Consumer Trends Shaping the Future of the UK Insurance Industry

The UK insurance coverage market has remained resilient all through the cost-of-living disaster. The important nature of insurance coverage has protected the business from the worst of the difficult financial setting. 9 out of ten adults personal no less than one kind of insurance coverage, and even classes of insurance coverage that aren’t seen as needed e.g. pet or journey, markets have carried out strongly. In some circumstances, the cost-of-living disaster has had a constructive influence. For instance, Mintel’s market evaluation discovered that three-quarters of customers who just lately bought, or are planning to buy, journey insurance coverage imagine that the cost-of-living disaster has made having insurance coverage for journey extra necessary.

Nonetheless, this doesn’t imply that there’s room for insurers to turn into complacent. Rising residing prices might not have had an excessive amount of of an influence on the worth of the UK insurance coverage business itself, however it has led to adjustments in shopper behaviour and expectations. Insurance coverage insurance policies have come beneath elevated scrutiny. Beneath, we discover the 4 key shopper tendencies and improvements in insurance coverage that can form the way forward for the business.

This text examines the most recent shopper tendencies within the UK insurance coverage business, to study in regards to the US insurance coverage business check out Comperemedia’s Insurance coverage Advertising Traits.

As a result of ongoing squeeze on family funds, customers are actually, greater than ever, on the lookout for good worth when looking for insurance coverage. Mintel’s market analysis discovered that over a 3rd of UK customers assume low worth is one in every of three most necessary elements when renewing an insurance coverage coverage. Purchasing round is an engrained human behaviour, highlighted by the massive recognition of worth comparability web sites. A harsh financial setting encourages customers to be extra price-savvy, and that is mirrored within the 5% enhance in customers utilizing worth comparability web sites previously 12 months in comparison with the 12 months earlier than. Even Amazon has thrown its hat into the worth comparability ring, launching the Amazon Insurance coverage Retailer in its place method to insurance coverage comparability.

The three hottest merchandise shopped for on worth comparability websites are all insurance coverage merchandise (automobile, house, and journey insurance coverage, in that order). However, thankfully for insurers, many shoppers who store round on the level of renewal don’t truly go on to modify suppliers. Mintel has discovered that nearly two-fifths of house insurance coverage clients, and two-thirds of automobile insurance coverage clients stayed with their present supplier even after buying round.

Shoppers are on the lookout for methods to decrease prices past utilizing worth comparability websites. Over half of UK motorists anticipate to take some motion to scale back the price of their automobile insurance coverage at their subsequent renewal. The automobile insurance coverage market has been main innovation within the business for a while now with telematics insurance policies, however now expertise has advanced past black-boxes fitted in vehicles. For instance, the app DriveScore permits drivers to trace their driving behaviour with their private telephone, after which empowers them to make their very own determination over whether or not to share that knowledge with their insurer or not.

Insurers ought to develop methods to teach customers on the advantages of expertise in motor insurance coverage, notably when it comes to lowering prices. This might be notably helpful to Gen Z and younger Millennials, who’re extra open to utilizing expertise and who are inclined to have greater automobile insurance coverage premiums.

It’s also necessary to keep in mind that perceived worth typically goes past upfront value, and there’s area for technological improvements to supply one thing past decrease costs. In February 2023, pet insurance coverage agency Waggel introduced a partnership with the vet expertise agency Vet-AI to supply its policyholders limitless entry to Vet-AI’s Joii Pet Care App. The partnership permits Waggel clients to get 24/7 entry to vet video consultations, vet nurse consultations and a symptom checker.

Technological innovation can be utilised to encourage retention and enhance buyer satisfaction. The vast majority of UK customers say they solely wish to interact with their insurer when renewing a coverage or making a declare, which might result in a scarcity of name loyalty from customers. Encouraging the usage of supplier apps might assist bolster constructive engagement regularly and finally construct belief. By specializing in buyer expertise and engagement all through the coverage time period, relatively than simply on the level of buy or renewal, suppliers can enhance the probability that clients will renew their insurance coverage coverage relatively than change.

With a view to meet shopper demand for handy customer support, insurers want to contemplate how they’ll enhance preliminary app engagement, particularly amongst a youthful demographic, who Mintel have recognized as extra prepared to make use of apps to handle insurance policies. This could possibly be achieved by unique in-app offers and rewards. Manufacturers can take inspiration from the medical insurance market. The Vitality medical insurance app, for instance, permits subscribers to trace their exercise factors and entry cinema and movie reward vouchers.

Funding in digital companies is important for the way forward for the market. Nonetheless insurers have to be sure that this doesn’t come on the expense of conventional companies, corresponding to phone helplines. Over 4 in ten insurance coverage policyholders want to talk to somebody on the telephone in terms of making a declare.

In response to the cost-of-living disaster, customers are in search of extra flexibility of their insurance coverage insurance policies, each when it comes to fee and protection choices. Manufacturers want to answer this demand, and it’s notably necessary for insurers to seek out methods to cater for many who are going through tight monetary stress however have to retain entry to important insurance coverage cowl. A great instance of a product that’s responding to this want is AXA’s tiered house insurance coverage, which permits clients to decide on what gadgets they wish to embody of their cowl each inside and outdoors the house.

Mintel’s International Outlook on Sustainability 2023 discovered that buyers’ consciousness of environmental points are rising. 9% of adults with insurance coverage rank the sustainability credentials of their supplier as a high three precedence at renewal. Though inexperienced and moral insurance coverage stays a distinct segment phase of the market, curiosity and growth are rising and can proceed to take action as local weather and sustainability efforts proceed to achieve momentum. In the long run, notably as soon as the financial system strengthens, sustainability will turn into much more necessary. As these elements turn into extra important, insurers might want to discover methods to explicitly reveal their sustainability credentials.

Regardless of challenges posed by the cost-of-living disaster, insurance coverage stays a necessary buy for almost all of customers. Insurers have to proceed offering worth, each by means of aggressive costs and insurance policies with added extras. It can be crucial that the insurance coverage business embraces expertise and the usage of apps to have interaction with youthful customers, however not on the expense of alienating older customers.

Is what you are promoting responding to the evolving attitudes and preferences of insurance coverage clients? With Mintel’s main impartial market and shopper analysis, you possibly can focus your methods to align with the most recent tendencies and developments within the UK insurance coverage business. Discover our intensive Insurance coverage Market Analysis, or fill out the shape beneath to enroll to Highlight, Mintel’s free e-newsletter for unique insights.