The UK private motor insurance market is arguably one of the most competitive in personal lines insurance, and with consumers being highly responsive to changes in premiums, new product development is often limited. However, Vitality – a provider more accustomed to shaking up the life insurance market – has announced its intentions to partner with Covéa and launch a new motor insurance product in spring 2021.
According to GlobalData’s UK Top 20 General Insurance Competitor Analytics, Covéa was the 10th largest private motor insurance provider in 2019, with gross written premiums in excess of £382m. Clearly, the partnership will allow Vitality the opportunity to become instantly competitive, benefiting from both the knowledge and reputation held by Covéa in the highly competitive market.
The new product, called VitalityCar, is expected to be based on Vitality’s Shared-Value Insurance Model, which uses incentives to reward customers for positive behaviors. Given how the model has helped to set the company apart from its competition in the life and health insurance markets, it would not be unreasonable to expect similar levels of success. The launch will also be aided to an extent by the Financial Conduct Authority’s review into pricing reforms. These are expected to shake up the market from the current status quo and allow for innovate new products such as the upcoming VitalityCar to become more competitive as consumers become less price-orientated and products that offer more than the traditional policies can clearly illustrate their added value.
The COVID-19 pandemic may also benefit the launch of VitalityCar. Many incumbents have had to reduce their investments on new product development, meaning that – in the short term – competition from similar style policies should be relatively low, allowing for Vitality to become established in the highly competitive private motor insurance market.