For years, the industry narrative has been simple: insurance is a price-driven market. Consumers want cheaper cover, and competition is about delivering it.
Our latest consumer research suggests something more nuanced.
Last month, we surveyed 1,010 insurance customers about their claiming habits and how they think about the role of insurance. The findings show that insurance is increasingly used as protection for serious, infrequent losses across both home and motor, highlighting a potential gap between customer behaviour and current product design.
A market-wide shift, but not a uniform one
At a high level, the pattern is consistent. Many consumers say they apply their own internal threshold before claiming, choosing not to claim for low-value losses.
Around half express interest in large-loss-only products. A majority say they would consider increasing their excess if the value exchange is clear. Nearly nine in ten say they consider factors beyond price when choosing a policy.
This behaviour appears across a broad cross-section of the market.
The nuance lies in how developed that behaviour is, and how it differs between home and motor.
Home insurance: behaviour is more established
In home insurance, the shift is more clearly defined.
More than a third of respondents say they would only claim for very large losses, while just 6% say they would claim regardless of value. Around half say they are interested in products that cover major claims only, and 58% say they would consider an excess above £1,000 if the price reduction is sufficient.
At the same time, respondents report that 92% of current excesses sit at £500 or less.
This gap suggests misalignment between behaviour and product design.
Policy choice reinforces this. Two thirds say they aim to balance price and cover, 21% say they prioritise cover, and only a small minority say they focus on price alone.
Many customers are absorbing smaller losses and reserving insurance for more significant events. This aligns more closely with a catastrophic model than current products reflect.
Motor insurance: shifting, but less defined
Motor shows a similar direction, with more variation.
Around a quarter of respondents say they would only claim for very large losses, while most say they apply a threshold. Only a small minority say they would claim for everything.
Interest in large-loss-only products is slightly lower, and uncertainty is higher, with around one in five respondents unsure.
Respondents also indicate a willingness to increase excess, although this is more sensitive to price and faces slightly higher resistance.
This reflects motor’s role in daily life. Claims feel more frequent, the asset is essential, and loss is more disruptive.
The direction of travel is similar, with less consistency.
Consistent across age, with different levels of maturity
Threshold-based behaviour appears across all age groups, with a broadly consistent balance between price and cover.
The difference is in maturity.
Older respondents are more likely to say they would only claim for larger losses, reflecting a more settled approach, and show less interest in new product structures.
Middle-aged respondents are actively balancing trade-offs and open to adjusting excess. This makes them the most commercially relevant group.
Younger respondents are more open to new ideas, with less fixed behaviour.
What this means for insurers
There is a growing gap between how products are designed and how many customers actually use them.
Many respondents say they are already filtering out smaller claims and self-insuring that risk. Products continue to assume frequent, lower-value claims.
At the same time, the market has moved towards stripped-back propositions. Essentials tiers and product stacking have reduced headline price and increased complexity.
Customers rarely engage deeply with policy wording. This creates a disconnect between perceived and actual cover, often only discovered at the point of claim.
A different direction for product design
There is an opportunity to design products that reflect how customers already behave. This means reserving insurance for more significant losses.
The challenge is understanding what must remain.
Even infrequent claims carry strong expectations. Windscreen cover in motor is a clear example. It may not fit a catastrophic model, and it is widely assumed.
Not all large losses are equal in the eyes of the customer. Understanding which claims matter, and why, is critical.
Before launching new models, insurers need to understand:
which losses customers consider worth claiming
which elements of cover are essential
how higher excess and reduced cover are interpreted
Without this, there is a risk of designing products that miss customer expectations.
Home insurance presents the more immediate opportunity, where behaviour and demand are more aligned. Motor is moving in the same direction, with greater variability.
From insight to action
Recognising the shift is one thing. Acting on it requires a deeper understanding of how customers interpret trade-offs and make decisions in practice.
This goes beyond stated interest. It is about real-world behaviour.
At Consumer Intelligence, we help insurers build that understanding through bespoke consumer research, enabling more confident product design before propositions reach the market.
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