1. finance

UK Household Insurance Market Size, Share, Emerging
Opportunities, Outlook and Competitive Landscape
Summary
Soft market conditions endure in a UK household insurance market with high levels of competition and capacity,
and a continuing shift in customer buying habits. Despite this, the market continues along a profitable path for as
long as it can rely on relatively benign weather conditions.
Synopsis
Verdict Financial's UK Household Insurance: Market Dynamics and Opportunities report provides an in-depth
analysis of the UK household insurance market. It looks at market size and performance ratios as well as changes in
premiums, claims, contextual and economic factors, regulations, and opportunities. It provides a thorough
overview of the market along with future forecasts and analysis of emerging technologies and products.
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Key Findings
- UK household insurance gross written premium (GWP) fell by 3.8% in 2015, hampered by tough underwriting
conditions in a competitive market. Home insurance premium rates are currently reported to be largely flat to
slightly negative across the UK as a whole.
- In spite of winter 2015 storms, home insurance remains profitable, with a 94.6% combined operating ratio (COR)
in 2015, compared to 93.4% in 2014. The sector has been propped up by several benign weather years and has
benefited from reserve releases.
However, concerns remain over pricing for severe weather events.
- The home insurance expense ratio fell in 2015 (-1.6 percentage points [pp]) as a result of a drop in commission
ratio and efficiency improvements. However, at 40.6% it remains relatively high compared to motor, and has been
adversely impacted in H1 2016 by the introduction of Flood Re.
- The rise of 'Generation Rent' presents a shifting landscape that is dampening overall market growth, and is
presenting home insurers with a customer demographic that has different needs and preferences not necessarily
catered to effectively by current services. Private renters now account for around 20% of dwellings, up from just
over 10% a decade ago.
Reasons To Buy
- Benchmark yourself against the rest of the market. Ensure you remain competitive as new innovations and
insurance models begin to enter the market.
- Be prepared for how regulation will impact the household insurance market over the next few years.
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Table of Content
Executive Summary
The UK household insurance market remains highly competitive
Key findings
Critical success factors
Market Context
A soft market and changing customer behavior led to a fall in GWP in 2015
Home insurance GWP fell by 3.8% in 2015
Premium rates return to flat or slightly negative following the Insurance Premium tax hike
Changing customer behaviors are compounding the competitive nature of the market
Competition remains fierce in the home insurance sector, preventing rate increases
Combined policies continue to dominate, but home ownership trends are impacting GWP
Home insurance remains profitable due to relatively benign weather
The loss ratio rose in 2015 as a result of the soft market, but the COR remained below 100%
The expense ratio fell in 2015 as a result of a lower commission ratio and a focus on efficiency
Claims costs fell in 2015, although the average claims cost increased
Gross incurred claims fell across all categories, except fire and escape of water
Average claims cost increased, with the average winter storm claim significantly higher in 2015
Escape of water claims were the costliest peril in 2015, although technology may ultimately assist
Flood Re affected H1 2016 results, but overall the impact is expected to be small
Flood Re launched in April 2016 and is expected to benefit around 350,000 homes “over time”
Flood Re costs have increased expense ratios for insurers in H1 2016
Overall, Flood Re impacts are expected to be relatively small
Home insurance demand remained strong, but underlying dynamics are shifting
New home registrations and completions increased, although numbers remain well below historic levels and
requirements
Mortgage approval rates rose by 4% in 2015, but have fallen in 2016
Read Complete Report with TOC @ http://www.radiantinsights.com/research/uk-household-insurance-marketdynamics-and-opportunities
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