyers of insurance want to raise, which include insurance policies spelt out in plain English and policies to cover them properly, without obscure get-out clauses.

The general insurance industry has undergone radical consolidation during the last 3 years, resulting in an industry dominated by five giant companies, only 2 of which are UK-centred. This has implications for competition, because premiums are able to rise faster in an oligopolistic market than in one with many equal players.

The distribution of insurance has continued to change gradually, as the company agent continues to lose market share to direct methods of insurance selling. The impact of the Internet is still tiny, although considerable effort is being exerted to increase the use of sites. The role of the independent financial adviser has not been superseded entirely, and the increased complexity of products in the market is likely to put a premium on the role of adviser.

Motor insurance is an area where competition is still fierce, and there are innovative or cost-cutting companies that widely advertise their websites and telephone contact numbers. Aggregators are already entering this market, though it is too early to say whether they will take market share from more traditional players. Although Direct Line is a dominant player, other traditional providers are producing interesting sites. The distribution of motor insurance through the population is still low, particularly among the poorer deciles.

Household insurance is a lot less dynamic. The rise in house prices may have increased the amount of insurance taken out, but the level of competition is lower. Buildings insurance is more valuable than contents insurance, but the link with mortgage lenders remains strong, and the traditional insurers dominate. Contents insurance is different — clearly the number of households without it is large, and social policy will have to be brought into play to ensure a larger market penetration for contents protection.

Travel insurance is an example of a competitive market where traditional insurers act as suppliers to retailers, offering travel insurance as a commodity. Here, too, there is a considerable need to penetrate the market further.

Accident and health insurance is vital to ensure that people are able to recover from bad luck and remain useful members of the community. The markets are not as large as they could be, and the penetration of health insurance through society remains very low. There are issues of price and suitability of products.

This report looks at the future for the main players in the general insurance industry in the aftermath of the World Trade Centre disaster, and considers political, social, economic and technological issues. Key Note concludes that technology is no longer the exciting answer to the problems of the industry — in a dangerous world, the insurer is an increasingly vital part of the social structure and has a responsible role to play.

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Last updated by Amanda Porteous May 2002