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The personal lines insurance market has reached a level where products are priced at such a low rate that shopping around for better deals-which is common across the four main product categories (motor, home, travel, and pet)-is becoming a thankless task with limited benefits. Intense competition has driven rates down to a level where switching provider is beginning to offer little in terms of cost savings. As a result, automatic renewals have increased in most distribution channels and product categories. This trend is set to continue unless a hardening of rates is brought about or capacity is reduced.
Almost half of policies across all of the personal lines markets are distributed through the direct channel.
Price comparison site usage has fallen but they remain an important port of call for customers-whether for research, quote comparison, or regular sales purposes.
The online channel remains important to consumers purchasing personal lines as the use of digital devices has become ubiquitous and internet usage gains in popularity.
Verdict Financial's "UK Personal Lines Distribution" explores consumer purchasing behavior and how it is developing across the four main personal insurance product categories. The report discovers what is most influential to customers when purchasing a policy and also reveals the most popular providers in each of the respective markets. New trends and innovations are highlighted along with the key factors influencing the distribution of personal insurance products.
Reasons To Buy
To understand consumer purchasing decisions and how these will influence the market over the next few years.
To improve consumer engagement by recognizing what is most important to customers and how insurers can adapt their products and services to meet their needs.
To discover the top providers in the personal lines markets and how the distribution of personal insurance products is developing now, and also how it will evolve in the future.
Adapt and improve your company's distribution strategy to ensure it is aligned with customer purchasing attitudes, behaviors, and expectations.
Low premiums are encouraging customers to say put
Critical success factors
Changing customer attitudes are causing insurers to rethink their strategies
The direct channel continues to grow its share of the personal lines market
Around 50% of policies across personal lines are purchased direct
A strong phone service is required to complement the online proposition
The direct channel is expected to experience little change over the coming years
Aviva and Direct Line lead the car and home markets
Automatic renewals increase among direct customers amid a decline in shopping around
Brokers' share of personal lines shows no real sign of progress
Intermediaries have no more than a 10% share across the personal lines
Telephone is the standout method of engagement for consumers purchasing from brokers
Aviva heads up three of the personal lines markets in the broker channel
Brokers saw a sharp fall in the proportion of customers switching provider
Banks are fully equipped but struggling to attract more personal lines business
Banks are failing to make use of their access to a large customer base
Consumers in the banking channel prefer to use the telephone
Retail banks are now major players in the home and travel insurance markets
Banking channel switching rates offer a mixed picture across the product categories
Retail outlets are performing well in the markets with an established reputation
The retail sector maintains its strong affiliation with pet insurance
The supermarkets dominate the retail channel, with Tesco still the frontrunner
Tesco heads up the individual personal lines product categories
Customer loyalty among car insurance customers is relatively low in the retail channel
Price comparison site usage rates are falling
Fewer policies are purchased using aggregators but they continue to fulfil their purpose
Comparethemarket.com is the top site for aggregator-bought product introductions
Comparethemarket.com leads the way for policies purchased in the aggregator space
Switching levels remain high in the aggregator space
Personal lines distribution
The direct channel and aggregators generate the most business for personal lines insurers
The direct channel and the banking space will experience growth over the coming years
TRENDS AND DEVELOPMENTS
Price has become less of an influencer in the personal insurance space
More consumers are happy to remain with insurers they previously held a policy with
The price is not always right as aggregator headline quotes continue to capture customers
The digital channel offers alternative means for brand and product engagement
Allianz has demonstrated how technology can be used for purposes other than sales
Consumers are still struggling to see the use case for mobile apps
Insurers are battling to make adequate use of social media
Consumers are not using their smartphones for insurance purposes
Insurers providing expedient solutions will decide the channel infrastructure
Clarity and simplicity will be key requirements for insurers in the coming years
Worry+Peace provides a demonstrative view for customers and their policies
P2P concepts remind insurers of the need to maintain relevance
New PassportCard offers an additional route to market for travel insurers
Abbreviations and acronyms
About Verdict Financial
Figure 1: The share of personal lines policies purchased directly has increased
Figure 2: The majority of direct customers purchase cover over the phone
Figure 3: Top three brands by product, direct channel, 2014-15
Figure 4: The proportion of car insurance customers who automatically renewed grew slightly
Figure 5: The proportion of direct home customers switching fell by 4.5 percentage points
Figure 6: Automatic renewals in the direct pet space increased by almost 10 percentage points
Figure 7: Brokers' shares fell across the personal lines, with the exception of car insurance
Figure 8: Telephone is the preferred purchasing method of broker customers
Figure 9: Top three brands by product, broker channel, 2014-15
Figure 10: Switching among brokered car insurance customers fell 5.3 percentage points
Figure 11: Switching in the brokered home space decreased by 10.4 percentage points
Figure 12: Automatic renewals grew substantially in the brokered pet insurance market
Figure 13: The banking channel still accounts for a small proportion of personal lines
Figure 14: Phone is now the preferred method of purchasing in the banking channel
Figure 15: Top three brands by product, banking channel, 2014-15
Figure 16: Automatic car insurance renewals declined significantly in the banking channel
Figure 17: More banking customers in the home insurance space are automatically renewing
Figure 18: Pet insurance switching levels in the banking channel declined substantially
Figure 19: Retail brands' share of personal lines has fallen across all product categories
Figure 20: Tesco tops the leaderboard of retail brands offering personal insurance products
Figure 21: Top three brands by product, retail brand channel, 2014-15
Figure 22: Car insurance customers in the retail channel prefer to shop around
Figure 23: Automatic home insurance renewals increased 13.1 percentage points in the retail channel
Figure 24: Switching among pet customers in the retail channel fell by 8.0 percentage points
Figure 25: Aggregators have lost ground across all of the personal lines product categories
Figure 26: Comparethemarket.com leads the majority of aggregator-bought product intros
Figure 27: Top three price comparison sites by product, 2014-15
Figure 28: Switching rates for car insurance on aggregators fell 14.1 percentage points
Figure 29: Home customers on aggregators saw switching rates fall by 17.3 percentage points
Figure 30: 27.0% of aggregator pet customers now opt to automatically renew their policy
Figure 31: Direct insurers and aggregators generate the most GWP in personal lines
Figure 32: The direct channel and banks are set to increase their share of personal lines
Figure 33: ABI's channel segmentation of personal lines insurance distribution
Figure 34: Previously holding a policy has become an important factor regarding car insurance
Figure 35: More home customers are selecting an insurer based on ease of policy arrangement
Figure 36: The vast majority of consumers choose a top five quote on an aggregator
Figure 37: Allianz is the first UK insurer to launch a video relay service for deaf people
Figure 38: The promotion of new products is most important for insurers using social media
Figure 39: 78.8% of consumers now own a smartphone
Figure 40: Most consumers with a mobile device rarely use it for insurance purposes
Figure 41: MyLicence enables motor insurers to better profile their customers
Figure 42: PassportCard resembles a debit card but is specifically designed for travel insurance
Table 1: Product distribution splits by channel (POUNDm), 2015
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Channel, Method, Purchasing, Customer, Broker, Bank, Direct, Price comparison site, Online, Convenience, Switching, Renew, Distribution, Policy, Aggregator.