The newest knowledge from our Insurance coverage Behaviour Tracker has highlighted some sizeable shifts within the Motor and Dwelling insurance coverage markets. This replace focuses on the important thing client tendencies, and the impacts this has had on insurers and Value Comparability Web sites (PCWs).
Renewal premium market tendencies
2023 and early 2024 introduced unprecedented inflation throughout private traces, with costs rising each at new enterprise and renewal. These will increase led shoppers to buy round extra, reversing a pattern pushed by Basic Insurance coverage Pricing Practices (GIPP) reforms from 2022. Inflation additionally returned switching to pre-GIPP ranges. Instantly put up GIPP, policyholders had struggled to discover a deal price shifting to; from 2023, the excessive price of insurance coverage meant any transfer was price making.
The second half of 2024 noticed fewer respondents reporting greater premiums at their renewal, notably within the Motor market. How did shoppers react to this modification in situations?
Altering client behaviour
Customers did store round much less with extra beneficial renewal situations. Nevertheless, the drop in these buying round was far lower than quantity of respondents reporting decrease premiums. With premiums decreases being decrease than the file inflation, these steadfastly excessive costs could imply that some shoppers are pressured to buy out of necessity.
We may be seeing very totally different cohorts of behaviour by renewal date. Those that have a late yr renewal date could have seen an preliminary shock in 2023, adopted by stability in 2024. Conversely, these with an early yr renewal may have been stunned final yr however may even see a greater renewal premium in 2025. With a renewal enhance of round £40 being a set off for Motor prospects to buy round, we may even see continued falls in buying via the yr.
Essentially the most common cause for not buying round throughout private traces was policyholders liking the corporate they’re with. The primary cause for buying round was precept. Growing robust buyer relationships is due to this fact key to drive prospects away from a price-based buying tendency.
PCW engagement tendencies
Whereas PCWs have been the principle channel in Motor for a very long time, the significance in Dwelling has elevated tremendously in recent times. Admiral estimated of their Full Yr 2024 outcomes that the variety of PCW prospects within the Dwelling market had elevated by c.50% between H1 2023 and H2024. Our IBT knowledge tells an analogous story, with a c.10percentpt enhance in Dwelling consumers utilizing PCWs between 2022 and 2024.
Nevertheless, together with premiums this development has softened. The Admiral estimate confirmed steady prospects between H1 2024 and H2 2024, the place aggressive Dwelling new enterprise premiums decreased -1.4%. Evaluation from SimilarWeb masking February 2024 to February 2025 noticed a drop in site visitors to the main 4 PCWs year-on-year. With premiums in each Motor and Dwelling persevering with to fall via the primary quarter of 2025, each PCWs and insurers face a better battle for a declining pool of recent enterprise prospects.
Insurers concentrate on retention
One key attribute within the companies which grew share via 2024 was not inactive buyer bases, however a capability to carry onto their policyholders which did store round. Manufacturers newer to the sector are likely to have extra value delicate books constructed up of shoppers who purchase on PCWs. Respondents from these prospects usually tend to store round, however essentially the most profitable companies have the best share of consumers who stick with the agency.
A theme of the 2024 outcomes season has been companies’ capabilities in maximising their current buyer base. Aviva highlighted their skill to supply higher costs to current prospects on PCWs, whereas Admiral reported +13% development of their MultiCover product. With Client Responsibility driving a extra value-led method to enterprise, companies are discovering new methods to construct long-term relationships which is able to result in smaller new enterprise volumes sooner or later.
Product tiering and model stacking
Insurers are taking motion to make sure they’re maximising the alternatives introduced to them. One main insurer is pricing extremely keenly with their telematics product, whereas others lead with stripped again “Necessities” merchandise. Model stacking is widespread in Motor, with over half of quotes seeing no less than two merchandise from one model within the prime 5 positions. This pattern is lessened in Dwelling, notably for policyholders aged 50+. Having many manufacturers shut collectively could enhance conversion choices, however with out eager pricing teams could also be leaving cash on the desk to rivals when squeezing them out.
Suggestions for insurers and PCWs
Improve transparency round coverage options to obviously talk worth and differentiate past pricing alone.
Construct relationships with prospects, changing those that store round on precept to those that keep as a result of they like their insurer.
Capitalise on focused alternatives, whereas not leaving cash on the desk to rivals.
Take into account the journey that policyholders have been on in recent times, and transfer the dialog from value to worth.
The evolving client dynamics pushed by GIPP rules, strategic shifts in insurer retention methods and altering PCW engagement patterns, present each challenges and alternatives. Staying carefully attuned to those tendencies will allow insurers and PCWs to successfully adapt methods, guaranteeing continued success amidst this shifting panorama.
The GIPP Efficiency Tracker
Following the FCA’s Basic Insurance coverage Pricing Practices (GIPP) directive, we’re about to embark upon a major shift wherein we’ll see the eradication of value strolling, the removing of loyalty penalties, and insurers competing more durable than ever to not solely entice however extra importantly, retain prospects.
The GIPP Efficiency Tracker gives you with the flexibility to trace modifications throughout the insurance coverage market and assist inform your product proposition and pricing technique in response to GIPP.
