20 Mar 2020
Posted in Insurance
UK household insurance gross written premiums fall by 4.9% in 2018 to £6.2bn
Generation rent is an impeding factor on the household insurance market, with start-ups and some incumbents now offering flexible renters’ cover. Under the backdrop of a decline in UK household insurance gross written premiums (GWP), which fell by 4.9% to £6.2bn in 2018, this transition within the market creates a harder environment for insurers, who will likely see combined policies decline and a rise in cheaper landlords’ and renters’ policies, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘UK Household Insurance: Market Dynamics and Opportunities 2019’, reveals that only 19.4% of renters from Generation Z and 19.0% of millennials expect to stop renting within the next two years. Many younger people have been renting for several years and plan to continue doing so.
This trend of long-term renting is a matter of concern to insurance companies, as GlobalData’s UK Insurance Consumer Survey shows that the overall penetration rate for any form of household insurance is 77.2%, while it is only 48.1% for those who rent. It was also revealed that a large percentage of uninsured customers in this space are not being effectively targeted by traditional insurers and policies. Therefore, the challenge for insurers is to create simple and cheap policies and educate people on the benefits of home insurance
Ben Carey-Evans, Insurance Analyst at GlobalData, commented: “Two leading reasons why much of Generation Z does not have a home insurance policy are because 22% think they do not need it and 17% believe the policies are too expensive. The results for millennials are similar. However, insurers should re-evaluate how they offer household insurance to successfully access these groups.”
Traditional players such as RSA, Lloyds Bank, Direct Line and Aviva continue to lead the market – although they face increasing competition from insurtechs such as Lemonade and Urban Jungle. These start-ups are honing in on ‘Generation Rent’, and are able to offer specific renters insurance, which is usually cheaper and more convenient through quick online purchase.
Carey-Evans continues: ‘‘These modern players offer digital and flexible policies aimed at renters, and will therefore alter the market going forward, with on-demand, flexible policies likely to become commonplace.”
Similarly, landlord insurance will be an increasingly important product as the landscape continues to shift towards renters. Currently, landlords regularly purchase combined policies, a standard buildings one, or no insurance at all.
Carey-Evans adds: “The 2019 Consumer Survey found that only 57.5% purchased specific landlords insurance. This means there will be a significant opportunity for insurers as younger generations increasingly rent.”