Studie - UK Home Emergency Insurance 2010

Introduction

The report is an invaluable guide to the UK home emergency insurance market, providing insight into competitor strategies and performance as well as overall market growth and trends. It examines distribution, including the major role of utilities, identifies the key providers and provides unique market sizing data.

Scope

*Market size and segmentation data.

*The latest market developments and advertising statistics for home emergency insurance by competitor.

*A discussion of the main factors affecting the home emergency insurance market in the future

Highlights

Time-series analysis of policy number data from British Gas and HomeServe suggests that the home service/emergency insurance market has been through the 'growth' phase of the product lifecycle and is now in the 'maturity' phase.

British Gas, one of the biggest advertisers for home emergency products, has launched its 'look after your world' series of TV advertisements, which includes promoting its boiler repair service.

Reasons to Purchase

*Understand size and segmentation of this market in terms of policy numbers.

*Help in planning your entry into the UK home emergency market.

*Gain insight into the distribution profile of this sector.

Overview 1

Catalyst 1

Summary 1

Executive Summary 2

Home emergency is a mass market sector with utilities playing a key role 2

Home emergency and home care is a mass market product 2

Utilities have a competitive advantage 2

British Gas will be a top 10 insurer 2

Table of Contents 3

Table of figures 4

Table of tables 5

Market Context 6

Introduction 6

Home service is a substitute for home emergency insurance 6

Home emergency insurance covers a number of areas including heating systems, blocked drains and electrics failure 6

Home service products offer annual servicing as well as covering emergencies 7

Utility companies have a competitive advantage 8

Home emergency insurance and home service products are a good fit for utility providers 8

Home insurance providers also play a role in the sale of home emergency insurance 9

There are 17 million contracts in force 11

Datamonitor estimates that there are 17 million home service contracts and home emergency insurance policies in-force 11

The market is maturing 13

The recession has made some consumers reluctant to buy extra add-ons 13

Customer Focus 15

Introduction 15

Home emergency presents good value to consumers 15

Home emergency insurance offers good value to consumers 15

Raising consumer awareness remains a challenge for home insurance providers 16

Maintenance contracts have attracted criticism from consumer media groups such as Which? 16

Utility companies can target their service products at a captive customer base 17

Central heating cover is the most common form of home emergency insurance sold by energy companies 17

Homeserve partners with water companies and is particularly strong on water-related propositions 17

Companies advertise by direct mail 18

Direct mail is always the most popular for home emergency insurance advertising 18

Homeserve spends by far the most on advertising 20

Homeserve spent £13m on advertising its home emergency cover 20

British Gas has reduced its marketing budget and is focusing on press and TV advertisements 20

Shield spend £0.8m to advertise home emergency market by direct mail 21

E.ON started advertising its home emergency product in 2009 21

British Gas launched a new advertising campaign for home repair in November 2009 23

Competitive Dynamics 25

Introduction 25

Most home insurance providers partner with HomeServe and Inter Partner Assistance 25

Few home insurance providers underwrite their own home emergency policies 25

The existence of home service providers has made it relatively easy for insurers to enter this market 25

Utilities dominate the standalone market 26

Inter Partner Assistance underwrites most policies 27

AXA Assistance recorded £43.4m in turnover from its UK home assistance business 27

Homeserve manages repairs and claims for a large number of insurance providers 27

Homeserve's operating income has more than doubled since 2005 27

Homeserve aims to achieve higher profitability by transferring its focus to its UK membership business 28

Homeserve offers a wide range of home service products, from insurance to one-off repair 30

Homeserve sells insurance through its affiliates 30

Homeserve is exploring new opportunities to grow its business in 2010 30

Homeserve provides services directly to consumers through its website 31

Repair services also form an integral part of Homeserve's business 32

British Gas aims to be a top 10 insurer 32

British Gas is the UK's leading energy and home services provider 32

British Gas is aiming to grow through a higher conversion ratio from its one-off repair service 33

British Gas is in a strong position and is aiming to become a top-10 UK insurer by 2011 34

Future Decoded 35

Introduction 35

There are opportunities to grow the market 35

The rental sector represents a huge opportunity for competitors to grow their market share 35

The market is maturing 35

APPENDIX 37

Definitions 37

Premium income measures 37

Earned premium 37

Gross premium 37

Net premium 37

Written premium 37

Other definitions 37

Channel 37

Direct insurer/writer 37

Brokers 37

Bancassurers 37

Brandassurers 38

Platform 38

Further reading 38

Ask the analyst 38

Datamonitor consulting 38

Disclaimer 38

List of Tables

Table 1: Number of home service contracts and home emergency insurance policies in-force by type, 2009 13

Table 2: Contract numbers for British Gas and HomeServe, 2004-09 14

Table 3: Home emergency one-off call-out cost (quotes from ReactFast) 17

Table 4: British Gas' home service contracts in-force by type, 2008-09 17

Table 5: Homeserve's home emergency policy numbers by category, 2008-09 18

Table 6: Home emergency insurance advertising spend by medium, 2004-09 20

Table 7: Home emergency insurance advertisers by medium, 2009 22

Table 8: Top 10 UK emergency insurance advertisers ranked by 2009 expenditure, 2005-09 (£) 23

Table 9: Home emergency insurance providers list: top 20 home insurance providers 26

Table 10: Other standalone home emergency insurance providers 27

Table 11: Homeserve's five-year operation performance, FY2005-09 (£000s) 29

List of Figures

Figure 1: Aviva offers home emergency insurance from £7.95 a month 7

Figure 2: British Gas's boiler and heating service contracts includes an annual boiler inspection 8

Figure 3: British Gas offers a range of services, from ongoing care to one-off repairs to homes 9

Figure 4: Home emergency cover is often sold as an add-on to a customer's home insurance policy 11

Figure 5: British Gas' strength is gas/boiler contracts whilst HomeServe's strength is in plumbing and drains 12

Figure 6: The boom years for home service and home emergency insurance are over, however there is steady growth 14

Figure 7: Homecall+ offers three level of covers for its home emergency range 15

Figure 8: Most requested domestic emergency jobs cost around £100 or above 16

Figure 9: TV advertising expenditure has been decreasing over recent years as a proportion of the total marketing budget 19

Figure 10: Homeserve spent the most on advertising home emergency insurance in 2009 21

Figure 11: British Gas advertises its one-off boiler repair service to attract non- customers 24

Figure 12: Homeserve is shifting its focus from its service division to its higher profit margin membership business 28

Figure 13: Homeserve offers its affiliate partners up to £45 per sale 30

Figure 14: Homeserve offers a range of home emergency products to customers 31

Figure 15: Homeserve offers one-off repair services to its customers 32

Figure 16: British Gas owns Dyno-Rod, which specializes in drain care and plumbing 33

Figure 17: British Gas offers a variety of HomeCare service contracts 33

Figure 18: British Gas is aiming to grow through achieving a higher conversion of its business from its one-off repair service 34

Figure 19: The rental sector represents a significant opportunity for home emergency insurance providers to grow the market 36

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