Gadget insurance stands out among niche lines with £604m premium surge

Gadget insurance has emerged as a success story in the UK general insurance market, combining growth in policy volumes with fair payout ratios despite ongoing regulatory pressure on add-on products, according to analysis by independent consultancy Broadstone.

The firm’s review of FCA General Insurance Value Measures Data 2024 found that gadget insurance policies rose from 7.87 million in 2023 to 8.46 million in 2024 – an annual increase of 7.5%.

The majority of these were standalone products, which accounted for almost two-thirds of sales.

Premium income also surged over the same period, climbing 22% from £496m in 2023 to £604m in 2024. Broadstone said the growth suggested insurers had begun to restore margins after a period of tight profitability, while continuing to deliver fair value to consumers.

Add-on payout ratios remained steady at 41.8%, while standalone products saw a drop from 59.3% in 2023 to 42.9% in 2024. The consultancy attributed this to pricing recalibration as insurers adjusted to higher device costs and changing claims behaviour.

Claims frequency also declined, with add-on policies falling from 12.8% to 7.8% and standalone products dropping from 10.4% to 7.8% between 2022 and 2024. Broadstone said this reflected a move from very high levels of product utilisation to a more sustainable level of claims activity, even as the average cost of claims increased due to the higher value of insured devices.

Rising importance

Cormac Bradley, senior actuarial director at Broadstone, said gadget insurance had managed to sustain consumer confidence and deliver measurable value at a time when many niche products were struggling.

He said: “While some niche insurance products struggle to justify their value, gadget insurance is thriving. It is delivering consistent consumer benefit 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 growth of gadget insurance could signal a shift in the industry’s ability to connect with younger, tech-reliant customers – a demographic that traditional personal lines have historically found hard to reach.

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 while the market offered “a significant opportunity” for insurers, future growth would depend on their ability to manage “tech inflation and evolving risk profiles” through dynamic pricing and product innovation.