Market overview

The UK home insurance market is set to turn a profit in 2022 as it reels from bad weather in the first quarter – including the wettest month on record in February – before falling into unprofitable territory in 2021 The UK insurance industry is one of the largest in the world. , managing £1.8 trillion of investments and employing 300,000 people. The insurance sector could, however, be one of the most affected by Brexit due to the level of regulation and interconnectedness between the UK and European financial systems.

Industry disruptors seek to take advantage of areas that need improvement. The use of big data can improve underwriting efficiency, risk and claims assessment, customer retention and engagement, security, fraud prevention, and improving the customer journey to purchase. clients. The UK was the fourth largest insurance market in the world in 2021.

The UK also has the highest insurance penetration rate in Europe, at over 14%, with around 41.6 million UK adults having some form of general insurance. The main types of insurance are construction, contents and combined.

Report scope

The home insurance market covers the types of insurance policies available in the current insurance scenario in the UK: building/property insurance, contents insurance, building and contents insurance, tenant’s or tenant’s insurance. renter and strata/holiday home insurance, as well as distribution channels operated in the industry. . Also, considering the growth of online insurance platforms in the country, a detailed study has been presented on this separately.

Main market trends

InsurTech and the UK insurance industry

Since entering the market, European insurtechs have focused on several key areas, including direct insurance, comparison websites, product development and risk assessment. Industry disruptors seek to take advantage of areas that need improvement. The use of big data can increase the effectiveness of underwriting, risk and claims assessment, customer retention and engagement, security, fraud prevention and improvement of the customer’s buying journey.

Fire detectors, secure systems and water leak detectors have been on the market and in homes for some time now, but the ability to connect them all to a smartphone or tablet and manage them remotely has only been possible for a few years. Collaboration between the insurance industry and technology companies in the smart home market could significantly reduce the risk of claims reimbursement, while providing added value to the customer through an increased sense of security.

Some insurers have already seized the opportunity by offering discounts if homes are equipped with certified locks or a burglar alarm. An alternative approach is to offer smart home technology and insurance coverage as part of the insurance package. Overall, the top 10 insurance brands in the UK accounted for two-thirds of the insurance sectors’ share of voice, with comparison websites taking the largest share.

Customers value simplicity; they want products that are easy to understand, buy and use, they also want to know that they are paying a fair price and that claims will be paid fairly; With this knowledge, insurers can use a human-centric approach to redesign products and exceed customer expectations.

Buying home insurance policies online has become increasingly popular in the UK and is the most used channel for policy applicants. Industry sources have indicated that currently more than 40% of sales are made through online platforms. Vendors must have a strong online presence to ensure growth in the current market scenario. The most common pre-purchase activity is visiting a price comparison website, emphasizing the importance of price to customers. Therefore, it is essential that the premium prices and the cover provided are extremely competitive.

Buildings and contents insurance in the digital age

In today’s world rapidly changing, policyholders want to better understand risk and learn how to predict and mitigate potential threats. To reduce the frequency and severity of claims and to better interact with customers, more insurers are offering risk prevention services.

Each year, more than 90% of combined building and home insurance policyholders are existing policyholders and their choice boils down to either renewing with an existing insurer (about half renew each year) or switching from one insurer to another. another (about four out of ten change every year). For content-only and building-only insurance, a greater proportion of policyholders who undertake a new customer journey each year are new entrants to the market, i.e. they purchase home insurance for the first times. Even when renewing, policyholders typically embark on a new customer journey: more than eight in ten policyholders with combined cover who renew continue to research alternative policies and/or negotiate a revised agreement with their provider before agree to renew.

As insurers revamp their offerings to find renewed resilience and stability in the flux of global uncertainty, industry leaders have the opportunity to evolve legacy environments and redefine differentiated value. Despite the new challenges that have emerged from an increasingly complex and demanding competitive landscape, the insurance sector presents itself with immense potential for innovation.

With the adoption of high technology, data flows multiply and, as consumers become more connected, new opportunities emerge. Agile innovators who can integrate transformative technology, behavioral economics, and collaborative ecosystems will set the pace for change.