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May 18, 2016updated 26 Jan 2022 3:11pm

Timetric IIC survey: D2C channel set to be top performer in UK insurance market

The direct to consumer (D2C) channel is set to outpace IFAs, brokers, agents and bancassurance in terms of growth over the next year in the UK insurance market, according to a survey by Timetric's Insurance Intelligence Center (IIC).

By Ronan Mccaughey

The direct to consumer channel is set to outpace IFAs and brokers, agents and bancassurance in terms of growth over the next year in the UK insurance market, according to a survey by Timetric’s Insurance Intelligence Center (IIC).

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The global industry survey was conducted in March 2016 by Timetric’s IIC team. They surveyed around 120 industry experts across the world. Participants’ expertise covered all market segments: non-life, life, personal accident and health, and reinsurance.

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From the UK perspective, UK respondents were slightly less optimistic about the outlook for growth over the next 12 months in the aggregator channel.

Aggregators are already well-established in the UK, possibly leading to skepticism about further room for growth.

However, premiums written through this channel are still expected to rise, whereas those written through traditional channels – bancassurance, agents and brokers/IFAs – are all expected to decline.

Optimistic outlook for UK market

Most of the respondents focusing on the UK market expect premiums in their segment to grow. The premium outlook is generally more positive than in continental Europe, with direct insurers in particular optimistic about future growth.

A total of 40% of personal accident and health professionals believe the premiums in the segment will grow more than 5% over the next five years.

The survey found that over the next five years some 60% of life insurers in the UK anticipate profitability in their segment to improve – with 27% of respondents expecting premium income to rise by more than 5% over the next five years.

Health insurance growth

Globally, the Timetric survey revealed health insurance is the business line expected to grow most over the next year.

Asked what product line they anticipate to grow the most over the next 12 months, 39% of respondents to Timetric’s IIC survey chose health insurance in first place, with individual life coming in second place at 33% and liability in third place at 27%.

Although 33% of respondents expect individual life insurance to be one of the fastest growing lines over the next year, there was a regional split on this issue.

The strong growth expected for individual life by a majority of experts from the European, African and Asian markets was not shared by respondents from North America – who favour the prospects of the personal motor business instead.

Industry disruptors

Asked what will be the biggest industry disruptor over the next five years, the majority (55%) said new technologies, followed by regulatory changes (13%) and excessive competition (12%).

The reasons given for new technologies as the top disruptor include the rise of Fintech/Insurtech business models, the changes advanced analytics are expected to have on the underwriting process, but also new business-to-client solutions and related customer expectations, and finally cyber risk.

In terms of regulatory disruption, some respondents in Europe and APAC insisted that regulators lack awareness of how markets can unfold their full potential and that regulation simply “has gone too far”.

Although technological innovations are expected to be the biggest disruptor over the next 5 five years, increased competition and driving consumer engagement are the two priority areas currently challenging insurers and brokers.

survey

Business challenges

For example, the top business challenge for insurers is increased competition followed by regulatory pressure or changes.

Brokers, meanwhile, reported that driving consumer engagement is the main business challenge they face, followed by adopting new technologies in second place.

Insurance technology providers said increased competition is the number one challenge they face. The Timetric IIC survey found most of the respondents focusing on the UK market expect premiums in their segment to grow.

A total of 53% life insurance players expect UK premium income to rise by 1-5% over the next five years. Meanwhile, 27% said they expect UK premium income to grow by more than 5% over the next five years.

While the survey’s main focus was on insurance company executives, respondents also included other market participants such as brokers, agencies, banks and technology providers, as well as consultants, auditors and other industry experts.

This survey is the first in a new series of Timetric surveys, intended to shed light on trends and professional opinions in the insurance industry.

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What will drive the cyber insurance market over the next 3 years?

The global cyber insurance market was worth $7bn in gross written premiums (GWP) in 2020. It will reach $20.6bn by 2025, as the market will continue to thrive post-COVID-19. Our recent report on Cyber Insurance reveals that cybersecurity was thrust into the spotlight in 2020 as COVID-19 forced businesses to digitize their processes and adopt remote working practices overnight. The pandemic also presented an opportunity for cybercriminals to exploit global panic, with a surge in cyberattacks occurring in 2020. The need for cyber insurance is apparent, but the market is not as easy to navigate as it once was. Use our report to guide and help you to:
  • Benchmark yourself against the rest of the market.
  • Ensure you remain competitive as new innovations and insurance models begin to enter the fray.
  • Prepare for how regulation will impact cyber insurance over the next few years.
Download the full report to understand what to expect and how to align your business for success.
by GlobalData
Enter your details here to receive your free Report.

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