Challenger bank Monzo has entered the UK home insurance market to offer contents cover, and this should prove popular given UK consumers’ preference for digital channels. Monzo has recognised the low penetration rates for contents insurance specifically, and GlobalData data shows that young consumers and renters present a significant opportunity for contents-only insurers.
GlobalData’s 2024 UK Insurance Consumer Survey found that only 44.3% of renters have a home insurance policy—this group only requires contents cover. This compares to a penetration rate of 90.2% for homeowners (with a mortgage). Furthermore, only 38.4% of adults under the age of 30 who rent have home insurance cover. This is therefore a huge market opportunity. Our survey also finds that over half (61.0%) of under-30s purchase home insurance online (either via laptop, smartphone, or a app), so a bank that specialises in the digital channel should be well placed to reach this consumer group.
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Young adults and renters have always been a challenging group for insurers to reach. Monzo is offering simple policies via its app with a quick sign-up process, which should appeal to younger customers. The process involves answering only five questions to receive a quote. The penetration rate for renters will always be well below homeowners due to the need to have buildings cover, but the difference at present is vast and does leave people vulnerable. Monzo itself estimated that renters could have around £12,000 ($15,600) of belongings unprotected.
Monzo will be the brand behind the policy, although it will be underwritten by Chubb. It could spark a rise in the bancassurance channel, which has remained static in the UK over the past few years. 13.7% of consumers purchased home insurance via banks in 2024, which is an increase on 11.9% in 2023 but below 15.0% in 2022. This suggests there is a solid customer base for bancassurance due to add-ons to accounts or brand trust, but there is little evidence of large growth in the channel. Overall though, household customers are open to using the bank channel, and there is a sizable opportunity for insurers due to the low penetration rates for contents-only policies. Monzo targeting this area with digital policies therefore appears to be a sensible move.
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By GlobalData
