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Market Research Report

UK Commercial Property Insurance: Market Dynamics and Opportunities 2018

Published by GlobalData Product code 363203
Published Content info 47 Pages
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UK Commercial Property Insurance: Market Dynamics and Opportunities 2018
Published: September 28, 2018 Content info: 47 Pages
Description

"UK Commercial Property Insurance: Market Dynamics and Opportunities 2018", report provides an in-depth analysis of the UK commercial property insurance market. Among the points discussed include the size of the market, performance ratios, as well as changes in premiums, claims, incidents of peril, regulations, and opportunities. The report provides a thorough overview of the market along with future forecasts.

The commercial property insurance sector continues to endure low premium rates and steady annual gross written premium (GWP) increases. As a result, the value of the market is expected to experience small, incremental increases in GWP over the coming years. The market remains competitive with the leading players retaining similar shares year-on-year, keeping premium rates at stubbornly low levels. In a market that is dependent on external factors such as the overall health of the economy and weather conditions, it remains difficult to predict an outcome for the commercial property insurance sector. The benign claims environment throughout 2017 was encouraging for insurers, but the effect of severe weather at the beginning of 2018 is likely to impact the market in the immediate year ahead.

Scope

  • This report provides an in-depth analysis of the UK commercial property insurance market.
  • Among the points discussed include the size of the market, performance ratios, as well as changes in premiums, claims, incidents of peril, regulations, and opportunities.
  • The report provides a thorough overview of the market along with future forecasts.

Reasons to buy

  • Benchmark yourself against the rest of the market.
  • Ensure you remain competitive as new innovations and significant market developments occur.
  • Be prepared for how the commercial property sector could be affected following the UK's decision to leave the European Union.
Table of Contents
Product Code: FS0160IA

Table of Contents

1. EXECUTIVE SUMMARY 2

  • 1.1. Market summary 2
  • 1.2. Key findings 2
  • 1.3. Critical success factors 2

2. MARKET DYNAMICS 7

  • 2.1. Introduction 7
  • 2.2. The commercial property market showed steady GWP growth 7
    • 2.2.1. GWP increased by 3.3% in 2017 as IPT was passed on to consumers 7
    • 2.2.2. Insurers hardened rates to turn a profit in 2016 and 2017, after a tough 2015 8
    • 2.2.3. Market COR increased in 2017, but remains under 100% 10

3. MARKET OPPORTUNITIES 16

  • 3.1. New construction rose in 2017, but dipped in early 2018 16
    • 3.1.1. Regulation has dampened interest in commercial property investment 20
  • 3.2. A strong H2 in 2017 saw the real estate sector match 2016 lending 21
  • 3.3. Global investment in London is booming 22
  • 3.4. Rents are rising slowly across commercial sectors 23
    • 3.4.1. Immigration and vacant property rates could prove detrimental to the commercial sector 27
  • 3.5. Fly tipping has become a significant issue 29

4. COMPETITOR LANDSCAPE 30

  • 4.1. The top five insurers dominate the market 30
    • 4.1.1. Aviva is focusing on claims with a new partnership 31
    • 4.1.2. AXA completed a merger with XL Catlin to create a global property & casualty powerhouse 32
  • 4.2. Technology and preventative measures are emerging in the market 33
    • 4.2.1. RSA is targeting prevention with the relaunch of the RSAred database 33
    • 4.2.2. Allianz is prioritizing brokers 34
    • 4.2.3. Cytora is a rare tech player to influence the market 35
    • 4.2.4. FloodFlash aims to offer fairer cover to businesses in areas of flood risk 35
    • 4.2.5. BIBA is looking towards drone insurance 35

5. FUTURE DEVELOPMENTS AND BEYOND 37

  • 5.1. The immediate future will be defined by the weather and Brexit 37
    • 5.1.1. GWP will rise above £6.3bn by 2022 37
  • 5.2. Brexit will have a significant impact on the industry 39
    • 5.2.1. The construction industry is lobbying government on labor availability 39
    • 5.2.2. Overseas investors continue to be encouraged by favorable exchange rates 39
    • 5.2.3. New regulation for overseas investors is expected 41
  • 5.3. The Draft London Plan outlines projects to maintain status 41
  • 5.4. Technology and the sharing economy are reshaping elements of the market 41
    • 5.4.1. Airbnb is disrupting the market 41
    • 5.4.2. Shared office space is taking off around the world 42
    • 5.4.3. Homes can now be built by 3D printers 43
  • 5.5. 2018 is expected to be a record year for commercial property sales 44
  • 5.6. The logistics and industrial sectors look set for healthy growth 44

6. APPENDIX 45

  • 6.1. Abbreviations and acronyms 45
  • 6.2. Bibliography 45
  • 6.3. Further reading 46

List of Tables

  • Table 1: UK commercial property underwriting results, 2009-17 9
  • Table 2: UK commercial property insurance market claims ratio, expenses ratio, and COR, 2013-17 10
  • Table 3: UK commercial property gross claims incurred (£m), by type of claim, 2013-17 13
  • Table 4: UK commercial property number of claims notified (000s), 2013-17 14
  • Table 5: Construction output, non-seasonally adjusted, current prices by sector (£000s), 2014-17 16
  • Table 6: Construction output, non-seasonally adjusted, current prices by sector CAGR, 2015-17 17
  • Table 7: Volume and percentage point increases in all categories of UK construction, May 2018 17
  • Table 8: Proportion of residential and commercial property rented in the UK, 2004, 2014, and 2017 19
  • Table 9: The cost of prime industrial rents in selected cities in the UK (euros per sq. meter) 25
  • Table 10: Population estimates summary for the UK, 2015-17 28
  • Table 11: Market shares by GWP for the top 10 players in the commercial property market, 2016-17 31
  • Table 12: GWP for the top 10 players in the commercial property market (£m), 2016-17 31
  • Table 13: Commercial property insurance market forecast for GWP and annual growth, 2017-22f 38
  • Table 14: The value of £1 in the leading 10 global currencies, September 2018 40

List of Figures

  • Figure 1: Commercial property insurance saw steady growth in 2017 8
  • Figure 2: The sector has only seen one year of negative profit since 2011 9
  • Figure 3: The commercial property market recorded a COR of 99.3% in 2017 11
  • Figure 4: 2016 was a challenging year for claims, with 2017 performing more in line with previous years 12
  • Figure 5: 2017 saw an improvement on claims notified compared to 2016 14
  • Figure 6: New housing work continues to grow 18
  • Figure 7: Commercial property remains larger than residential 19
  • Figure 8: The number of buy-to-let mortgages crashed after Q1 2016, but remortgages are on the rise 21
  • Figure 9: London dominates foreign investment in commercial property 23
  • Figure 10: Industrial rents rose sharply in Q2 2018 24
  • Figure 11: Industrial rent in London is by far the highest across the UK 25
  • Figure 12: Yield growth has largely dropped across commercial property categories to June 2018 26
  • Figure 13: The UK population has risen by just under 10% since 2005 27
  • Figure 14: Aviva and RSA saw growth in market shares in 2017 30
  • Figure 15: AXA uses apps to target smaller commercial players 33
  • Figure 16: The RSAred dashboard looks to provide customers with real-time data 34
  • Figure 17: The commercial property market will reach £6.3bn by 2022 38
  • Figure 18: Pound sterling is losing ground on the US dollar following the Brexit vote 40
  • Figure 19: The WeWork app allows companies to rent office space by the hour 43
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