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(EMAILWIRE.COM, October 25, 2016 ) 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.
Report 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.
Report URL: http://www.reportsweb.com/UK-Household-Insurance:-Market-Dynamics-and-Opportunities?
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.
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- 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.
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Reason 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.
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 The rise of 'Generation Rent' presents a shifting landscape Penetration rates are high among owner-occupiers, but lower for tenants 2016 and Beyond Household insurance GWP is forecast to stabilize up to 2018 Premium rates are unlikely to increase in the short term A significant weather event will be required to shift rates Demand and profitability will be impacted by the slowdown in the economy Household GWP is expected to stabilize from 2016 to 2018 The negative economic consequences of Brexit could have an adverse effect Brexit will not result in substantial changes to the market's structure The economic consequences of Brexit will have the greatest impact FCA regulation on renewal transparency will impact the market in H2 2017 FCA regulation will increase renewal transparency and promote shopping around Between 11% and 18% more home insurance customers could shop around The impact will largely be evident from H2 2017 A major weather event will reveal Flood Re's market impact A significant weather event will reveal the extent to which Flood Re can plug the pricing gap Stakeholders need to remain aware of the ultimate aim for premiums to fully reflect flood risks The growth of 'Generation Rent' will impact product development Renting will remain the fastest growing type of tenure Home insurers need to build propositions targeted to the needs and behaviors of this customer segment Technology-enabled product and service offerings have the potential to transform home insurance in the longer term Consumer appetite for smart home technology is increasing in the wake of a growing number of products There have been two significant developments in UK-connected home insurance in 2016 In spite of benefits, connected home insurance will not take off in the short term Insurers will continue to seek opportunities to develop and test connected home use There is growing interest in pay-as-you-go, highly tailored micro-insurance policies Appendix Abbreviations and acronyms Supplementary data Definitions Combined operating ratio Compound annual growth rate Gross written premium Methodology Primary and secondary research Publisher's 2015 UK General Insurance Consumer Survey Bibliography Further reading About Publisher Disclaimer
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ReportsWeb.com
Priya Sisodia
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sales@reportsweb.com
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