Insurance in the UK, Part 2

Part
01
of three
Part
01

Gadget Insurance - UK

Our research estimates the UK gadget insurance market to be worth £3.93 billion. Around 47.36 million gadgets are insured in the UK, according to our estimates.

  • The size of the gadget insurance market in the UK is estimated to be £3,932 million or around £3.93 billion. The process of researching and calculating the market size has been explained below.

Additional findings

  • 35% of Brits have gadget insurance.
  • In 2017, a UK person owned an average of 2 gadgets.
  • The average gadget insurance price in the UK is £83.03, as calculated below.
  • As calculated below, around 47.36 million gadgets are insured in the UK.

RESEARCH STRATEGY

The current market size of the UK gadget insurance market couldn't be reliably triangulated. The reason for this is that we used a slightly outdated data point to triangulate the market size. The average number of gadgets per an individual living in the UK was 2 in 2017, according to a study by Electric Tobacconist. It is likely that this number has changed in the past two years, considering the worldwide technological advancements. Still, we used this data point to estimate the market size, since recent information couldn't be found. We attempted to find the current market size information in the following ways:

First, market research publications such as IBIS World and Statista were searched, in search for a pre-compiled report on the UK gadget insurance market. No relevant reports appeared to exist, except for a paywalled 2018 gadget insurance report by Mintel. We dived into UK insurance market reports, both on market research sources such as Deloitte and in local publications, hoping to locate reports that segment the insurance market by type of insurance, but determined gadget insurance wasn’t mentioned in reports specific to the UK.

We resorted to attempting to triangulate the market size. We searched for the following data points: [1] the average UK gadget insurance cost, and [2] the number of insured gadgets in the UK. Since we weren’t able to directly locate the number of gadgets that are insured, we searched for the average number of gadgets per person in the UK and the number of people in the UK with gadget insurance policies. Regardless, we were unable to locate recent data on the average number of gadgets per person in the UK. Recent data focused on either the average number of mobile phones or the average number of internet-connected devices (including desktop computers), which couldn’t be used in the research.

CALCULATIONS

In order to estimate the current UK gadget insurance market size, we used the following data points: [1] the average cost of gadget insurance in the UK and [2] the number of insured gadgets in the UK.

Average cost of gadget insurance in the UK

MoneySavingExpert segments gadget insurance costs by device cost, type of policy and insurance provider. We calculated the average between the 24 offered prices as follows:

Switched On;
  • Cheap gadgets: £36/£46 (mid-range policy/full cover)
  • Mid-range gadgets: £64/£75 (mid-range policy/full cover)
  • Expensive devices: £100/£120.50 (mid-range policy/full cover)

CoverCloud;
  • Cheap gadgets: £40.70/£52.50 (mid-range policy/full cover)
  • Mid-range gadgets: £51.50/£72.50 (mid-range policy/full cover)
  • Expensive devices: £110.23/£156.57 (mid-range policy/full cover)

Leisure Guard;
  • Cheap gadgets: £44.31/£57.51 (mid-range policy/full cover)
  • Mid-range gadgets: £81.21/£101.91 (mid-range policy/full cover)
  • Expensive devices: £109.20/£122.58 (mid-range policy/full cover)

Debenhams;
  • Cheap gadgets: £51.15/£62.15 (mid-range policy/full cover)
  • Mid-range gadgets: £76.45/£90.20 (mid-range policy/full cover)
  • Expensive devices: £122.10/£148.50 (mid-range policy/full cover)

The average of the above-listed prices is £83.03 (1,992.77/24).

Number of insured gadgets in the UK

In order to estimate the number of insured gadgets in the UK, we used the following two data points: [1] the percentage of the UK population with gadget insurance, and [2] the average number of gadgets per UK individual, as follows:

Around 23.68 million people in the UK have gadget insurance (67.65*0.35). Thus, around 47.36 million devices are insured in the UK (23.68*2)

Market size

Assuming the average cost per insured device is £83.03, while the number of insured devices is 47.36 million, the estimated market size is £3,932 million (47,360,000*83.03=3,932,300,800).
Part
02
of three
Part
02

Tenant Liability Insurance - UK

Tenant liability insurance costs between £40 to £103.27 per annual in the United Kingdom. After exhaustive research through multiple market related sources, the market size for tenant liability insurance industry in the United Kingdom is not available in the public domain preexisting or triangulated.

Summary of Helpful Findings

Research Strategy

Your research team began by combing through market reports and reputable media such as IBISWorld, S&P Global (Market Intelligence), The Telegraph, Reuters, and Financial Times for preexisting information on the UK tenant liability market size. While we were able to find reports on the UK home insurance market, the employers' liability insurance market, and other insurance industry verticals, a wide-reaching search through these sources indicated that there is no publicly available information regarding the United Kingdom tenant’s liability insurance market.

Our next strategy was to aggregate the revenue generated from tenant liability insurance of major providers of the service in the United Kingdom. While we were able to identify major players (Urban Jungle, Rentguard, LetAlliance, HomeLet, and IntaSure) in the UK market, information or data points regarding the sales revenue generated from tenant liability insurance were unable on the public domain as a majority of these players (Urban Jungle, Rentguard, and HomeLet) are private entities and are under no legal obligation publish their transactions or financial details to the public. The publicly held companies did not outline the sales revenue generated from tenant liability insurance products. Hence, we could not triangulate a proxy for the market.

Your research also looked through media sources and housing agencies' databases such as The Homes and Communities Agency (HCA), National Housing Federation, The Telegraph, Reuters, and Financial Times for information regarding the total spend on tenant liability insurance in the United Kingdom. A thorough and wide-reaching search through the sources above provided no specifics regarding spend on tenant liability insurance.

We also attempt triangulating a proxy for the industry by determining the average cost of tenant liability insurance in the United Kingdom and then multiply same with either the total number of tenant liability insurance policies sold in the most recent year or the total number of tenants in the United Kingdom with tenant liability insurance policies. While we were able to uncover the average cost of tenant liability insurance policy in the United Kingdom, statistics/data points on the total number of tenant liability insurance policies sold in the most recent year or the total number of tenants in the United Kingdom with tenant liability insurance policies were publicly unavailable.

Though we were able to uncover the total number of tenants (renters), and the percentage of young renters with tenant insurance in the United Kingdom after an exhaustive search through the previously highlighted sources. However, we could not forge ahead to triangulate a proxy for the market using these data points due to limited information as we could not further ascertain the percentage/the total number of young renters in the UK or the percentage of total renters in the United Kingdom with the policy.


Part
03
of three
Part
03

Building Insurance - UK

The United Kingdom building insurance market has been estimated at £2.03 billion (calculations below). The Association of British Insurers reports that 16.9 million households out of 26.6 million households had building insurance in 2017.

UK Building Insurance Market

  • According to the Association of British Insurers (ABI), 16.9 million households had building insurance.
  • Based on data provided by Statista, the average cost of building insurance in the United Kingdom was calculated as £119.86 (calculations below).
  • Therefore, the UK building insurance market is estimated at £2.03 billion.

Additional Key Findings

  • The United Kingdom private landlord insurance market was valued at £807.3 million in 2018, from £759.0 million in 2016.
  • According to a report by GlobalData, "Underinsurance remains the greatest opportunity for insurers, with over 30% of landlords not having specialist cover."
  • IBISWorld notes that the performance of the United Kingdom stock markets affects the investment revenue of the home insurance market.
  • "Direct Line Insurance Group plc, Aviva plc, Lloyds Banking Group plc, RSA Insurance Group plc and AXA UK plc" are the leading companies in the United Kingdom home insurance industry based on market share.
  • The home insurance market in the United Kingdom is highly competitive with many global players competing for market share; only a few players hold a significant share of the market.
  • The key factors driving the growth of the home insurance market include:
    • The continued growth of household numbers further propelled by the continued rise of rented accommodations.
    • "The desire for home improvements among homeowners and modern construction techniques which are encouraging claims for the escape of water and fire."
    • The growing competition among home insurance providers, which is keeping home insurance premiums keen.
    • "The growing focus of the industry on using InsurTech to improve customer engagement and offer more competitive and tailored prices."

Research Strategy

We commenced our research into the building insurance market in the UK by searching for market reports from reputable market research platforms such as Mordor Intelligence, IBISWorld, and Research and Markets. While these sources provided reports (here and here) on the overall size of the home insurance market in the United Kingdom, the breakdown of this market by the encompassing segments was behind a paywall. Other sources such as Statista provided data on household expenditure on home insurance, as well as the average cost of building insurance in the United Kingdom.

Our next approach was to consult insurance organizations in the United Kingdom such as the Association of British Insurers (ABI). However, the data on the breakdown of the general insurance market, which is inclusive of home insurance, was only available for subscribed members. Fortunately, we found a free report from the ABI detailing the number of buildings with building insurance.

To determine the size of the UK building insurance market, we resorted to triangulating the total premium generated in the segment by multiplying the number of buildings with building insurance by the average cost of building insurance. Our calculations have been detailed below.

Calculations

According to the ABI, 16.9 million households out of 26.6 million households had building insurance. Statista provides the average cost of home (buildings) insurance by property type as outlined below:

Therefore, the overall average cost of buildings insurance in the UK is:

(£137.63 + £139.53 + £113.97 + £111.57 + £109.85 + £106.59) / 6 = £119.86

The total size of the UK building insurance market is therefore estimated as:

£119.86 * 16.9 million = £2.03 billion

The screenshot of the Statista data, as well as the screenshots (and URL) of IBISWorld, can also be found in this attached document.

Sources
Sources

From Part 02
Quotes
  • "If you opt to add it on, tenants’ liability insurance can cost as little as £5 per year. A standalone policy could cost you in the region of £40 to £100 a year, and you’ll probably have to pay an excess of between £50 and £100 each time you make a claim."
Quotes
  • "In case you didn’t realise, we love a bit of data. Here’s something we made earlier comparing price and coverage for standalone cover. As you can see, prices tend to fluctuate between £40-£100. The providers compared are Urban Jungle, Intasure, LetAlliance, Rentguard, and HomeLet."
Quotes
  • "Across the UK there are currently 14.8 million(2) renters and new research from Sainsbury’s Bank Home Insurance indicates that over half, 8.4 million(3) of them are leaving themselves unprotected by not having home contents insurance in place."
  • "52,078,525 adults currently live in the UK (ONS), 29.35596% are renters, so 29.35596% of 52,078,525 = 15,288,150.97"