G Day Perceptions and Buyer Behaviour Latest Consumer Views

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1 Re:Think G Day Perceptions and Buyer Behaviour Latest Consumer Views The run up to G day attracted extensive trade press coverage and was one of the big insurance stories of This focus has continued in 2013 with the emphasis shifting from the challenges of pipeline management to the impact on premium rates and sales volumes. But what do consumers think of these changes? Are they aware of them? Have they changed their views of the UK insurance market? The Study* We asked whether UK consumers are aware of the unisex premium rate requirement under the EU Gender Directive, and if so, how they had heard about it. We also examined how consumers perceive the changes whether they think they are now more fairly treated and what they expect to happen to overall prices of insurance products. Finally, we asked if the changes will affect their future buying behaviour. In each case we looked at whether the responses varied depending on which insurance products UK consumers currently have or may consider buying. * The study was conducted by ICM research who interviewed a random sample of 2028 adults aged 18+ in the UK via an online omnibus. The results have been weighted to be nationally representative of all adults in the UK. Pg 1

2 Awareness and communication of EU unisex premium requirement We began our study by asking respondents if they currently have insurance products and whether they are looking to purchase or renew these in We then asked respondents who have at least one insurance product whether they believe premiums vary according to gender and if they were aware of the EU Gender Directive and its effect on insurance premiums. Respondents who stated they were aware of the directive were asked where they had heard about it. Insurance products ownership: Based on our sample, over two thirds of the UK population have car or home insurance, with just over half (53%) looking to buy or renew these in One third have Life Insurance and slightly fewer (28%) contribute into a Private Pension scheme, with much lower proportions looking to buy or renew reflecting the longer term nature of these covers. Only 3% expect to buy or renew Income Protection. Insurance By Product UK Population Have Would Buy/Renew 69% 67% 53% 53% 33% 12% 28% 6% 5% 3% Home Insurance Car Insurance Life Insurance Private Pension Income Protection Were you aware of the EU Gender Directive and its resulting change in premium rates before today? No 27% Gender neutral insurance premiums awareness: We found that nearly three quarters of respondents expect insurance premiums to be gender neutral and are aware of the EU Gender Directive and its effect on premiums. Yes 73% EU Gender Directive communication: However, only 3% of respondents who were aware of the EU Directive had heard about it from their insurers, whilst the majority had read about it in the press or other news media (90%). 10% had heard about it from friends or family. UK Population Aware of Gender Ruling: Where did they hear about it? I read about it in the press or via other news media I heard about it from friends or family My insurer(s) explained the legislation and its implications to me Other [respondents were asked to select all applicable answers] 11% 3% 3% 90% Pg 2

3 Do UK consumers believe they are being treated more fairly post EU Gender directive? We continued by examining perceptions of fairness. We asked respondents if they believe they are now being treated more fairly, and looked at whether this perception varies by gender or according to ownership of different insurance products. Perception of fairness: Overall, a higher proportion of men than women perceive gender neutral rates as fairer. Over half of men believe that they are being treated more fairly post EU Gender Directive whilst only 27% consider gender neutral rates to be less fair. In contrast women s views are much more evenly divided. Perceptions of new premiums resulting from the Gender Directive: Fairness to Consumers More fair Less fair No difference 24% 39% 22% 51% 27% 37% Gender Neutral Rates perceived to be FAIRER by product ownership 41% 52% 51% 49% 52% 50% 46% 39% 38% 39% Are these perceptions influenced by ownership of different insurance products and hence the direction of gender bias in previous premiums? are more likely than women to benefit from unisex rates for car insurance and life insurance and this appears to be reflected in the relative perceptions of fairness. Life Insurance Income Protection Private Pension Car Insurance Home Insurance For income protection women are more likely to benefit than men yet perceptions of fairness differ very little by gender. For private pensions the change to unisex annuity rates is more likely to favour women yet a higher proportion of men than women perceive this change as fair. Pg 3

4 What do UK consumers think will happen to the premiums they pay on their policies post EU Gender directive? We asked consumers how they think the EU Gender Directive affects how much they pay for their insurance premiums. For life insurance, income protection and private pensions, the opinions of men and women regarding how much they will pay are strikingly similar, with a large majority of each gender expecting no change in what they pay. In contrast the message that women are more likely to see increased car insurance premiums appears better understood by both genders. 70% 22% Life Insurance 8% 71% 18% 11% Income Protection I will pay more I will pay less I will pay the same Car Insurance 14% 17% 7% 4% 23% 43% 51% 79% 79% 60% 17% Private Pension 6% Home Insurance 77% 17% 6% 76% 16% 8% 12% 5% 9% 61% 30% 83% These results suggest very little expectation by either gender that there could be a general increase in insurance costs as a result of the EU Gender Directive. Pg 4

5 How do UK consumers perceive pricing trends in the insurance industry post G Day? Will these perceptions affect their future buying behaviour? Having seen that the majority of respondents believe premiums will not vary, and smaller proportions perceive prices will increase, we continued by examining their wider views of what will happen to prices in the industry overall. We also asked whether these perceptions are likely to affect future buying behaviour. Pricing perceptions post EU Gender Directive industry view: In contrast with the results outlined above, when asked how they expect insurance prices to reflect gender neutral rates for the whole insurance industry, the majority of respondents expect prices to increase. The only significant gender variation in this perception is that 25% of women compared with just 15% of men believe that the increase will be significant. Pricing Perceptions Post Gender Directive: Industry View Premiums increased significantly Premiums increased marginally No change Premiums decreased marginally 5% 15% 27% 2% 25% 33% 47% 46% Future buying behaviour if premiums increase Shop around for a better quote on the same policy Stay with your insurer and keep your current level of cover and pay the slightly higher premium Both reduce the cover and shop around Reduce the amount of cover in order to lower the cost 7% 8% 4% 13% 68% Future buying behaviour: 68% of respondents said that if premiums increase as a result of the EU Gender Directive they will shop around for better quotes on their existing policies. Only 8% claim they will stay with their insurers and pay the revised premiums. Reassuringly, just 4% of respondents claim they would reduce their cover to pay a lower price. Pg 5

6 Re:Think Conclusions The study looked at consumers awareness of the EU Gender Directive and its implications for insurance premiums. It also analysed current buying behaviour and insurance pricing perceptions, and how future behaviour may change in relation to gender neutral rates. The results showed that three quarters of consumers are aware of the EU Gender Directive, and understand that all insurance premiums are now gender neutral. However, only 3% of respondents recalled hearing about this change through communications from their insurers. The vast majority (90%) had read about it in the press. The majority of consumers also believe that the premiums they currently pay will not be affected. However, when prompted to think about general market trends, most think prices will increase. These results suggest that, with the exception of car insurance, the more obvious likely impacts of gender neutral rates (e.g. women are now likely to pay more for life assurance, and pension annuities are likely to be more expensive than they were for men) are not well understood. Finally, if premiums were to increase, over two thirds of respondents said that they would shop around for a better quote on their existing policies, rather than staying with their current insurers and paying a higher premium. Interestingly, a higher proportion of men than women perceive gender neutral rates as fairer. We hope you found this study insightful and would welcome any questions or views. If you require a more indepth analysis on any of the topics discussed we would be delighted to provide this. Media contact: David Heeney, Chief Marketing Officer, UK & Ireland david.heeney@pacificlifere.com Protection enquiries: James Tait, Head of Protection Marketing, UK & Ireland james.tait@pacificlifere.com Pacific Life Re Limited Tower Bridge House St. Katharine s Way London E1W 1BA Phone: +44 (0) Pacific Life Re Limited is authorised and regulated by the Financial Services Authority. Registered in England and Wales. Company No The material contained in this booklet is for information purposes only. Pacific Life Re gives no assurance as to the completeness or accuracy of such material and accepts no responsibility for loss occasioned to any person acting or refraining from acting on the basis of such material.