Marketing and Advertising Strategies in UK Personal General Insurance 2007

The advertising and marketing of personal general insurance in the UK is fiercely competitive. With budgets running into millions of pounds it is absolutely critical to obtain the most up to date competitor and market information. This brief analyzes the marketing spend of the top personal general insurance advertisers in 2006, focusing on trends in product line, media preference and strategy.

Report Highlights


In 2006, several companies changed focus in their advertising campaigns to focus on policy features and benefits rather than price. Instead of focusing solely on price savings, the advertising campaigns of the largest advertisers now emphasize their service levels and the additional features of their policies. The 10 largest advertisers on general insurance products together reduced their advertising spending to £193 million in 2006, a drop of 12.8 per cent. However, not all companies in the top 10 contributed to this reduction.
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CHAPTER 1 INTRODUCTION 11
What is this brief about? 11
Who is the target reader? 11
How to use this brief 11
CHAPTER 2 ISSUES AND TRENDS 12
Introduction 12
The advertising message is shifting from price to features 12
Personal lines advertising has long been focused on price 12
2006 saw a shift in the focus of insurance advertising to policy features and customer service 13
Many advertising campaigns started in 2006 focused on features rather than price, driven by insurers' need to raise premiums to exit the soft cycle 13
Pressure from the FSA is also supporting the move away from price-based advertising 14
As insurance providers begin to compete on features new marketing problems present themselves 16
The commoditization of personal general insurance products has made differentiating products difficult 16
Even when an advertising campaign successfully identifies a unique feature to the market, replicating its success is easy 16
Advertising is dominated by a few large companies, but smaller players are finding ways of challenging them 17
Direct insurers dominate advertising due to their size and their need to build up strong brand awareness 17
A few other players are increasing their budgets substantially, imitating the successful strategies of direct writers 18
Aggregators are also challenging direct insurers' lock on the marketing of insurance 18
Smaller insurance providers have adopted targeted advertising strategies to compete effectively 19
Reduced and refocused campaigns can benefit smaller insurance providers 19
Other companies target their television advertisement towards different demographics 19
Sponsorship is an alternative to advertising that allows insurance providers to target specific demographics without competing against the efforts of other providers 20
CHAPTER 3 PERSONAL GENERAL INSURANCE ADVERTISERS 21
Introduction 21
Increases in marketing budgets were rare among the top 10 advertisers in 2006 21
The top 10 advertisers reduced their spending by £28 million in 2006 21
In defiance of the market trend in 2006, three of the largest insurance advertisers increased spending 22
RIAS joined the top 10 in 2006 by increasing its advertising spend by 36.9 per cent 22
Both RBS subsidiaries in the top 10 increased advertising spending in 2006 22
The majority of general insurance advertisers scaled back their advertising spending in 2006 22
BUPA, the AA, Lloyds TSB and Saga also scaled back advertising in 2006, though by smaller amounts 23
The top 10 insurance advertisers continued to devote most of their marketing budgets to television and direct mail but reduced spending on all media 25
The top 10 general insurance advertisers favored television advertising in 2006 25
Direct mail increased as a share of the total spend, and was almost as important to the top 10 as television advertising in 2006 25
The top 10 supported their advertising campaigns by spending smaller amounts in the media of press, radio and outdoor 26
The top 10 advertisers devote the most resources to motor and household products, with household increasing its share of the total budget 28
Motor insurance advertising declined by 24.1 per cent among the top 10 reflecting a shift in focus away from this unprofitable line 28
Advertising on household insurance was the only product line to receive more money in 2006 28
Spending on all other personal insurance advertising declined in 2006 28
CHAPTER 4 MOTOR INSURANCE ADVERTISING 30
Introduction 30
Advertising on motor insurance products remained dominated by the television campaigns of direct insurers in 2006 30
Motor insurance advertising increased by 2.3 per cent in 2006 to almost £200 million 30
The top 10 motor advertisers are mainly direct insurers, but two brokers were also part of the top 10 in 2006 30
The spend of the top 10 grew slightly in 2006, driven chiefly by the substantial increases of four motor insurance advertisers 31
The top 10 motor advertisers focus on television advertising, reflecting the need for direct insurers in particular to build up brand awareness 33
Most of the largest motor advertisers spent the majority of their budgets on television advertising in 2006 33
Direct mail advertising is used by most of the top 10 to complement their television campaigns 34
Press, outdoor and radio advertising were used sparingly by the top 10 motor insurance advertisers in 2006 35
The smaller advertising budgets of advertisers ranked 11-20 were more evenly split between television and direct mail 36
The list of advertisers ranked 11-20 contains a more varied mixed of providers 36
Direct mail was the most favored medium among advertisers ranked 11-20, accounting for 46.4 per cent of their total spend 36
Television advertising was also very important to competitors ranked 11-20 in 2006 37
Advertisers ranked 11-20 spent smaller amounts on marketing in radio, the press and outdoor 37
CHAPTER 5 HOUSEHOLD INSURANCE ADVERTISING 39
Introduction 39
Advertising on household insurance products totaled £105.7 million in 2006, though growth in marketing budgets came primarily from increases in building and contents spending 39
Insurance providers spent £91.8 million advertising building and contents insurance combined and £13.9 million advertising contents-only insurance in 2006 39
The majority of the advertising spending on household insurance was concentrated on direct mail 40
Building and contents insurance advertisers favored direct mail in 2006, and increased spending via this medium 41
The top 10 building and contents advertisers split their efforts between cross-selling through direct mail and gaining new customers from television advertising 41
The top 10 contained mainly direct insurers and bancassurers eager to expand their market share 41
Direct mail was the primary means of marketing building and contents insurance, reflecting the large number of banks and brokers in the top 10 42
Television advertising was also important to several of the largest building and contents advertisers 42
Press advertising was undertaken by all in the top 10 in 2006, though this medium played a minor role in advertising strategies 42
Advertisers ranked 11-20 focused their more limited budgets on direct mail advertising 44
Direct mail dominated the advertising strategies of advertisers ranked 11-20 44
Only a few advertisers included television or press campaigns in their building and contents marketing 45
The contents-only insurance advertising is dominated by the direct mail campaigns of banks and direct insurers, which decreased their outlays in 2006 47
The top 10 contents-only insurance advertisers, which consists mainly of banks and direct insurers, reduced their spend in 2006 47
Direct mail was the primary means of advertising contents-only insurance for all of the top 10, except Norwich Union 48
Direct mail accounted for the bulk of the spending by the top 10 in 2006 48
Norwich Union and Halifax were the only contents-only advertisers in the top 10 to pursue a television campaign in 2006 49
Direct mail was the preferred medium for advertising by advertisers in the 11-20 bracket 50
Limited budgets resulted in targeted direct mail campaigns 50
Press advertising was the only other expense for advertisers ranked 11-20 51
CHAPTER 6 APPENDIX 53
Research methodology 53
Current readings 53
Do you need more information? 53
Datamonitor Financial Services Consulting 53
SPP writing team 55

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Table 1: Top 10 personal general insurance advertisers, 2005-6 24
Table 2: Top 10 personal general insurance advertisers' spend by media, 2005-6 27
Table 3: Top 10 personal general insurance advertisers' spend by product, 2005-6 29
Table 4: Top 10 motor insurance advertisers, 2004-6 33
Table 5: Top 10 motor insurance advertisers' spend by media, 2006 36
Table 6: The spending of motor insurance advertisers by media, 2006 38
Table 7: Total household advertising spend by media, 2005-6 41
Table 8: Top 10 building and contents insurance advertisers' spend by media, 2006 44
Table 9: The spending of building and contents advertisers ranked 11-20 by media, 2006 47
Table 10: Top 10 contents-only insurance advertisers, 2004-6 48
Table 11: Top 10 contents-only insurance advertisers' spend by media, 2006 50
Table 12: The spending of contents-only insurance advertisers ranked 11-20 by media, 2006 52


Figure 1: Like many other advertisers, Norwich Union's "quote me happy" campaign focused on low price as its principle draw 13
Figure 2: The Norwich Union's press advertisement from September 2006 emphasizes service and features 15
Figure 3: CIS launched the first advertising campaign with a green focus in 2006 17
Figure 4: Privilege's marketing campaign, started in 2005, targeted low claims groups with its range of ads featuring Joanna Lumley 20
Figure 5: Bennett's, the motorcycle insurance broker, had a very successful sponsorship of the British Superbike Championship in 2006 20
Figure 6: The majority of the largest insurance advertisers reduced advertising spending in 2006 24
Figure 7: Direct mail and television were the preferred media for advertising insurance in 2006 27
Figure 8: As the two largest insurance lines, motor and household also received the largest proportion of the advertising budget in 2006 29
Figure 9: RAC began a new print campaign in 2005 called "More know how" as part of its reinvigorated marketing campaign 32
Figure 10: Sheilas' Wheels has been aggressively marketed by HBOS via a television campaign 34
Figure 11: Television remained the medium of choice for most of the top 10 advertisers in 2006 35
Figure 12: Television and direct mail account for almost 90 per cent of spending by advertisers ranked 11-20 38
Figure 13: Direct mail constituted the bulk of the advertising outlay for household insurance products 40
Figure 14: Direct mail constituted the bulk of the advertising outlay for building and contents insurance among the top 10 in 2006 43
Figure 15: Direct mail constitutes the bulk of the marketing outlay for building and contents 46
Figure 16: Halifax far outspent any of its rivals in contents-only insurance via its direct mail campaigns in 2006 49
Figure 17: Most advertisers ranked 11-20 pursued a single medium approach to contents-only insurance in 2006 51

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