Gadget insurance coverage stands out amongst area of interest traces with £604m premium surge

Gadget insurance coverage has emerged as successful story within the UK common insurance coverage market, combining progress in coverage volumes with truthful payout ratios regardless of ongoing regulatory stress on add-on merchandise, in keeping with evaluation by unbiased consultancy Broadstone.

The agency’s evaluation of FCA General Insurance Value Measures Data 2024 discovered that gadget insurance coverage insurance policies rose from 7.87 million in 2023 to eight.46 million in 2024 – an annual improve of seven.5%.

The majority of those have been standalone merchandise, which accounted for nearly two-thirds of gross sales.

Premium earnings additionally surged over the identical interval, climbing 22% from £496m in 2023 to £604m in 2024. Broadstone stated the expansion steered insurers had begun to revive margins after a interval of tight profitability, whereas persevering with to ship truthful worth to shoppers.

Add-on payout ratios remained regular at 41.8%, whereas standalone merchandise noticed a drop from 59.3% in 2023 to 42.9% in 2024. The consultancy attributed this to pricing recalibration as insurers adjusted to increased machine prices and altering claims behaviour.

Claims frequency additionally declined, with add-on insurance policies falling from 12.8% to 7.8% and standalone merchandise dropping from 10.4% to 7.8% between 2022 and 2024. Broadstone stated this mirrored a transfer from very excessive ranges of product utilisation to a extra sustainable stage of claims exercise, whilst the common price of claims elevated as a result of increased worth of insured units.

Rising significance

Cormac Bradley, senior actuarial director at Broadstone, stated gadget insurance coverage had managed to maintain shopper confidence and ship measurable worth at a time when many area of interest merchandise have been struggling.

He stated: “While some area of interest insurance coverage merchandise wrestle to justify their worth, gadget insurance coverage is prospering. It is delivering constant shopper profit and adapting to market realities.

“Driven by the rising importance – and cost – of devices in people’s everyday lives, consumer demand is strong and becoming an essential product. It’s one of the few product lines that appears to be engaging younger consumers while maintaining fair value metrics.”

Broadstone added that the expansion of gadget insurance coverage might sign a shift within the business’s capacity to attach with youthful, tech-reliant clients – a demographic that conventional private traces have traditionally discovered laborious to succeed in.

Bradley continued: “This could be a sign that insurers are beginning to close the generational gap in product relevance and accessibility. Insurers that meet younger consumers where they are today are well placed to anticipate their needs and build trust that lasts well beyond the gadget lifecycle.”

He added that whereas the market provided “a significant opportunity” for insurers, future progress would rely on their capacity to handle “tech inflation and evolving risk profiles” via dynamic pricing and product innovation.