Keywords : Insurance, insurance industry, insurance provider
This market research report provides a detailed analysis of trends which will impact the UK general insurance market in 2012. It outlines a range of trends including the emerging influence of social media, the effects of incoming regulation, and how technology is continuing to change the shape of insurance distribution. This market research report also explores how insures can benefit from the changes....
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This market research report provides a detailed analysis of trends which will impact the UK general insurance market in 2012. It outlines a range of trends including the emerging influence of social media, the effects of incoming regulation, and how technology is continuing to change the shape of insurance distribution. This market research report also explores how insures can benefit from the changes.Gain an understanding of which trends will impact the insurance industry in 2012Understand how internal and external forces will change consumer and business behaviourTarget valuable opportunities for growth and avoid threats to businessOngoing instability within the global economy will attract capital to the relative calm of the UK insurance market . This has encouraged and will continue to encourage both UK and non-UK companies to put additional capital into general insurance.The advantage that social media has over traditional industry ing channels is that it allows consumers to actively engage with insurers, rather than simply being on the receiving end of a barrage of messages. Insurance industry players are adapting to the growing importance of so-called "inbound industry ing".Which trends will determine the shape of the UK insurance industry in 2012?What impact will new technology, incoming regulation, and the downturn have on the UK insurance market ?How can insurers and introducers increase profitability by exploiting changes over the next 12 months?
Insurance Industry in the United Kingdom
OVERVIEW
•Catalyst
•Summary
EXECUTIVE SUMMARY
•EUR zone difficulties have been the main obstacle to strong growth
?2011 was characterized by political indecision and reactive industry s
•Economic instability has limited insurers' ability to sustain strong growth
?The uncertain economic environment has caused erratic GWP growth
?2011 was a challenging year for claims
•The eurozone crisis continues to threaten UK growth in 2012
?EUR zone instability is the main threat to insurers
?UK insurers will find themselves exposed to the continuing crisis facing EUR pe
•Trend : The UK economic environment will shape 2012
?Economic uncertainty will define insurers' strategies
•Trend: Regulation will create costs and opportunities in 2012
?Delayed Solvency II directive will remain a key cost for insurers
?Insurers will face greater scrutiny once the FSA splits
•Trend: Innovative and targeted use of social media will boost insurer profiles in 2012
?Insurers are beginning to use social media as a key industry ing tool
OVERVIEW OF 2011
•Introduction
•EUR zone difficulties have been the main obstacle to strong growth
?2011 was characterized by political indecision and reactive industry s
•Economic instability has limited insurers' ability to sustain strong growth
?The uncertain economic environment has caused erratic GWP growth
?Despite a competitive industry some personal lines saw premium increases
?Within commercial lines only motor premiums increased notably in 2011
?Insurers are thought to have rebuilt reserves during 2011
•2011 was a challenging year for claims
?Claims costs have restrained profits
•Predictions for 2011 remain unfulfilled
?Predictions will roll over into 2012
•The eurozone crisis continues to threaten UK growth in 2012
?EUR zone instability is the main threat to insurers
?UK insurers will find themselves exposed to the continuing crisis facing EUR pe
?The climate of uncertainty casts fresh doubts about the solvency of the eurozone
?High borrowing costs will continue to challenge governments and private industry players alike
?High borrowing costs are damaging to the economy and to financial providers
?Financial services providers will react by cutting costs and taking other defensive measures
TOP TRENDS FOR 2012
•Introduction
•Trend 1: The UK economic environment will shape 2012
?Economic uncertainty will define insurers' strategies
?Consumers will continue to suffer low confidence
?Businesses continue to struggle in an uncertain environment
?Insulating against the sovereign debt crisis will be the defining narrative of 2012
•Trend 2: Insurers need profitable underwriting for sustainable growth
?New industry entrants will increase the need for profitable underwriting
?Insurers can no longer rely on investment returns for profitability
?Insurers recognize that improving the quality of their books will be important
?GWP is expected to grow in 2012
?Insurers will struggle to push through premium increases
•Trend 3: Regulation will create costs and opportunities in 2012
?Delayed Solvency II directive will remain a key cost for insurers
?Insurers will face greater scrutiny once the FSA splits
?Legal costs and referral fees could reduce claims frequency and costs
?The alternative business structure will prove popular with insurers
?Equality rulings will impact on pricing structures
?Brokers are looking for a distinct status within the Financial Services Compensation Scheme
•Trend 4: Insurers will target claims costs to maintain profits
?Fraud, personal injury, and legal fees are being targeted to reduce costs
?Reducing fraud will be an important way of limiting losses
?Savings from reducing fraud have the potential to increase sharply during 2012
?2012 will see insurers rewarding policy holders for reducing risks
?Legal costs should fall as a result of new legislation
•Trend 5: Instilling loyalty will be the biggest consumer challenge of 2012
?Building customer loyalty will be important for insurers
?Insurers need to address the dominance of aggregator sites to encourage loyalty
•Trend 6: Technology will play a key part in increasing consumer choice
?Giving consumers the opportunity to engage, research, and purchase will be important
?Consumer data will be valuable for targeting potential policy holders
•Trend 7: Innovative and targeted use of social media will boost insurer profiles in 2012
?Insurers are beginning to use social media as a key industry ing tool
?Social media will be increasingly used to address consumer complaints
?Encouraging honest feedback will improve service
?Professionalizing social media use will be an important trend
•Trend 8: Insurers will recruit talent and grow into regions to attract customers
?2012 will see a continued regionalization of brokers and underwriters
?A lack of new resources entering the industry could restrict growth
APPENDIX
•Sources
•Further reading
•Ask the analyst
•Disclaimer
TABLES
•Table: UK annual GWP growth and COR for the general insurance industry, 2000–10
•Table: Estimated premium growth (%), 2011
•Table: Firms liquidations, 2006–10
•Table: Underwriting result, investment income, and trading result as a percentage of net written premium (worldwide business of UK insurers), 2000–10
•Table: Personal and commercial lines projections (£m), 2010–12f
•Table: Projections of commercial premium increases (%), 2012
•Table: Analysis of fraudulent claims value and volume, 2004–10
•Table: Consumer loyalty by income (%), 2011
•Table: Aggregator use by household income (%), 2011
FIGURES
•Figure: Major macroeconomic events in the eurozone in 2011
•Figure: GWP grew strongly in 2010, but COR remained high
•Figure: UK GWP grew across the board during 2010
•Figure: Motor premiums increased rapidly during 2011
•Figure: Only commercial motor saw substantial premium increases during 2011
•Figure: A rebuilding of reserves points towards a hardening industry
•Figure: Several eurozone members saw their long-term borrowing costs rise significantly in 2011
•Figure: Impact key
•Figure: Impacts of the UK economic environment in 2012
•Figure: Consumers have been paying off debt from 2010 onwards
•Figure: Firms insolvencies remain stubbornly high
•Figure: Implications of an unstable economic climate
•Figure: Impacts of profitable underwriting
•Figure: Investment income has fallen from 2005's high
•Figure: Motor premiums rose strongly in 2011, supporting GWP growth
•Figure: Only commercial motor lines will show any strong growth during 2012
•Figure: Implications of a search for profitable underwriting
•Figure: Impacts of regulation
•Figure: Implications of regulation in 2012
•Figure: Impacts of claims costs
•Figure: Implications of reducing claims costs in 2012
•Figure: Impacts of consumer loyalty
•Figure: Middle income consumers are the most likely to switch motor insurance providers
•Figure: Implications of a search for consumer loyalty in 2012
•Figure: Impacts of technology
•Figure: Swiftcover has used a social media utility to maintain customer interest
•Figure: Implications of using technology in 2012
•Figure: Impacts of social media
•Figure: Implications of social media use in 2012
•Figure: Impacts of organic growth
•Figure: The largest proportion of brokers are based in London or the South East
•Figure: Implications of organic growth in 2012
Companies mentionned
AXA, Bank of England, CMS Energy Corporation, Devoteam SA, Hutchison 3G UK Limited, Schindler Holding Ltd.
