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Household Insurance for the Affluent
Market Briefing, May 2005, 1356  €


Description

IntroductionThe HNW insurance market is currently experiencing a number of changes.
Composite insurers have challenged more established players which has led to product innovation as insurers try to differentiate their offerings.
This brief examines the strategies that insurers can employ to achieve success in this niche sector of the household insurance market.ScopeExtensive coverage of the number of HNW and MNW individuals, penetration levels and the rating environment currently facing underwritersIncorporates in-depth primary research interviews with senior professionals from key HNW playersUtilizes Datamonitor's Global Wealth Model to forecast the growth in HNW and MNW individuals to 2009HighlightsThe suitability of online distribution is restricted to mass affluent MNW business, as it would be of little use to larger niche risks currently dealt with by brokers.
Banks and building societies have also yet to make an impact in the sale of HNW insurance.In the long term, FSA regulation may favor higher premium insurers competing on product quality and service, rather than price.
As transparency improves, customers will be increasingly able to make an informed decision as to the type of cover they require based on specific product features.Although certain insurers have claimed that developing risk trends have prompted the introduction of extra covers, evidence from the Home Office's British Crime Survey does not appear to entirely support this assertion.
Nevertheless, extra covers for car-jacking, stalking and identity fraud are low risk product differentiators.Reasons to PurchaseObtain a comprehensive understanding of the current hot topics in HNW insuranceGain insight into a number of strategies that can be employed to effectively target the different customer segments within the UK HNW populationUnderstand how your customer base looks set to grow over the next five years

Sommaire
 
TABLE OF CONTENTS
 
CHAPTER 1 MARKET CONTEXT 8
 
Introduction 8
 
What is High Net Worth insurance? 8
 
Who are HNW individuals? 8
 
High Net Worth market size 9
 
Datamonitor’s Global Wealth Model 9
 
The number of HNWs grew by 16 per cent in 2003 9
 
Penetration levels are relatively low, but will rise slowly 11
 
Underinsurance is still a huge problem 12
 
Underwriters are facing a flat rate environment at present 13
 
Insurers have benefited from a benign claims environment of late 14
 
Insurers are introducing new covers as risk-free differentiators 14
 
Mid Net Worth insurance 19
 
What is mid net worth insurance? 19
 
The number of MNW individuals is currently growing 19
 
CHAPTER 2 DISTRIBUTION 22
 
Brokers and intermediaries dominate HNW distribution 22
 
Online distribution is limited to certain market sectors 22
 
Banks have yet to make an impact 23
 
Regulation looks set to affect HNW distribution and premiums 23
 
CHAPTER 3 CUSTOMER FOCUS 25
 
Introduction 25
 
Increasing penetration and growing the market is more important than poaching business from rival insurers 25
 
Strategies to target the HNW customer 25
 
Use the claims function as a key differentiator 25
 
Extra covers appeal to some and are relatively risk-free 27
 
Targeting the elderly will prove worthwhile 27
 
Strategies to target the MNW customer 30
 
CHAPTER 4 COMPETITIVE DYNAMICS 32
 
Introduction 32
 
Company types 32
 
HNW players can be split into two key groups 32
 
Competitor profiles 34
 
Chubb 34
 
Hiscox 35
 
Oak Underwriting 36
 
Zurich Private Clients 38
 
Other players 39
 
CHAPTER 5 THE FUTURE DECODED 41
 
Introduction 41
 
HNW forecasts 41
 
The number of HNWs is forecast to grow strongly 41
 
Penetration will rise slightly 43
 
Underwriters will continue to face a flat rating environment 43
 
MNW forecasts 44
 
The mass affluent population wll grow at a slightly slower rate 44
 
CHAPTER 6 APPENDIX 47
 
Datamonitor’s Global Wealth Model 47
 
Quantitative assumptions 47
 
Methodology 47
 
Continuous refinement to the understanding of liquid wealth distribution 48
 
Current and future readings 50
 
Relevant links 50
 
Datamonitor’s custom research capabilities 50
 
SPP writing team 52
 

 

 
LIST OF TABLES
 
Table 1: Number of UK HNW individuals by liquid asset band, 1999-2003 11
 
Table 2: Selected number of offences from the British Crime Survey, 1999-2004 18
 
Table 3: The number of MNW individuals in the UK by liquid asset band, 1999-2003 21
 
Table 4: UK HNW individuals by age band, 1999-2003 29
 
Table 5: Forecast number of HNW individuals by liquid asset band, 2003-8f 43
 
Table 6: Forecast number of MNW individuals by liquid asset band, 2003-8f 46
 
Table 7: Development of macroeconomic variables in Datamonitor’s Global Wealth Model, 2003-8f 47
 

 

 
LIST OF FIGURES
 
Figure 1: The number of HNW individuals grew strongly in 2003 10
 
Figure 2: There has been no significant shift towards aggravated burglaries, car-jacking, kidnapping and credit fraud in recent years 17
 
Figure 3: The number of MNW individuals recovered in 2003 20
 
Figure 4: Over half of HNW individuals in the UK were above the age of 65 in 2003 28
 
Figure 5: A key distinction can be made between composites and specialists 33
 
Figure 6: Some insurers are offering an array of extra covers 39
 
Figure 7: The number of HNW’s is forecast to grow by almost 7 per cent per year to 2008 42
 
Figure 8: The number of MNWs will grow by more than 6 per cent each year to 2008 45
 
Figure 9: Datamonitor’s core consulting capabilities 51
 

 
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