Mintel Report on Motor Insurance

Motorists are beginning to wise up to rising motoring insurance costs, according to new research published this week by Mintel. The latest report on the subject details how consumers are now seeking at least three quotations before renewing their policies.

Mintel's information shows that, following years of sharp premium rises, many motorists feel the need to shop around for the cheapest rates available. Research questioning 1,876 UK adults found some 52 percent of motorists looked for at least three different rates before choosing their provider, this proportion has risen from 44 percent in February 2001. Some seven or more quotations were obtained by 7 percent of adults.

By age, the survey found that the 17 to 24 year old and 25 to 34 year old age groups are most likely to seek a number of different rates before renewing. Similarly, the number of owners who renewed without seeking any less expensive alternatives has fallen from 27 percent to 24 percent over the last year. 'The idea that substantial savings can be accrued from 'shopping around' has been promoted by providers hoping to counter consumer inertia among policyholders, and the message does seem to be reaching motorists' comments Paul Davies, senior finance consultant at Mintel.

Online information gathering and the rise of tele-brokers have facilitated the trend towards greater consumer proactiveness. In terms of Internet sales, online sales of motor insurance are now starting to increase and Mintel forecasts that this market will be worth in excess of £232 million by 2005.

Switching providers also appears to be on the increase. Some 40 percent of adults with motor insurance have been with their provider for less than 2 years. This represents a rise of 2 percentage points since 2001 and confirms people are becoming less prepared to stick with their insurer irrespective of premium rates.

On a more positive note, premium rises are likely to be less severe in 2002. These have risen rapidly over the last few years, as difficult underwriting conditions and a proliferation of claims have forced insurers to increase rates. However, during 2002 it is expected that there will be more limited rises of between 8 percent and 10 percent at most, with increases flattening out towards the end of the year.

In conclusion, Mintel forecasts that the performance of the motor insurance industry will gradually improve over the next five years, with the market worth £7.1 billion by 2006. Paul Davies notes that, 'The motor insurance sector now appears to be heading in the right direction and insurers can confidently plan for a period of underwriting surplus as the market recovers from the upheavals of the mid-1990s.'

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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