UK Private Motor Insurance: Market Dynamics and Opportunities 2021

Pages: 46 Published: November 24, 2021 Report Code: GDFS0347IA

The gross written premium (GWP) of the private motor insurance market in the UK was valued at GBP 12.9 billion in 2020. The market is projected to grow at a CAGR of more than 1% during the period 2021-2025. The number of vehicles on the roads in 2020 fell significantly from the previous year as national lockdowns and other national restrictions, introduced to curb the spread of COVID-19, kept consumers at home for long periods of the year, reducing traffic, collisions, and claims. Going forward, the market is expected to recover slowly, a result of reduced mobility in the short term, maintaining a low level of road accidents and claims for now, which will keep premium prices lower than before the pandemic. The bodily injury was the largest claim type segment in terms of gross claims paid in 2020 followed by accidental damage, property damage, replacement vehicle, and theft of a vehicle.

Overview of the private motor insurance market in the UK

Overview of the private motor insurance market in the UK

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What are the market dynamics in the private motor insurance market in the UK?

The private motor insurance market contracted in 2020. This has been driven by a combination of a falling average premium and a reduction in total policies written. This reduction in premiums is positive news for UK drivers who had previously been hit hard by rising costs, driven by rising vehicle repair costs, as well as uncertainty surrounding the implementation of the Civil Liability Act and new FCA pricing rules. 

Price fluctuation is expected to continue in 2021 as repair costs continue to rise. This can be attributed to the growingly sophisticated vehicle designs and advanced technology for motor vehicles, including electric cars, which present new challenges to mechanics, engineers, and other trade workers. Meanwhile, the possibility of more lockdowns in 2021 and onwards will continue to generate uncertainty for both consumers and providers. With fewer learners and recently qualified drivers, as well as generally less traffic on the roads, it naturally follows that there has been a reduction in claims for most claim types, including injury and accidental damage. The fall of notified claims could also suggest a potential end to the compensation culture in the UK private motor insurance market.

What are the types of claims in the UK’s private motor insurance market?

Bodily injury claims are the most expensive claim for insurers. The second most costly claim type for insurers, in terms of average cost, was the theft of a vehicle. 

Bodily injury claims in the UK

Bodily injury claims remain the greatest burden on insurers, as the average cost and total cost remain the highest in class. The majority of bodily injury claims are whiplash-related. This type of claim is difficult to dispute since it is not easy to diagnose, but with further crackdowns on whiplash injuries through the Civil Liability Act, the total number and cost of bodily injuries is expected to fall further.

Theft of a vehicle claims in the UK

Thieves are turning to stealing more expensive, high-end vehicles. There has been a rise in the number of criminals targeting weaknesses in new cars’ keyless entry systems, allowing thieves to make off with luxury cars in seconds, as cars with keyless entry tend to be newer and thus higher in value, which pushes up the average payout for the theft of a vehicle.

Theft from a vehicle, property damage, accidental damage, windscreen only, replacement vehicle, and other claims in the UK

Looking at the types of claims separately, the average cost of all types of claims increased in 2020 compared to 2019. The exception is theft from a vehicle, which is likely due to people taking valuables out of their cars in the knowledge that they will not be using them for long periods of time or for long-distance/regular travel due to lockdowns. Despite this, there has been a rise in catalytic converter theft, as criminals increasingly targeted the valuable metals that they utilize.

Private motor insurance market in the UK, by claim type

Private motor insurance market in the UK, by claim type

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Which are the major players in the private motor insurance market in the UK?

The top five players accounted for over 49% of the market in 2020. Direct Line remained the market leader for private motor insurance in 2020. Allianz jumped to second in the market, after completing the purchase of LV= General Insurance Group and the General Insurance division of Legal & General at the start of the year. With customers’ driving behavior changing at an accelerated rate due to national lockdowns and other restrictive measures, a growing number of insurers are looking to develop more flexible motor insurance packages. Now, almost all major providers offer some sort of telematics-based policy, mostly simple black-box policies, measuring either mileage or driving quality and setting premiums based upon the data gathered by the telematics equipment.

Private motor insurance market in the UK, by key players

Private motor insurance market in the UK, by key players

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Market report scope

Market size (Year – 2020) GBP 12.9 billion (Gross Written Premiums)
Growth rate (CAGR) >1%
Base year for estimation 2020
Forecast period 2021-2025
Segmentation by claim type Bodily Injury, Theft of a Vehicle, Theft from a Vehicle, Property Damage, Accidental Damage, Windscreen Only, Replacement Vehicle, Other Claims
Key players Direct Line Group, Allianz, Aviva, Admiral, Advantage Insurance, Munich Re, Ageas, esure, AXA, Covéa, and LV=

This report explores consumer purchasing behaviors in the private motor insurance space, as well as how consumer preferences are changing over time. It identifies what is most influential to customers when purchasing a policy, and also reveals the most popular providers in the market. New trends and innovations are highlighted, as well as the key factors that will influence the market over the next few years.

Reasons to Buy

  • Ensure you remain competitive as new innovations and insurance models begin to enter the market.
  • Be prepared for how regulation will impact the private motor insurance market over the next few years.
  • Benchmark yourself against the leading competitors.
  • Understand the impact of COVID-19 on the private motor insurance market.

Key Players

Direct Line
Aviva
Admiral
Ageas
LV=
Advantage
Munich Re
esure
AXA
Covea
By Miles
Tesla
Marmalade
Marshmallow
Vitality
Abacai
Carrot

Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

2. Market Dynamics

2.1 The private motor insurance market contracted again in 2020

2.2 Factors influencing premiums in 2020

2.3 The motor claims landscape in 2020

2.4 RTAs and their link to claims

3. Competitor Dynamics

3.1 Direct Line remains the market leader for motor insurance

3.2 Analysis of the market leaders

3.3 Newcomers and insurtechs gain traction

4. The Market Going Forward

4.1 Sluggish recovery in the private motor insurance market

4.2 The Civil Liability Act will reform personal injury motor claims

4.3 Other factors will also contribute to a rise in premiums

4.4 Future opportunities in usage-based, car sharing, and P2P policies

4.5 Technology continues to reshape the motor insurance landscape

4.6 Connected cars, the Internet of Things, and smart motorways

4.7 The shift towards electric vehicles presents a challenge to insurers

4.8 Fully autonomous vehicles will disrupt the motor insurance landscape

5. Appendix

5.1 Abbreviations and acronyms

5.2 Methodology

5.3 Secondary sources

5.4 Further reading

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List of Tables

List of Tables

Table 1: Number of claims settled, average cost, and gross claims paid, by claim type, 2016-20

Table 2: GWP and market share of the top 10 private motor insurers in the UK, 2018-20

List of Figures

List of Figures

Figure 1: The private motor insurance industry declined in 2020

Figure 2: Average premiums have generally fallen since the start of the COVID-19 pandemic

Figure 3: There was a huge decline in claims notified and claims frequency in 2020

Figure 4: Average claim costs continue to rise

Figure 5: Bodily injury claims are the most expensive claim for insurers

Figure 6: The number of road casualties in 2020 is artificially low

Figure 7: Casualty numbers fell for all passenger types in 2020

Figure 8: Car and taxi road traffic fell to a 25-year low in 2020

Figure 9: The price of petrol dropped to 104.7 pence per liter in the first national lockdown

Figure 10: New car registrations fell 27.9% in 2020

Figure 11: The majority of consumers expect to drive fewer miles after the pandemic

Figure 12: Direct Line remains the market leader in the private motor market

Figure 13: The UK private motor insurance industry is expected to reach £14.2bn by 2025

Figure 14: Forecasting methodology

Frequently Asked Questions

The gross written premium (GWP) of the private motor insurance market in the UK was valued at GBP 12.9 billion in 2020.

 

 

 

The private motor insurance market in the UK is projected to grow at a CAGR of more than 1% during the period 2020-2025.

Key claim types in UK’s private motor insurance market include bodily injury, theft of a vehicle, theft from a vehicle, property damage, accidental damage, windscreen only, replacement vehicle, and other claims.

Direct Line Group is the leading player in the private motor insurance market in the UK followed by Allianz, Aviva, Admiral, Advantage Insurance, Munich Re, Ageas, AXA, and Covéa.

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