Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Home emergency is a mass market sector with utilities playing a key role 2
Home emergency and home care is a mass market product 2
Utilities have a competitive advantage 2
British Gas will be a top 10 insurer 2
Table of Contents 3
Table of figures 4
Table of tables 5
Market Context 6
Introduction 6
Home service is a substitute for home emergency insurance 6
Home emergency insurance covers a number of areas including heating systems, blocked drains and electrics failure 6
Home service products offer annual servicing as well as covering emergencies 7
Utility companies have a competitive advantage 8
Home emergency insurance and home service products are a good fit for utility providers 8
Home insurance providers also play a role in the sale of home emergency insurance 9
There are 17 million contracts in force 11
Datamonitor estimates that there are 17 million home service contracts and home emergency insurance policies in-force 11
The market is maturing 13
The recession has made some consumers reluctant to buy extra add-ons 13
Customer Focus 15
Introduction 15
Home emergency presents good value to consumers 15
Home emergency insurance offers good value to consumers 15
Raising consumer awareness remains a challenge for home insurance providers 16
Maintenance contracts have attracted criticism from consumer media groups such as Which? 16
Utility companies can target their service products at a captive customer base 17
Central heating cover is the most common form of home emergency insurance sold by energy companies 17
Homeserve partners with water companies and is particularly strong on water-related propositions 17
Companies advertise by direct mail 18
Direct mail is always the most popular for home emergency insurance advertising 18
Homeserve spends by far the most on advertising 20
Homeserve spent £13m on advertising its home emergency cover 20
British Gas has reduced its marketing budget and is focusing on press and TV advertisements 20
Shield spend £0.8m to advertise home emergency market by direct mail 21
E.ON started advertising its home emergency product in 2009 21
British Gas launched a new advertising campaign for home repair in November 2009 23
Competitive Dynamics 25
Introduction 25
Most home insurance providers partner with HomeServe and Inter Partner Assistance 25
Few home insurance providers underwrite their own home emergency policies 25
The existence of home service providers has made it relatively easy for insurers to enter this market 25
Utilities dominate the standalone market 26
Inter Partner Assistance underwrites most policies 27
AXA Assistance recorded £43.4m in turnover from its UK home assistance business 27
Homeserve manages repairs and claims for a large number of insurance providers 27
Homeserve's operating income has more than doubled since 2005 27
Homeserve aims to achieve higher profitability by transferring its focus to its UK membership business 28
Homeserve offers a wide range of home service products, from insurance to one-off repair 30
Homeserve sells insurance through its affiliates 30
Homeserve is exploring new opportunities to grow its business in 2010 30
Homeserve provides services directly to consumers through its website 31
Repair services also form an integral part of Homeserve's business 32
British Gas aims to be a top 10 insurer 32
British Gas is the UK's leading energy and home services provider 32
British Gas is aiming to grow through a higher conversion ratio from its one-off repair service 33
British Gas is in a strong position and is aiming to become a top-10 UK insurer by 2011 34
Future Decoded 35
Introduction 35
There are opportunities to grow the market 35
The rental sector represents a huge opportunity for competitors to grow their market share 35
The market is maturing 35
APPENDIX 37
Definitions 37
Premium income measures 37
Earned premium 37
Gross premium 37
Net premium 37
Written premium 37
Other definitions 37
Channel 37
Direct insurer/writer 37
Brokers 37
Bancassurers 37
Brandassurers 38
Platform 38
Further reading 38
Ask the analyst 38
Datamonitor consulting 38
Disclaimer 38
List of Tables
Table 1: Number of home service contracts and home emergency insurance policies in-force by type, 2009 13
Table 2: Contract numbers for British Gas and HomeServe, 2004-09 14
Table 3: Home emergency one-off call-out cost (quotes from ReactFast) 17
Table 4: British Gas' home service contracts in-force by type, 2008-09 17
Table 5: Homeserve's home emergency policy numbers by category, 2008-09 18
Table 6: Home emergency insurance advertising spend by medium, 2004-09 20
Table 7: Home emergency insurance advertisers by medium, 2009 22
Table 8: Top 10 UK emergency insurance advertisers ranked by 2009 expenditure, 2005-09 (£) 23
Table 9: Home emergency insurance providers list: top 20 home insurance providers 26
Table 10: Other standalone home emergency insurance providers 27
Table 11: Homeserve's five-year operation performance, FY2005-09 (£000s) 29
List of Figures
Figure 1: Aviva offers home emergency insurance from £7.95 a month 7
Figure 2: British Gas's boiler and heating service contracts includes an annual boiler inspection 8
Figure 3: British Gas offers a range of services, from ongoing care to one-off repairs to homes 9
Figure 4: Home emergency cover is often sold as an add-on to a customer's home insurance policy 11
Figure 5: British Gas' strength is gas/boiler contracts whilst HomeServe's strength is in plumbing and drains 12
Figure 6: The boom years for home service and home emergency insurance are over, however there is steady growth 14
Figure 7: Homecall+ offers three level of covers for its home emergency range 15
Figure 8: Most requested domestic emergency jobs cost around £100 or above 16
Figure 9: TV advertising expenditure has been decreasing over recent years as a proportion of the total marketing budget 19
Figure 10: Homeserve spent the most on advertising home emergency insurance in 2009 21
Figure 11: British Gas advertises its one-off boiler repair service to attract non- customers 24
Figure 12: Homeserve is shifting its focus from its service division to its higher profit margin membership business 28
Figure 13: Homeserve offers its affiliate partners up to £45 per sale 30
Figure 14: Homeserve offers a range of home emergency products to customers 31
Figure 15: Homeserve offers one-off repair services to its customers 32
Figure 16: British Gas owns Dyno-Rod, which specializes in drain care and plumbing 33
Figure 17: British Gas offers a variety of HomeCare service contracts 33
Figure 18: British Gas is aiming to grow through achieving a higher conversion of its business from its one-off repair service 34
Figure 19: The rental sector represents a significant opportunity for home emergency insurance providers to grow the market 36
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