United Kingdom (UK) Household Insurance - Market Dynamics and Opportunities 2021
Summary
This report analyzes the UK household insurance market, looking at drivers of uptake across different demographics and dwelling types. The report discusses the claims landscape as well as the broader housing market and upcoming regulatory changes within insurance. Incumbent competitors are analyzed and compared, along with newcomers and insurtechs within the space. Future impacts - including climate change, smart home devices, and changing living arrangements - are also examined.
Gross written premiums (GWP) declined by 0.8% in 2020. This was driven by a 1.3% fall in total policies written across all three products in the home insurance space. Average premiums have fluctuated on a quarterly basis, with the average price of buildings-only and combined policies in 2020 at the same level as they were in 2016. Meanwhile, contents-only policies were £9 lower over the same period. This is despite increases in average claim costs, house prices, and house repair costs. Correspondingly, insurers’ underwriting profitability in the market declined considerably in 2020. House price increases have been driven by the stamp duty holiday from July 2020 to October 2021 boosting home purchases, while the pandemic slowed new house-build completions and increased repair costs thanks to global supply side issues. We forecast an increase in GWP in the market in 2021 before a gradual, year-on-year contraction until 2025.
Scope
- The UK home insurance market contracted to £6.32 billion in 2020 - a fall of 0.8%.
- In 2020, average premium prices for combined policies increased by 0.4%. For buildings-only and contents-only policies, they decreased by 1.4% and 0.1% respectively.
- Generation Rent is still a growing, untapped demographic, with less than half of all renters in the UK owning a contents insurance policy.
- Identify underlying drivers of demand and premium prices for home insurance products.
- Examine the nature of the home insurance claims landscape.
- Compare the performances of market leaders.
- Determine how insurtechs are attempting to gain traction in the market.
- Understand the progression of home insurance lines into the future.
- Executive Summary
- Market overview
- Key findings
- Critical success factors
- Market Dynamics
- Growth in the UK household insurance market has been relatively stagnant over time
- Table Figure 1: UK household insurance market GWP declined in 2020
- Table Household insurance GWP, annual growth rate, 2016-20
- Table Figure 2: Home insurance premiums fluctuate quarter to quarter
- Table Yearly and quarterly average household insurance premium rate movements, Q1 2016-Q2 2021
- Table Figure 3: Combined insurance accounts for the largest share of GWP
- Table Figure 4: Penetration rates are below 50% for tenants
- Table Percentage of respondents holding any form of home insurance, 2019-20
- Table Figure 5: Over 20% of UK home occupiers rent
- Table Figure 6: There are several different reasons why renters choose not to purchase a home insurance policy
- Table Figure 7: One in five private renters have the wrong cover
- Government and regulatory policies in home insurance
- The claims landscape in 2020
- Table Figure 8: Weather-related gross claims more than doubled in 2020
- Table Figure 9: Lockdowns reduced the number of theft claims
- Table Household gross claims incurred and number of claims notified, by type, 2016-20
- Table Figure 10: The pandemic has accelerated the increase in house rebuilding costs
- Table Figure 11: Inflation is driven by both supply side and demand-side factors
- The housing market has been affected by the pandemic
- Table Figure 12: New home registrations and completions fell dramatically in 2020
- Table New home registrations and completions, 2016-20
- Table Figure 13: Mortgage approvals were affected on a monthly basis, but increased in 2020 compared to 2019
- Growth in the UK household insurance market has been relatively stagnant over time
- Competitor Dynamics
- Analysis of the market leaders
- Table Figure 14: RSA remains the market leader in the home insurance market
- Table Top 10 UK household insurers by GWP and market share, 2018-20
- Insurtechs and newcomers
- Table Figure 15: Almost half of consumers use a comparison website before purchasing contents-only insurance
- Analysis of the market leaders
- The Market Going Forward
- The market is expected to remain relatively static
- Table Figure 16: The home insurance market will remain stable over the next five years
- Table UK household insurance market forecasts, 2020-25f
- Smart home devices and the future of home insurance
- Other providers may soon join the market
- Table Figure 17: Consumers are open to the idea of purchasing home insurance from non-traditional providers
- Climate change and adverse weather will affect claims
- Insurers can play a role in alleviating the cladding crisis
- The market is expected to remain relatively static
- Appendix
- Abbreviations and acronyms
- Methodology
- Table Figure 18: Forecasting methodology
- Secondary sources
- Further reading
- About GlobalData
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