Final month, we surveyed 1,010 insurance coverage clients about their claiming habits and the way they consider the function of insurance coverage. The findings present that insurance coverage is more and more used as safety for critical, rare losses throughout each house and motor, highlighting a possible hole between buyer behaviour and present product design.
A market-wide shift, however not a uniform one
At a excessive degree, the sample is constant. Many shoppers say they apply their very own inside threshold earlier than claiming, selecting to not declare for low-value losses.
Round half categorical curiosity in large-loss-only merchandise. A majority say they might contemplate growing their extra if the worth trade is obvious. Almost 9 in ten say they contemplate components past value when selecting a coverage.
This behaviour seems throughout a broad cross-section of the market.
The nuance lies in how developed that behaviour is, and the way it differs between house and motor.
Dwelling insurance coverage: behaviour is extra established
In house insurance coverage, the shift is extra clearly outlined.
Greater than a 3rd of respondents say they might solely declare for very massive losses, whereas simply 6% say they might declare no matter worth. Round half say they’re desirous about merchandise that cowl main claims solely, and 58% say they might contemplate an extra above £1,000 if the worth discount is adequate.
On the identical time, respondents report that 92% of present excesses sit at £500 or much less.
This hole suggests misalignment between behaviour and product design.
Coverage alternative reinforces this. Two thirds say they intention to steadiness value and canopy, 21% say they prioritise cowl, and solely a small minority say they concentrate on value alone.
Many purchasers are absorbing smaller losses and reserving insurance coverage for extra important occasions. This aligns extra intently with a catastrophic mannequin than present merchandise replicate.
Motor insurance coverage: shifting, however much less outlined
Motor reveals an analogous path, with extra variation.
Round 1 / 4 of respondents say they might solely declare for very massive losses, whereas most say they apply a threshold. Solely a small minority say they might declare for every part.
Curiosity in large-loss-only merchandise is barely decrease, and uncertainty is increased, with round one in 5 respondents not sure.
Respondents additionally point out a willingness to extend extra, though that is extra delicate to cost and faces barely increased resistance.
This displays motor’s function in day by day life. Claims really feel extra frequent, the asset is important, and loss is extra disruptive.
The path of journey is analogous, with much less consistency.
Constant throughout age, with completely different ranges of maturity
Threshold-based behaviour seems throughout all age teams, with a broadly constant steadiness between value and canopy.
The distinction is in maturity.
Older respondents usually tend to say they might solely declare for bigger losses, reflecting a extra settled method, and present much less curiosity in new product buildings.
Center-aged respondents are actively balancing trade-offs and open to adjusting extra. This makes them essentially the most commercially related group.
Youthful respondents are extra open to new concepts, with much less fastened behaviour.
What this implies for insurers
There’s a rising hole between how merchandise are designed and what number of clients truly use them.
Many respondents say they’re already filtering out smaller claims and self-insuring that threat. Merchandise proceed to imagine frequent, lower-value claims.
On the identical time, the market has moved in direction of stripped-back propositions. Necessities tiers and product stacking have diminished headline value and elevated complexity.
Clients not often interact deeply with coverage wording. This creates a disconnect between perceived and precise cowl, usually solely found on the level of declare.
A special path for product design
There is a chance to design merchandise that replicate how clients already behave. This implies reserving insurance coverage for extra important losses.
The problem is knowing what should stay.
Even rare claims carry robust expectations. Windscreen cowl in motor is a transparent instance. It could not match a catastrophic mannequin, and it’s broadly assumed.
Not all massive losses are equal within the eyes of the client. Understanding which claims matter, and why, is crucial.
Earlier than launching new fashions, insurers want to grasp:
which losses clients contemplate price claiming
which components of canopy are important
how increased extra and diminished cowl are interpreted
With out this, there’s a threat of designing merchandise that miss buyer expectations.
Dwelling insurance coverage presents the extra instant alternative, the place behaviour and demand are extra aligned. Motor is shifting in the identical path, with higher variability.
From perception to motion
Recognising the shift is one factor. Performing on it requires a deeper understanding of how clients interpret trade-offs and make selections in apply.
This goes past acknowledged curiosity. It’s about real-world behaviour.
At Shopper Intelligence, we assist insurers construct that understanding by way of bespoke shopper analysis, enabling extra assured product design earlier than propositions attain the market.
