UK High Value Home Insurance 2010

Transcription

1 Brochure More information from UK High Value Home Insurance 2010 Description: UK High Value Home Insurance 2010 presents a detailed examination of the high value home insurance market. It contains an analysis of the current state of the market by looking at total market growth, profitability, claims, competitive forces and a forecast for the total number of UK affluents and the total market in gross written premiums. Scope - Information and data on the attractiveness of the UK high value home insurance market - Data on historical and forecasted numbers of UK affluents. - An insight into affluent purchasing trends, preferences and investment strategies. Highlights of this title Datamonitor has estimated that there were 661,000 high value home insurance policies in force in Around 531,000 of these policies were for mid net worth individuals and 58,000 for high net worth's. This market is plagued by large losses which are largely weather or escape of water related (for all household claims, escape of water accounted for 35% of the total claims bill). In a non-event yearwhere there are no large losses caused by a weather eventthe market combined operating ratio (COR) should be around 90%. A recurring theme that emerged throughout primary interviews was that less complex risks will continue to see a move towards direct distribution because it is easier to underwrite for these types of risks. However, clients with complex risks will continue to use brokers which can tailor a bespoke policy. Key reasons to purchase this title - Understand how high value home insurance players view this market at present. - Get to grips with the size of the market and how it is anticipated to grow in the future. - Realize how distribution of high value home insurance policies will change based on different purchasing patterns. Contents: Overview Catalyst Summary Executive Summary Recent market growth has been driven by increased penetration and various rate increases Underinsurance is still a big issue for this market Some enhanced standard home insurance policies are taking business away from the specialist sector With the numbers of affluents expected to grow in the future, there is plenty of new business to be won Insurers can make good returns from high value home insurance A typical non-event year should produce a combined ratio of 90% The threat of new entrants coming into the higher end of the market is low Some players are increasing rates in order to improve underwriting profits The future of the high value sector will be characterized by divergence in distribution MNW home insurance policies are likely to be sold direct while HNWs will continue to use brokers The total market will see moderate growth as a result of new business generation

2 Table of Figures Table of Tables Market Context Introduction High value home insurance products offer superior service and wide coverage Wealthy individuals need enhanced insurance protection due to their greater value of assets There is no industry-wide definition of MNW and HNW individuals Segmenting MNW and HNW customers is vital for targeting new business Most high value policies available on the market start from 50,000 contents sums insured The total market continues to grow despite the downturn The UK high value home insurance market is estimated to be worth 574m in gross written premiums Datamonitor estimates that there were 589,000 high value policies in force during 2009, up by 1.9% on 2008 The total potential market could be worth anything up to 1.9 billion in GWP Penetration is increasing, albeit at a slowing rate, but underinsurance still plagues this market Greater direct advertising, cross-selling, appraisals and partnerships will help improve penetration Hiscox is the only insurer which has a high profile, high value home insurance advertising campaign Enhanced standard home insurance policies are a threat to the MNW market Customers, especially MNW individuals, are becoming increasingly price-sensitive Providers need to promote the benefits of high value products to prevent business being lost to enhanced standard home insurance policies The number of wealthy individuals grew in 2009 by 8.1% to reach 8.2 million Most high net worth individuals are aged between 31 and 50 A large number of affluents are moving their investments back into equities Art, gold and collectibles have also become popular investments Insurers can make good returns from high value home insurance HNW risks are more profitable than MNW Insurers can generate attractive returns in the high value home insurance sector Underwriting is becoming more rigorous in order to select the most profitable risks Rate increases by a number of insurers may become the norm for the next year or two There are significant barriers to entry in this market, especially for HNW and UHNW offerings Escape of water continues to be the number one cause of claims Escape of water claims accounted for 35% of all household claims during the first three quarters of 2009 The latest crime statistics show a modest rise in cheque and credit card fraud which may influence claims Some HNW insurers are noticing a marginal rise of aggravated burglary against their clients Home & Legacy has partnered with SmartWater in a bid to deter theft-related crime Many believe that insurers need to invest more into improving the claims service The market for loss recovery specialists is growing due to the strong emphasis on claims service quality The threat of inflation throughout 2010 will raise contents claims costs The Floods and Water Management Bill is becoming closer to reality, which should help lower claims costs Distribution Introduction Brokers are the principle route to market for MNW and HNW home insurance products National and regional brokers are the most important distribution channel The majority of mass market household insurance policies are distributed by banks and building societies Affinity partnerships, often with retail banks, are a popular route to market Call centers are a useful way of dealing with clients' queries and MNW product distribution The broker channel is at risk of losing commoditized MNW business to direct insurers Market sentiment is that MNW risks are far easier to sell direct compared to HNW and UHNW clients Direct online offerings are important for attracting the next generation of emerging affluents However, younger individuals are more likely to switch insurance provider Price comparison websites are a way of capturing data that can be used to sell MNW policies online To prevent becoming obsolete in the MNW market, brokers need to work closer with insurers Some have argued that insurers should provide brokers with better resources, although this is unlikely Brokers should aim to target commercial accounts in order to retain and grow business Better client relationship management will undoubtedly help improve client retention Insurers may purchase brokers instead of investing into a direct offering Competitive Dynamics Introduction Most policies available on the market are tailored towards MNW individuals Chubb and Hiscox are the market leaders in the high value home insurance market Both Chubb and Hiscox have sustained their positions as the two largest underwriters Hiscox underwrites high value home insurance via its '505' and '606' policy schedules

3 Chubb's 'Masterpiece' home insurance product range offers a wide range of features and benefits The remainder of the market is characterized by insurers of smaller but similar respective sizes Sterling is one of few MNW and HNW specialist insurers in the market Chartis has significantly expanded its presence in this market since entering back in 2003 The market as a whole is characterized by composites and specialist insurers Numerous different regional and national brokers exist in this market 2009 saw many new deals and competitor developments Providers are constantly innovating and looking for new business opportunities Synergy Private Clients entered the market in late 2008 Fortis is making moves to expand its presence in the MNW market Marsh acquired HSBC Insurance Brokers in December 2009 Oak and Plum Underwriting have partnered to offer brokers a full range of MNW and HNW cover Home & Legacy launched three new household insurance products early in 2009 Home & Legacy is now on the panel for the broker network Keychoice MNW 'quote and buy' facilities are becoming increasingly popular in order to speed up underwriting Home & Legacy now offers online quote and buy for its MNW clients Plum Underwriting currently provide an online quote and buy facility for brokers to access Lloyd's capacity Chubb's new broker website 'Masterpiece24' provides brokers with a quote and bind system for HNW cover Castle Cover launched a new HNW website called Regal Insurance which offers online purchasing The Future Decoded The MNW and HNW market will experience a divergence in distribution and premium rates MNW home insurance policies are likely to be sold direct while HNWs will continue to use brokers It is possible that the MNW market will become more defined as a segment Insurers will continue to remain competitive for clean risks, but premiums will increase for risky clients The market will grow to reach 694m in gross written premiums by 2014 The total market will see moderate growth as a result of new business generation The numbers of UK wealthy individuals will increase significantly to 12.4m by 2014 APPENDIX Data tables Definitions Combined ratio Composite insurer Gross premium London insurance market Managing general agent Mid-net worth (mass affluent) Mass market High net worth Liquid assets (or liquid wealth) Onshore Written premiums Methodology Primary and secondary research High value home insurance market sizing Wealth Management Market Leaders Survey 2010 Datamonitor's Global Wealth Model The UK sub-model Wealth model forecasting methodology Datamonitor's wealth numbers compared with other wealth numbers Further reading Ask the analyst Datamonitor consulting Disclaimer List of Tables Table 1: Total number of UK affluents measured by onshore liquid wealth, e (000s) Table 2: Hiscox and Sterling ratios, (%) Table 3: UK household insurance claims by peril, 2004-Q ( m) Table 4: Selected number of offences from the British Crime Survey, 2004/ /09 Table 5: Mid and high net worth products Table 6: Key drivers affecting UK MNW and HNW home insurance GWP, 2010f-14f Table 7: UK high value home insurance market GWP, 2009e-14f ( m) Table 8: Forecast for the number of UK affluents, 2009e-14f (000s) Table 9: UK inflation rate as measured by the CPI and RPI, June 2008-December 2009 (%)

4 List of Figures Figure 1: Defining MNW and HNW policies Figure 2: MNW policies start at around 50,000 of contents while HNW policies start between 150,000 and 250,000 Figure 3: Two thirds of the high value home insurance market is accounted for by MNW GWP in 2009 Figure 4: Hiscox's advertising campaign has raised the profile of high value home insurance Figure 5: The number of UK affluents grew in 2009, after falling significantly in 2008 Figure 6: Most UK-based HNWs are relatively young Figure 7: Almost half of all HNW investment portfolios are invested into equities Figure 8: Insurers can earn high returns from high value home insurance Figure 9: 2009 will be a record year for escape of water claims Figure 10: Generally crime has fallen, although fraudulent activities may continuing rising Figure 11: Lorega is leading the way for loss recovery insurance Figure 12: 2009 was characterized by falling inflation which in turn lowered home contents claims costs Figure 13: Example of how price comparison sites could be used to capture customers Figure 14: Hiscox is the number one high value home insurance underwriter Figure 15: Chubb offers three main specialist high value household insurance policies Figure 16: Hiscox and Chubb are the largest underwriters active in the high value home insurance market Figure 17: Composites and specialist insurers are both active in the MNW and HNW home insurance market Figure 18: Regal's online offering seeks entice more HNWs into making online quotes Figure 19: The high value home insurance market will experience an average growth of 3.9% up to 2014 Figure 20: The numbers of UK MNW and HNW individuals will experience year-on-year growth Ordering: Order Online - Order by Fax - using the form below Order by Post - print the order form below and send to Research and Markets, Guinness Centre, Taylors Lane, Dublin 8, Ireland.

5 Page 1 of 2 Fax Order Form To place an order via fax simply print this form, fill in the information below and fax the completed form to (from USA) or (from Rest of World). If you have any questions please visit Order Information Please verify that the product information is correct and select the format(s) you require. Product Name: UK High Value Home Insurance 2010 Web Address: Office Code: Product Formats Please select the product formats and quantity you require: SC Quantity Hard Copy: Electronic (PDF) - Single User: Electronic (PDF) - Enterprisewide: USD USD 57 Shipping/Handling USD 4495 USD * Shipping/Handling is only charged once per order. Contact Information Please enter all the information below in BLOCK CAPITALS Title: Mr Mrs Dr Miss Ms Prof First Name: Last Name: Address: * Job Title: Organisation: Address: City: Postal / Zip Code: Country: Phone Number: Fax Number: * Please refrain from using free accounts when ordering (e.g. Yahoo, Hotmail, AOL)

6 Page 2 of 2 Payment Information Please indicate the payment method you would like to use by selecting the appropriate box. Pay by credit card: You will receive an with a link to a secure webpage to enter your credit card details. Pay by check: Please post the check, accompanied by this form, to: Research and Markets, Guinness Center, Taylors Lane, Dublin 8, Ireland. Pay by wire transfer: Please transfer funds to: Account number Sort code Swift code IBAN number Bank Address ULSBIE2D IE78ULSB Ulster Bank, Main Street, Blackrock, Co. Dublin, Ireland. If you have a Marketing Code please enter it below: Marketing Code: Please note that by ordering from Research and Markets you are agreeing to our Terms and Conditions at Please fax this form to: (646) or (646) From USA or From Rest of World