United Kingdom (UK) Household Insurance Market Dynamics, Trends and Opportunities, 2023

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UK Household Insurance Market Report Overview

The gross written premium of the United Kingdom (UK) household insurance market was GBP5.97 billion in 2022 and is expected to achieve a CAGR of less than 1% during 2023-2027. Since the younger generations find it difficult to afford homeownership and living expenses are high, insurers must focus on Generation Rent in order to preserve or grow market share and GWP of household insurance. By providing solutions suited to the requirements of younger populations, insurtech startups are challenging established insurers in this market.

UK Household Insurance Market Outlook 2022-2027 (GBP Billion)

UK Household Insurance Market Outlook 2022-2027 (GBP Billion)

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The UK household insurance market research report analyzes the UK household insurance market and looks at drivers of uptake across different demographics and dwelling types. It discusses the claims landscape in 2022, the housing market, and upcoming regulatory changes within insurance. Incumbent competitors, newcomers, and insurtechs within the space are analyzed and compared. Future impactors in the market are also covered.

Gross Written Premium (2022) GBP5.97 billion
CAGR (2023-2027) <1%
Historical Period 2018-2022
Forecast Period 2023-2027
Key Claim Types ·        Escape of Water

·        Weather

·        Fire

·        Theft

·        Accidental Damage

·        Subsidence

·        Other Domestic Claims

Key Insurers ·        Aviva

·        RSA

·        Direct Line

·        Chubb

·        Allianz

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UK Household Insurance Market Dynamics

Younger consumers, especially those under the age of 30, are exhibiting an interesting trend where they are far more eager to share their smart home data with insurance carriers. Tech giants such as Sky are beginning to see the potential as the adoption of smart home devices rises. Insurance companies have the opportunity to capitalize on the growing potential of this group regardless of whether they choose to live in rental housing or eventually become homeowners.

UK Household Insurance Market Segmentation by Gross Claims Types

Increases in weather and subsidence-related claims drove up the overall cost and number of claims incurred in 2022.

The key gross claims type in the UK household insurance market includes escape of water, weather, fire, business interruption, theft, accidental damage, subsidence, and other domestic claims. Escape of water incurred the highest claims in 2022. There was a decline in the value of household insurance claims in the second quarter of 2022. This was due to a drop in weather-related claims mostly owing to the second quarter’s lack of major storms and a much-below-average monthly rainfall, which minimized potential damage.

Meanwhile, there was a rise in theft claims during the holiday season as well as throughout the year. As a result of the cost-of-living crisis, fraudulent theft claims increased, especially those involving jewelry and electrical goods, and many of them went undetected. This might be one of the reasons for the growth of the number of theft claims in the UK household insurance market.

UK Household Insurance Market Analysis by Gross Claim Types, 2022 (%)

UK Household Insurance Market Analysis by Gross Claim Types, 2022 (%)

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UK Household Insurance Market - Competitive Landscape

Aviva led the household insurance industry in 2022, followed by RSA and Direct Line.

Some of the leading household insurers in the UK household insurance market are:

  • Aviva
  • RSA
  • Direct Line
  • Chubb
  • Allianz

Aviva has made major inroads in the High Net Worth (HNW) market and has extended its home and travel insurance arrangement with TSB Bank for a further five years till 2028, strengthening its position within the market.

UK Household Insurance Market Analysis by Household Insurers, 2022 (%)

UK Household Insurance Market Analysis by Household Insurers, 2022 (%)

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UK Household Insurance Market – Latest Developments

  • In the UK, Amazon has launched the Amazon Insurance Store to give customers a new method of buying home insurance. This insurance store seeks to improve the home insurance shopping experience by offering reliable like-for-like quote comparisons and a simplified process for obtaining a quote, in order to make the process seamless.
  • Sky Protect Smart House Insurance is a new service that combines home insurance with smart home technologies. This package comes with smart home devices including a video doorbell, indoor camera, leak detectors, motion sensor, and contact sensors. The aim is to offer consumers peace of mind by providing them with comprehensive cover, home emergency support, access to reputable tradesmen, and legal and cyber protection.

Segments Covered in the Report

UK Household Insurance Claim Types Outlook (Value, GBP Billion, 2018-2027)

  • Escape of Water
  • Weather
  • Fire
  • Theft
  • Accidental Damage
  • Subsidence
  • Other Domestic Claims

Scope

• The UK household insurance market is expected to grow by 2.9% in 2023, following a 3.3% decline in 2022.

• The average premium prices for combined, buildings-, and contents-only insurance decreased by 5.6%, 8.1%, and 8.4% respectively in 2022. Furthermore, the number of policies for all products fell, contributing towards the overall decline in GWP.

• Home insurance claims in the UK rose in 2022, with the cost of claims growing by 6.2% and the total number of claims reported increasing by 2.6%. A significant increase in weather-related and subsidence claims was the main factor behind the uptick in overall claims.

• Generation Rent remain an untapped demographic as roughly half have contents-only insurance in place.

Key Highlights

  • In 2021, the UK’s home insurance market shrank.
  • For combined policies, the average premium price rose in 2021. However, they declined by for buildings-only and contents-only insurance.
  • All types of claims notified fell except for escape of water. Gross claims for escape of water increased in 2021 because of lockdown relaxations, meaning fewer individuals were at home.
  • Less than half of all UK renters have a contents-only insurance policy, making Generation Rent a large, untapped demographic for insurers.

Reasons to Buy

  • Identify underlying drivers of demand and premium prices for home insurance products.
  • Examine the nature of the claims landscape in 2022.
  • Compare the performances of market leaders throughout the year.
  • Determine how insurtechs are attempting to gain traction in the market.
  • Understand the impact of inflation on the home insurance market going forward.

Aviva
Allianz
RSA
Direct Line
Chubb
Lloyds Banking Group
Ageas
AXA
NFU Mutual
LV=
L&G
Flood Re
Zurich
Barclays
TSB Bank
Lemonade
JPMorgan
Co-op
Amazon
GoCompare
Sky
Hiscox

Table of Contents

  • 1 Executive Summary

    • 1.1 Market overview
    • 1.2 Key findings
    • 1.3 Critical success factors

  • 2 Market Dynamics

    • 2.1 The UK household insurance market fell in 2022, but will return to growth by the end of 2023
    • 2.2 Government and regulatory policies in home insurance
    • 2.3 The claims landscape in 2022
    • 2.4 The housing market is returning to normal levels following a dip from the pandemic

  • 3 Competitor Dynamics

    • 3.1 Aviva remains the largest provider of home insurance in 2022
    • 3.2 Insurtechs and recent developments

  • 4 The Market Going Forward

    • 4.1 Growth in the market is expected to be stagnant through 2027f
    • 4.2 Smart home devices and the future of home insurance
    • 4.3 Other providers may enter the market
    • 4.4 Extreme weather events will affect claims

  • 5 Appendix

    • 5.1 Abbreviations and acronyms
    • 5.2 Methodology
    • 5.3 Secondary sources
    • 5.4 Further reading

  • 6 About GlobalData
  • 7 Contact Us

Table

Table 1: Household insurance GWP, annual growth rate, 2018–22

Table 2: Yearly and quarterly average household insurance premium rate movements, Q1 2018–Q2 2023

Table 3: Percentage of respondents holding any form of home insurance, 2021–22

Table 4: Household gross claims incurred and number of claims notified, by type, 2018–22

Table 5: New home registrations and completions, 2018–22

Table 6: Top 10 UK household insurers by GWP and market share, 2020–22

Table 7: UK household insurance market forecasts, 2022–27

Figures

Figure 1: UK household insurance market GWP slumped by 3.3% in 2022

Figure 2: Home insurance premiums have been on the rise since the large dip in Q1 2022

Figure 3: Combined insurance makes up 82.5% of total home insurance GWP in 2022

Figure 4: Roughly 50% of all renters have a home insurance product in place

Figure 5: The number of UK renters increased in 2022

Figure 6: Many have not purchased home insurance as it is too expensive

Figure 7: Uptake of contents-only insurance has fallen, whereas a quarter of renters have the wrong insurance

Figure 8: Overall cost of claims incurred grew by 6.2% in 2022

Figure 9: Number of claims notified increased by 2.6% in 2022

Figure 10: Rebuild costs are still growing, just at a slower pace in 2023

Figure 11: Consumers are reluctant to change their level of cover amid the cost-of-living crisis and high rebuild costs

Figure 12: New home registrations and completions continue growing in 2022, with a large increase in registrations

Figure 13: Mortgage approvals dropped off towards the end of 2022, in line with interest rates increasing

Figure 14: Younger consumers are more likely to be renting due to difficulty getting on the property ladder

Figure 15: Aviva retains its position as the leader in the household insurance market

Figure 16: Premiums in the household insurance market are expected to increase in 2023f

Figure 17: Younger consumers are far more likely to be willing to share smart home data with their insurer

Figure 18: Uptake of smart home devices in the UK, 2022

Figure 19: Big tech firms hold a strong position of trust among consumers if they were to sell home insurance

Figure 20: Forecasting methodology

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