European Motor Survey
By 2020, 1 million private motor insurance policyholders – roughly half of the Irish market – could change provider annually
Irish motorists more open to change than European counterparts
EMBARGOED Friday 18th September 0.01am: Analysis by Deloitte, the business advisory firm, indicates millions of European motor insurance customers are now more willing to switch provider than they were in the past. Here in Ireland, the number of annual switchers could double over the next five years and one million* private car policies – roughly half of the Irish market – could change provider each year by 2020.
Overall, a YouGov survey for Deloitte of 8,688 motor insurance customers across eight European countries found that up to 320 million* policies could switch by 2020. Whilst half (49%) of policyholders across Europe have been with the same motor insurer for the last three years or more, shifts in behaviour could see this fall by about one-third to 32% in the next five years. From now until 2020, Deloitte’s analysis suggests between 60 to 67 million* European policies could be swapped each year.
Deloitte’s findings suggest the European motor insurance market is heading towards a less stable environment where customer behaviours will be more volatile and regulation is shifting how products are priced and sold. This trend is more mature in Ireland as the survey findings show that there is less loyalty here than in other markets across Europe. In Ireland and the UK between 40 and 50 percent of respondents have been with their insurance providers for the last two years at most. In comparison between 40 and 60 percent of respondents in France, Germany and Switzerland have been with the same insurance provider for five years or longer.
Amongst Irish respondents to the survey, the top three reasons for switching motor insurance provider, after price, were found to be type of cover (39%), quality of experience with existing insurer (23%), and ease of switching (16%).
Glenn Gillard, insurance partner at Deloitte, said: “Motor insurance is at a tipping point. Here in Ireland, new car registrations for the first half of this year is up over 25% on last year**. Even though we’re in a better economic state, there is still pressure on households’ disposable income. Despite the improving economic environment, the insurance industry is struggling. Claims costs and premium rates have risen significantly – at July 2015, motor insurance premium rates had increased 16.3% over the previous year***. With ever greater access to information, rapidly increasing premium rates and significant adoption of digital channels, we expect that Irish customers will be shopping around and changing providers even more than in the past.”
Deloitte’s research shows cultural differences affect how motorists buy their insurance. In Ireland and the UK, for example, more than half of drivers research insurance policies online, and price remains the most quoted reason for switching. By comparison, drivers in Italy, Poland and Spain are most influenced by the recommendations of friends and family. Despite being digitally savvy, more than 50% of Irish customers surveyed buy their policy on the phone although only 12% buy their policy face-to-face. In comparison, more than half of customers in the continental European countries purchase their policies face-to-face, and the remainder are split between online buying and phone calls to insurers and intermediaries.
Sinead Kiernan, Director in Deloitte’s actuarial practice, commented: “While changes in customer behaviour offer opportunities for insurers to attract new customers, they also pose a threat to losing profitable loyal customers. With premium rates increasing, customers are more focussed than ever on price. Getting pricing right is critical."
“In the medium term, as pricing stabilises, the challenge for insurance companies will be to understand what matters to customers after price. The successful insurers will be those who demonstrate agility in customer experience, and provide personalised solutions rather than products. There is no ‘one size fits all’ and insurers should tailor their approach to maximise the impact on loyal customers they are looking to attract and retain.”
Glenn Gillard concluded: “In addition to addressing these medium term challenges, Irish insurers must urgently address profitability. Premium rates have already increased significantly over the last year and the industry has indicated this is likely to continue into next year. However, increasing premiums alone will not be sufficient to bring the industry to a stable and sustainable level. Insurers will need to reshape their portfolios to reflect their risk and capital tolerances. Actions are required by industry and by state agencies involved in road safety and claims awards to address increasing claims costs.”
About the research
YouGov conducted the survey for Deloitte of 8,688 motor insurance customers from France (1,044), Germany (1,018), Ireland (764), Italy (1,005), Poland (1,007), Spain (1,007), Switzerland (472) and the United Kingdom (2,371).
* Using our survey results, Deloitte estimated the likely impact of such changes in behaviour across each of the eight countries. We have assumed that respondents will behave according to their stated intentions of switching over the next five years, in response to the question: “On a scale of 0 to 10, where 0 is "Very unlikely" and 10 is "Very likely", how likely or unlikely are you to switch to another insurer when you next renew your motor insurance policy for your main car?” This enabled us to project the population’s tenure with their current insurer over the next five years. We have then applied these results against the number of registered cars.
**SIMI Motor Industry Review Q2 2015
***Source: CSO Consumer Price Index Motor car insurance at 31 July 2015
Notes to editors
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The information contained in this press release is correct at the time of going to press
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