United Kingdom (UK) Commercial Property Insurance Market Dynamics and Opportunities 2023
Summary
This report analyzes the UK commercial property insurance market, looking at drivers of uptake across different demographics and dwelling types. It discusses the claims landscape in 2022, the commercial property market across London, and the upcoming regulatory changes within insurance. Incumbent competitors are analyzed and compared, along with newcomers and insurtechs within the space. Future impactors in the market are also examined, including climate change, sustainability, underinsurance, and the changing office environment.
GlobalData expects gross written premiums in the UK commercial property insurance market to grow by 9.1% to GBP13.3 billion by the end of 2023, following its 18.5% growth to GBP12.2 billion in 2022. The main causes of the increase in 2022 were the ongoing high rates of inflation and supply chain issues that increased rebuild costs. At the same time, the claims environment returned to pre-pandemic levels, having experienced improvements in 2022. This improvement was mostly caused by a 16.4% decline in gross claims incurred, particularly a significant 48.3% decrease in business interruption claims. There was a 5.8% drop in claims notified, from 173,000 to 163,000, which helped to lower the total value of claims incurred.
Scope
- The UK commercial property insurance market is expected to grow by 9.1% to GBP13.3 million in 2023, following an 18.5% growth in 2022.
- Gross claims incurred declined by 16.4% in 2022, driven particularly by a significant 48.3% decrease in BI claims.
- There was a 5.8% drop in claims notified, from 173,000 to 163,000, which helped to lower the total value of claims incurred.
- Aviva holds its position as market leader with a 12.3% share of the market. It is expected to increase its share in 2023 courtesy of it now being able to underwrite engineered timber, showing its dedication to environmental, social, and governance (ESG) initiatives.
- Analyze the drivers of growth within the UK commercial property market.
- Determine areas of concern for insurers and the wider market, including in the claims landscape.
- Recognize the impact of Brexit, the cost-of-living crisis, and inflation on the market.
- Ascertain the market shares of the leading players.
- Examine future opportunities and challenges within the market.
- Executive Summary
- Market overview
- Key findings
- Critical success factors
- Market Dynamics
- The UK commercial property insurance market continued its strong growth in 2022
- Table Figure 1: The UK commercial property insurance market grew by 18.5% in 2022
- Table UK commercial property insurance market GWP and growth rate, 2018-22
- The claims landscape for commercial property recorded falls in both claims incurred and notified in 2022
- Table Figure 2: Overall gross claims paid decreased by 16.4% in 2022
- Table Gross claims paid (GBP million), by type, 2018-22
- Table Figure 3: Overall, the number of claims improved in 2022, falling by 5.8%
- Table Number of claims notified (000s), by type, 2018-22
- The construction sector continues to sustain growth in 2022, after being hampered in 2020
- Table Figure 4: Commercial construction output is expected to maintain growth over the forecast period
- Table UK commercial construction output, 2022-27f
- Table Construction output, non-seasonally adjusted, current prices by sector (GBP billion), 2018-22
- Investment in London slows down and is expected to fall again in 2023
- Tax incentives and regulations have an impact on commercial property investment
- Table Figure 5: Buy-to-let mortgages have started to tail off as high interest rates make lending harder
- Commercial-to-residential conversions will affect the commercial property market
- Table Figure 6: The population in the UK fell by 0.1% in 2021
- The UK commercial property insurance market continued its strong growth in 2022
- Competitor Dynamics
- Aviva remains the largest commercial property insurance provider in 2022
- Table Figure 7: Aviva maintains its position as the leader in the commercial property insurance market
- Table Competitor market shares and GWP, 2020-22
- Further developments
- Aviva remains the largest commercial property insurance provider in 2022
- The Market Going Forward
- Commercial property insurance is expected to grow to GBP15.2 billion by 2027
- Table Figure 8: GWP is forecasted to grow consistently until 2027, when it will reach GBP15.2 billion
- Inflationary pressures and high interest rates will impact the construction industry
- The underinsurance gap remains but appears to be closing
- Table Figure 9: Over half of UK SMEs are facing higher commercial property premiums for the same or less cover
- Table Figure 10: UK SMEs that express concerns about underinsurance has reduced to 34.7% from 42.4% in 2023
- Sustainable material underwriting will become more relevant as the nation transitions to net zero
- Table Figure 11: 64.9% of SMEs find an insurer's record in sustainability important or very important
- Technology offers insurers better claims assessment and cheaper property valuations
- Table Figure 12: Underwriting and risk profiling is the area of the value chain that will be most impacted by AI
- Table Figure 13: Larger SMEs are more comfortable with using an AI-powered chatbot compared to those that are
- Changing office working models can present both an opportunity and drawback for insurers
- Table Figure 14: Roughly 60% of employees do not anticipate returning to full-time office work as of 2022
- Table Figure 15: 79.7% of individuals expected to spend three or fewer days in the office in 2022
- Commercial property insurance is expected to grow to GBP15.2 billion by 2027
- Appendix
- Abbreviations and acronyms
- Methodology
- Table Figure 16: Forecasting methodology
- Secondary sources
- Further reading
- About GlobalData
- Contact Us
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