Almost a third (29.8%)of UK consumers are still buying home emergency insurance as a standalone product as opposed to an add-on to regular household cover, despite the fact that the latter offers superior convenience and efficiency at the point of purchase, according to research and consulting firm GlobalData.
According to the company’s latest report, consumers should be looking to purchase home emergency insurance as an extension of a regular household insurance policy, as customers would benefit from being able to simply add additional cover as and when they wish.
Thomas McCourtie, Financial Analyst for GlobalData, explains: “Insurers have a key role to play in ensuring regular home insurance customers remain fully informed of the benefits and value of add-on coverage. Home emergency insurance is best sold in the company of an existing household policy, and it is important that customers are notified of the option to buy home emergency cover in conjunction with ordinary home insurance.”
With the majority of home emergency insurance customers (70.2%) opting for an add-on policy, the market is evidently better suited to those who favour convenience and simplicity. GlobalData believes that home emergency insurers must strive to guarantee the features of a standalone product in an add-on policy so that customers are not subject to the risk of underinsurance.
Despite the advantages of add-on products, they have been subject to much investigation over recent years with the Financial Conduct Authority (FCA) raising concerns over the possibility that many had been mis-sold, and that competition in the space was ineffective. Following the FCA’s study, the market is ripe for change, especially once the regulator’s banning order for opt-out sales comes into full force, which is likely to affect the way insurers market and sell their products.
McCourtie concludes: “The regulatory landscape has changed over the past year, prompting providers to rethink their sales strategies and routes to market by focusing on configuring the sale of add-ons and improving the clarity of product information. These measures mean consumers will be better informed of the full coverage extent of their policies and more encouraged to shop around.”
- Information based on GlobalData’s report: UK Home Emergency Insurance 2016.