Risk Metrics: Consumer Concern for and Acquisition of Insurance for Everyday Risks in the UK

Table of Contents

0.0 EXECUTIVE SUMMARY

• In aggregate, the market for stand-alone policies in these 40 areas is worth almost £17 billion
• In a majority of cases, more than 50% of respondents perceive the underlying risks to be relevant
• The risks covered by identity theft insurance / assistance arouse the greatest consumer concern
• Protection of credit card payments generates comparatively little concern among cardholders
• Loss of driving license insurance is the least commonly held form of insurance of the 40 analysed
• Many types of cover are under-sold relative to the concern that the underlying risks produce
• Packaged or substitute cover outweighs stand-alone insurance for 25 of the 40 risks reviewed
• Providers of credit cards and premium accs. can exert more influence than is presently the case
• The results for particular consumer segments yield some results that are predictable
• … and others, such as the purchase patterns for extended warranties, that are more surprising

1.0 INTRODUCTION

• Research rationale
• In total, policies designed to cover the 40 groups of risk add up to £17 billion stand-alone market
• … although, in many cases, little or no published research exists to illustrate consumer behaviour
• The Risk Metrics research program adds value in four key respects
• … and is relevant to a variety of financial and other affinity partners as well as insurance providers
• Research sample
• Finaccord
• Risk Metrics and other consumer-focused studies
• UK affinity and partnership marketing publications
• IPT / Tpoll

2.0 RISK OVERVIEW

• Introduction
• Relevance of underlying risks
• Insurance types
• Consumers are most likely to perceive critical illness and identity theft as relevant risks
• … with only nine out of 40 risks perceived as relevant by fewer than 50% of respondents
• Insurance groups
• On average, 77.0% of consumers perceive risks related to personal health to be relevant
• Degree of concern caused by underlying risks
• Insurance types
• Among the relevant audience, the risk of identity theft produces the highest rates of concern
• … with parents and pet owners also relatively worried about the health of their children and pets
• Generally speaking, consumers are unconcerned about defects or accidental dam. to furniture
• Insurance groups
• The types of risk insured by extended warranties are least likely to produce concern
• The risks covered by insurance for golfing equipment are least likely to be relevant to consumers
• Insurance take-up rates
• Overall
• Only breakdown recovery insurance is held by more than a half of all survey participants
• … although a further four types of cover have been acquired by more than a third of the sample
• Loss of driving license insurance achieves the weakest overall take-up rate among consumers
• Among consumers for whom underlying risk is relevant
• RISK METRICS: CONSUMER CONCERN FOR AND ACQUISITION OF INSURANCE FOR EVERYDAY RISKS IN THE UK
• 17 of the 40 types of cover considered are held by more than a third of the relevant audience
• Several types of insurance appear under-sold relative to the concern that the related risks cause
• Over 50% of the concerned audience hold the applicable insurance for just 10 of the 40 risks
• … and the lack of cover is particularly acute at over 80% of concerned consumers in six cases
• Stand-alone and packaged / substitute cover
• Insurance to cover the risks analysed can often by acquired on a packaged basis
• … although there is a stand-alone market, albeit sometimes small, in almost every instance
• Approximate market size for stand-alone cover
• The survey results provide a basis for the calculation of an approximate market size
• … albeit a number of adjustments have been made in recognition of the research methodology
• … with a ' sanity check' having been made, where viable, against publicly available data sources
• The aggregate market for stand-alone cover possesses an aggregate value of almost £17 billion

3.0 RISK ANALYSIS

• Introduction
• Risks related to personal health
• Children' s health
• Critical illness
• Dental expenses
• Medical or hospital treatment
• Permanent disability
• Personal accident
• Sports accident
• Risks related to financial commitments
• Mortgage payments
• Loan / car finance payments
• Credit card payments
• Bill payments
• Legal expenses
• Price protection
• Risks related to personal possessions (eg. accidental damage, loss and theft)
• Angling equipment
• Bicycles
• Golfing equipment
• Jewellery
• Laptop computers
• Mobile gadgets (eg. Blackberry, iPod, MP3 player, personal digital assistant)
• Mobile telephones
• Musical instruments
• Pets
• Photographic equipment
• Purchase protection
• Satellite navigation systems (satnavs)
• Risks related to personal possessions (mechanical or other defects)
• Audio-visual appliances
• Desktop / laptop computers
• Kitchen appliances
• Furniture
• Risks related to personal security
• Card, key and document protection
• Identity theft
• Risks related to home ownership
• Electricity supply
• RISK METRICS: CONSUMER CONCERN FOR AND ACQUISITION OF INSURANCE FOR EVERYDAY RISKS IN THE UK
• Gas boilers, gas supply pipes and gas central heating
• Drainage, plumbing and water supply pipes
• Pest contamination
• Home crises
• Risks related to car ownership
• Breakdown recovery
• Mechanical defects to cars
• Shortfall protection
• Loss of driving license

4.0 SEGMENT ANALYSIS

• Introduction
• Risks related to personal health
• Children' s health
• Critical illness
• Dental expenses
• Medical or hospital treatment
• Permanent disability
• Personal accident
• Sports accident
• Risks related to financial commitments
• Mortgage payments
• Loan / car finance payments
• Credit card payments
• Bill payments
• Legal expenses
• Price protection
• Risks related to personal possessions (eg. accidental damage, loss or theft)
• Angling equipment
• Bicycles
• Golfing equipment
• Jewellery
• Laptop computers
• Mobile gadgets
• Mobile telephones
• Musical instruments
• Pets
• Photographic equipment
• Purchase protection
• Satellite navigation systems (satnavs)
• Risks related to personal possessions (mechanical or other defects)
• Audio-visual appliances
• Desktop / laptop computers
• Kitchen appliances
• Furniture
• Risks related to personal security
• Card, key and document protection
• Identity theft
• Risks related to home ownership
• Electricity supply
• Gas boilers, gas supply pipes and gas central heating
• Drainage, plumbing and water supply pipes
• Pest contamination
• RISK METRICS: CONSUMER CONCERN FOR AND ACQUISITION OF INSURANCE FOR EVERYDAY RISKS IN THE UK
• Home crises
• Risks related to car ownership
• Breakdown recovery
• Mechanical defects to cars
• Shortfall protection
• Loss of driving license

GRAPHICS / TABLES

• Sample breakdown by age group, household income band and geographical location
• Ranking of insurance types by degree of relevance to consumers, 2007
• Ranking of insurance groups by degree of relevance to consumers, 2007
• Ranking of ins. types by degree of concern caused by und. risks among cons. for whom risk is relevant, 2007
• Ranking of ins. groups by degree of concern caused by und. risks among cons. for whom risk is relevant, 2007
• Plot of relevance of and concern caused by underlying risks among consumers, 2007
• Ranking of insurance types by overall take-up rates among all consumers, 2007
• Ranking of ins. types by overall take-up rates among cons. for whom the underlying risks are relevant, 2007
• Conc. caused by und. risks and overall ins. take-up rates among cons. for whom the und. risks are relev., 2007
• Rank. of ins. types by overall take-up rates among cons. who are very or quite concerned by und. risks, 2007
• All cons. who are very or quite concerned by the und. risks and those lacking ins. within the same group, 2007
• Rank. of ins. types by overall take-up rates among all cons. split between stand-alone / packaged cover, 2007
• Rank. of ins. types by ov. take-up rates am. cons. for whom und. risks are relev. split bet. s-a. / pack. cover, 2007
• Cons. for whom the und. risks are relev. with s-a. cover and those within same group with pack. cover, 2007
• Approximate value of the market for stand-alone policies in the 40 relevant categories of policy, 2006/7
• Children' s health: level of concern and degree of relevance to consumers, 2007
• Children' s health insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Critical illness: level of concern and degree of relevance to consumers, 2007
• Critical illness insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Dental expenses: level of concern and degree of relevance to consumers, 2007
• Dental expenses insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Medical or hospital treatment: level of concern and degree of relevance to consumers, 2007
• Health / hospital cash plans: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Permanent disability: level of concern and degree of relevance to consumers, 2007
• Permanent health insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Personal accident: level of concern and degree of relevance to consumers, 2007
• Personal accident insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Sports accident: level of concern and degree of relevance to consumers, 2007
• Sports accident insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Mortgage payments: level of concern and degree of relevance to consumers, 2007
• Mort. payment protection ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Loan / car finance payments: level of concern and degree of relevance to consumers, 2007
• Loan payment protection ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Credit card payments: level of concern and degree of relevance to consumers, 2007
• Credit card pay. protect. ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Bill payments: level of concern and degree of relevance to consumers, 2007
• Bill payment protection ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Legal expenses: level of concern and degree of relevance to consumers, 2007
• Legal expenses insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Price protection: level of concern and degree of relevance to consumers, 2007
• Price protection insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of angling equipment: level of concern and degree of relevance to consumers, 2007
• Angling equipment insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007100
• Acc. dam. to or loss / theft of bicycles: level of concern and degree of relevance to consumers, 2007
• Bicycle insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of golfing equipment: level of concern and degree of relevance to consumers, 2007
• Golfing equipment insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of jewellery: level of concern and degree of relevance to consumers, 2007
• Jewellery insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of laptop computers: level of concern and degree of relevance to consumers, 2007
• Laptop computer insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of mobile gadgets: level of concern and degree of relevance to consumers, 2007
• Mobile gadget insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of mobile telephones: level of concern and degree of relevance to consumers, 2007
• Mobile telephone insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of music. instruments: level of concern and degree of relevance to consumers, 2007
• Musical instrument ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Veterinary exps. assoc. with ownership of pets: level of concern and degree of relevance to consumers, 2007
• Pet insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Pet insurance: consumer penetration rates split between owners of cats, dogs and other animals, 2007
• Acc. dam. to or loss / theft of photo. equipment: level of concern and degree of relevance to consumers, 2007
• Photograph. equipment ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of any kind of high value prod.: level of concern and degree of relev. to cons., 2007
• Purchase protection ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Acc. dam. to or loss / theft of satnavs: level of concern and degree of relevance to consumers, 2007
• Satnav insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Mechanical defects to audio-visual appliances: level of concern and degree of relevance to consumers, 2007
• Ext. warranties for audio-visual apps.: cons. pen. rates split by stand-alone purchase / packaged cover, 2007
• Mechanical defects to desktop / laptop computers: level of concern and degree of relevance to cons., 2007
• Ext. warranties for desktop / laptop comps.: cons. pen. rates split by stand-alone purch. / packaged cover, 2007
• Mechanical defects to kitchen appliances: level of concern and degree of relevance to consumers, 2007
• Ext. warranties for kitchen apps.: cons. pen. rates split by stand-alone purchase / packaged cover, 2007
• Defects, including acc. damage, to furniture: level of concern and degree of relevance to consumers, 2007
• Ext. warranties for furniture: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Loss or theft of cards, keys or valuable documents: level of concern and degree of relevance to cons., 2007
• Card protection insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Identity theft: level of concern and degree of relevance to consumers, 2007
• Identity theft insurance / assist.: cons. penetration rates split by stand-alone purchase / packaged cover, 2007
• Electrical emergencies or faults: level of concern and degree of relevance to consumers, 2007
• Elec. emergency and breakdown ins.: cons. pen. rates split by stand-alone purchase / packaged cover, 2007
• Gas boiler, gas supply pipe etc. emergencies or faults: level of concern and degree of relevance to cons., 2007
• Gas boiler, gas supply pipe etc. ins.: cons. pen. rates split by stand-alone purchase / packaged cover, 2007
• Drainage, plumbing and water supply emergs. or faults: level of concern and degree of relev. to cons., 2007
• Drain., plumbing and water supply ins.: cons. pen. rates split by stand-alone purchase / packaged cover, 2007
• Pest contamination: level of concern and degree of relevance to consumers, 2007
• Pest contamination ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Earthquakes, floods, storms and other natural calamities: level of concern and degree of relev. to cons., 2007
• Home crisis insurance: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Breakdown recovery: level of concern and degree of relevance to consumers, 2007
• Breakdown recovery insurance: cons. penetration rates split by stand-alone purchase / packaged cover, 2007
• Mechanical defects to cars: level of concern and degree of relevance to consumers, 2007
• Extended warranties for cars: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Shortfall protection: level of concern and degree of relevance to consumers, 2007
• GAP / shortfall protection ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Loss of driving license: level of concern and degree of relevance to consumers, 2007
• Loss of driving license ins.: cons. penetration rates split by stand-alone purchase and packaged cover, 2007
• Children' s health: level of concern and degree of relevance split by consumer segment, 2007
• Children' s health insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Critical illness: level of concern and degree of relevance split by consumer segment, 2007
• Critical illness insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Dental expenses: level of concern and degree of relevance split by consumer segment, 2007
• Dental expenses insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Medical or hospital treatment: level of concern and degree of relevance split by consumer segment, 2007
• Health / hospital cash plans: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Permanent disability: level of concern and degree of relevance split by consumer segment, 2007
• Permanent health insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Personal accident: level of concern and degree of relevance split by consumer segment, 2007
• Personal accident insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Sports accident: level of concern and degree of relevance split by consumer segment, 2007
• Sports accident insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Mortgage payments: level of concern and degree of relevance split by consumer segment, 2007
• Mort. payment protection ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Loan / car finance payments: level of concern and degree of relevance split by consumer segment, 2007
• Loan payment protection ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Credit card payments: level of concern and degree of relevance split by consumer segment, 2007
• Credit card pay. protect. ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Bill payments: level of concern and degree of relevance split by consumer segment, 2007
• Bill payment protection ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Legal expenses: level of concern and degree of relevance split by consumer segment, 2007
• Legal expenses insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Price protection: level of concern and degree of relevance split by consumer segment, 2007
• Price protection insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of angling equipment: level of concern and degree of relev. split by cons. seg., 2007
• Angling equipment insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of bicycles: level of concern and degree of relev. split by cons. seg., 2007
• Bicycle insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of golfing equipment: level of concern and degree of relev. split by cons. seg., 2007
• Golfing equipment insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of jewellery: level of concern and degree of relevance split by cons. seg., 2007
• Jewellery insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of laptop computers: level of concern and degree of relev. split by cons. seg., 2007
• Laptop computer insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of mobile gadgets: level of concern and degree of relev. split by cons. seg., 2007
• Mobile gadget insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of mobile telephones: level of concern and degree of relev. split by cons. seg., 2007
• Mobile telephone insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of music. instruments: level of concern and degree of relev. split by cons. seg., 2007
• Musical instrument ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Veterinary exps. assoc. with ownership of pets: level of concern and degree of relev. split by cons. seg., 2007
• Pet insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of photo. equipment: level of concern and degree of relev. split by cons. seg., 2007
• Photograph. equipment ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of any kind of high value prod.: concern / degree of relev. split by cons. seg., 2007
• Purchase protection ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Acc. dam. to or loss / theft of satnavs: level of concern and degree of relev. split by cons. seg., 2007
• Satnav insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Mechanical defects to audio-visual appliances: level of concern and degree of relev. split by cons. seg., 2007
• Ext. warranties for audio-visual apps.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Mechanical defects to desktop / laptop computers: concern and degree of relev. split by cons. seg., 2007
• Ext. warranties for desktop / laptop comps.: cons. pen. rates split by s-a. / pack. cover and by cons. seg., 2007
• Mechanical defects to kitchen appliances: level of concern and degree of relev. split by cons. seg., 2007
• Ext. warranties for kitchen apps.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Defects, including acc. damage, to furniture: level of concern and degree of relev. split by cons. seg., 2007
• Ext. warranties for furniture: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Loss or theft of cards, keys or valuable documents: concern and degree of relev. split by cons. seg., 2007
• Card protection insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Identity theft: level of concern and degree of relevance split by consumer segment, 2007
• Identity theft insurance / assist.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Electrical emergencies or faults: level of concern and degree of relevance split by consumer segment, 2007
• Elec. emergency and breakdown ins.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Gas boiler, gas supply pipe etc. emergencies or faults: concern and degree of relev. split by cons. seg., 2007
• Gas boiler, gas supply pipe etc. ins.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Drainage, plumbing and water supply emergs. or faults: concern and degree of relev. split by cons. seg., 2007
• Drain., plumbing and water supply ins.: cons. pen. rates split by s-a. / packaged cover and by cons. seg., 2007
• Pest contamination: level of concern and degree of relevance split by consumer segment, 2007
• Pest contamination ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Earthquakes, floods, storms and other natural calamities: concern / degree of relev. split by cons. seg., 2007
• Home crisis insurance: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Breakdown recovery: level of concern and degree of relevance split by consumer segment, 2007
• Breakdown recovery insurance: cons. penetration rates split by s-a. / packaged cover and by cons. seg., 2007
• Mechanical defects to cars: level of concern and degree of relevance split by consumer segment, 2007
• Extended warranties for cars: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Shortfall protection: level of concern and degree of relevance split by consumer segment, 2007
• GAP / shortfall protection ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007
• Loss of driving license: level of concern and degree of relevance split by consumer segment, 2007
• Loss of driving license ins.: cons. pen. split by stand-alone / packaged cover and by cons. seg., 2007