Table of Contents
Issues in the Market
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- Main findings of the research
- Abbreviations
Insights and Opportunities
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- The industry must act to close the ‘protection gap’
- Rebuilding consumer trust remains a key priority
- Protection providers need to exploit cross-selling opportunities
- The life industry needs to become less mortgage-focused
Market in Brief
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- The life protection industry faces a tough market environment
- Sales volumes increased slightly in 2007, but the value of sales fell
- Legal & General and AXA Sun Life dominate their market sectors
- Trade perspective: The industry faces a number of challenges
- Mintel’s research findings: Product ownership
- Mintel’s research findings: Arranging life protection
- Mintel’s research findings: Attitudes towards life protection
- Mintel’s research findings: Targeting opportunities
Fast Forward Trends
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- Trend 1: Science, Salvation and Enchantment
- Science is under the microscope
- Cracking the code
- The risks are on both sides
- Trend 2: Golden Bullet
- Science doesn’t only cause problems
- Your medicine, your way
- Where life and health meet
Product Background
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- Three key product types
- Term assurance
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- Figure 1: Overview of term assurance
- Level-term assurance
- Decreasing term assurance
- Whole-of-life insurance
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- Figure 2: Overview of whole-of-life sector
- Two discrete areas
- Typical uses
- Endowment insurance
Broader Market Environment
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- Key points
- Economic slowdown will inevitably create a tough environment
- Property market downturn casts a shadow over the life sector
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- Figure 3: Average UK house price, seasonally adjusted, January 2006-October 2008
- Mortgage lending has collapsed in the last 12 months
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- Figure 4: Number of approvals secured on dwellings, seasonally adjusted, January 2006-September 2008
- The malaise in the mortgage market will hit protection sales
- Stockmarket decline presents a negative backdrop for life insurers
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- Figure 5: FTSE 100 Index, end of month, January 1994-October 2008
- Population trends will impact on demand for life policies
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- Figure 6: UK population, by age bracket, 1992-2013
- The rise in one-person households reduces the need for cover
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- Figure 7: Total number and average size of households in the UK, 1992-2013
Internal Market Environment
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- Key points
- The life assurance protection gap stands at £2.3 trillion
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- Figure 8: Life assurance protection gap, measured by sums assured, 2002-07
- A lack of consumer trust continues to plague the life industry
- New non-disclosure rules should help restore consumer confidence
- The TCF initiative also creates an opportunity for the life industry
- Consumer apathy and financial illiteracy are also constraining sales
- A range of initiatives are aiming to boost financial capability
- Whole-of-life switch to ICOB rules should be a positive move
- IHT changes will hit sales of unit-linked whole-of-life policies
- Life-expectancy rates continue to rise…
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- Figure 9: Expectation of life at birth in the UK, by gender, 1900-2050
- …death rates continue to decline
- Life insurance premiums have also continued to fall…
- …but consumers still overestimate the cost of life cover
- Genetic testing moratorium has been extended to 2014
Strengths and Weaknesses in the Market
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- Figure 10: Key strengths and weakness within the UK life insurance market
- Strengths
- Weaknesses
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Who’s Innovating?
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- Key points
- The pace of innovation is increasing within the protection market
- Fortis has entered the market with an innovative product range
- Funeral benefit options could impact the over-50s life market
- Some insurers are aiming to tailor advice around lifestages
- Legal & General has raised its underwriting limits
- Future innovation will focus on product flexibility and transparency
Trade Perspective
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- The protection industry faces a number of challenges
- A declining mortgage market will hit life sales in the short term
- Product development will focus on flexibility and transparency
- Direct to consumer is likely to come of age
- Future prospects look rosy if providers can rise to the challenge
Market Size
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- Key points
- Sales volumes increased slightly in 2007, but the value of sales fell
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- Figure 11: Volume and value of new individual regular-premium life insurance policies written, 2002-07
- The whole-of-life sector enjoyed strong growth during 2007…
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- Figure 12: Number of new individual regular-premium life insurance policies written, 2002-07
- …and continues to grow in 2008
- The overall value of term assurance sales declined last year
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- Figure 13: Value of new individual regular life insurance premiums, 2002-07
- There are now around 33 million individual life policies in force
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- Figure 14: Individual life insurance business in force at year end, by product type, 2002-07
- Forecast
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- Figure 15: Value forecast of new individual regular life insurance premiums, 2002-13
- Term assurance – future outlook
- Whole life – future outlook
Segment Performance
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- Key points
- Less than half of term assurance sales are now mortgage-related
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- Figure 16: Proportion of new mortgage-related and other term assurance policies written, by volume,
- The average level of term assurance premiums fell last year
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- Figure 17: Average premiums on new term assurance policies written, 2002-07
- Guaranteed-acceptance plans form the bulk of whole-of-life sales
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- Figure 18: Proportion of new unit-linked and non-linked whole-of-life policies written, by volume, 2002-07
- There is a huge variation in average premium levels
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- Figure 19: Average premiums on new unit-linked and non-linked whole-of-life policies written, 2002 versus 2007
- Unit-linked sales accounted for half of all new premiums in 2007
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- Figure 20: Proportion of new unit-linked and non-linked whole-of-life policies written, by value, 2002-07
- Continued decline in mortgage-related endowment sector
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- Figure 21: Number of endowment policies sold, by type of policy, 2002-07
Market Share
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- Key points
- Legal & General held around a fifth of the life market in 2007
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- Figure 22: Life company rankings, by new regular-premium life business, 2006 and 2007
- Legal & General is the leading provider of term assurance
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- Figure 23: Top five providers of new individual term assurance policies, by volume of sales, 2007
- AXA Sun Life accounts for over half of whole-of-life market
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- Figure 24: Top five providers of new individual whole-of-life policies, by volume of sales, 2007
Companies and Products
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- Key points
- The UK life protection market continues to evolve
- Fortis’ arrival provides a significant boost to the life market
- Acquisitions will boost Royal London’s share of the life market
- The Post Office has increased its presence within the life market
- AXA Sun Life and Co-operative Funeralcare have forged an alliance
- Company snapshots
- Term assurance
- Legal & General
- Norwich Union
- Friends Provident
- Whole-of-life
- AXA Sun Life
Brand Communication and Promotion
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- Key points
- Life insurers invest heavily in advertising
- Total industry adspend amounted to £63 million in last 12 months
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- Figure 25: Advertising expenditure on life insurance products, 2003/04-2007/08
- Over-50s plans account for almost two thirds of total expenditure
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- Figure 26: Advertising expenditure on life insurance products, by sector, 2006/07 and 2007/08
- Direct mail is the main advertising medium used by life companies
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- Figure 27: Advertising expenditure on life insurance products, by media type, 2006/07 and 2007/08
- AXA Sun Life tops the life insurance adspend table
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- Figure 28: Advertising expenditure on life insurance products, by organisation, 2006/07 and 2007/08
Channels to Market
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- Key points
- IFAs account for almost half of mortgage-related term sales
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- Figure 29: Distribution of new regular-premium mortgage-related term assurance policies, by value, 2005-07
- The IFA sector dominates the market for other term products
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- Figure 30: Distribution of new regular-premium other term assurance policies, by value, 2005-07
- Direct providers have gained share in the whole-of-life sector
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- Figure 31: Distribution of new regular-premium whole-of-life policies, by value, 2005-07
- Bancassurers’ share of the whole-of-life market is rising
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- Figure 32: Proportion of new regular-premium life protection business obtained through bancassurers, by value, 2005-07
- Direct to consumer is widely expected to come of age…
- …but IFAs will remain a key element within the distribution mix
The Consumer – Product Ownership
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- Key points
- Survey background
- More than four in ten adults hold a life insurance policy
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- Figure 33: Ownership of life insurance and other protection products, June 2008
- Life policyholders are more likely to own other protection products
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- Figure 34: Ownership of protection products, by life insurance ownership, June 2008
- Two thirds of ABC1 35-54s hold a life insurance policy
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- Figure 35: Ownership of life insurance policies, by gender, age and socio-economic group, June 2008
- The majority of married consumers have life cover
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- Figure 36: Ownership of life insurance policies, by marital status, lifestage, Mintel’s Special Groups, ACORN group and TV region, June 2008
- Almost six in ten mortgage holders own life insurance
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- Figure 37: Ownership of life insurance policies, by working status, income, household tenure, technology users and newspaper readership, June 2008
The Consumer – Arranging Life Protection
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- Key points
- A third of policyholders took expert advice when buying cover
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- Figure 38: Agreement with statements about arranging life insurance, by gender, June 2008
- The 18-34s are most likely to have searched for cover online
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- Figure 39: Agreement with statements about arranging life insurance, by age, June 2008
- A relatively high proportion of ABC1s consulted an adviser
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- Figure 40: Agreement with statements about arranging life insurance, by socio-economic group, June 2008
- Most customers feel their policy was clearly explained to them
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- Figure 41: ‘Terms and conditions of my policy were clearly explained to me’, June 2008
- The 45-64s are most likely to be dissatisfied with the explanation
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- Figure 42: ‘Terms and conditions of my policy were clearly explained to me’, by gender, age and socio-economic group, June 2008
- People buying policies independently most likely to be satisfied
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- Figure 43: ‘Terms and conditions of my policy were clearly explained to me’, by agreement with statements about arranging life insurance, June 2008
- Few policyholders took out cover for tax or investment reasons
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- Figure 44: ‘Only got life insurance for tax/investment reasons’, June 2008
- One in ten 55-64s got their policy for tax or investment reasons
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- Figure 45: ‘Only got life insurance for tax/investment reasons’, by gender, age and socio-economic group, June 2008
The Consumer – Attitudes towards Life Protection
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- Key points
- A large minority of consumers do not trust life companies
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- Figure 46: ‘Life insurance companies can be trusted to pay out’, June 2008
- Lapsed policyholders tend to be relatively untrusting
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- Figure 47: ‘Life insurance companies can be trusted to pay out’, by ownership of protection products, June 2008
- The 35-54s are less likely to have faith in the life industry
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- Figure 48: ‘Life insurance companies can be trusted to pay out’, by gender, age, socio-economic group, June 2008
- Almost half of retired consumers trust life companies to pay out
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- Figure 49: ‘Life insurance companies can be trusted to pay out’, by lifestage, working status, income, tenure and TV region, June 2008
- A large majority feel people with dependents need life cover
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- Figure 50: ‘People with dependents have a responsibility to have life insurance’, June 2008
- Life policyholders appreciate the need to protect dependents
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- Figure 51: ‘People with dependents have a responsibility to have life insurance’, by ownership of protection products, June 2008
- Three quarters of ABs and 25-44s feel dependents should be protected
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- Figure 52: ‘People with dependents have a responsibility to have life insurance’, by gender, age and socio-economic group, June 2008
- Most mid-to-high earners feel people with dependents need life cover
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- Figure 53: ‘People with dependents have a responsibility to have life insurance’, by lifestage, working status, income, tenure and TV region, June 2008
- A sizeable minority feel no children means no need for life cover
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- Figure 54: ‘If you haven't got children, there's not much point in life insurance’, June 2008
- More than four in ten lapsed policyholders agree with the statement
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- Figure 55: ‘If you haven't got children, there's not much point in life insurance’, by ownership of protection products, June 2008
- Over-65s most likely to equate no children to no life cover needed
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- Figure 56: ‘If you haven't got children, there's not much point in life insurance’, by gender, age and socio-economic group, June 2008
- Most mortgage holders feel people with no children still need cover
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- Figure 57: ‘If you haven't got children, there's not much point in life insurance’, by lifestage, working status, income, tenure and TV region, June 2008
- Most consumers appreciate the value of life insurance
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- Figure 58: ‘Life insurance is a waste of money’, June 2008
- Almost three in ten ex-customers feel life cover is a waste of money
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- Figure 59: ‘Life insurance is a waste of money’, by ownership of protection products, June 2008
- A large majority of ABC1s and 25-44s recognise the value of life cover
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- Figure 60: ‘Life insurance is a waste of money’, by gender, age and socio-economic group, June 2008
- Most mortgage holders appreciate the value of a life policy
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- Figure 61: ‘Life insurance is a waste of money’, by lifestage, working status, income, tenure and TV region, June 2008
The Consumer – Targeting Opportunities
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- Key points
- Dissecting the sample according to attitudes towards life insurance
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- Figure 62: Segmentation based upon attitudes towards life insurance, June 2008
- Almost half of Hot Targets do not own a life insurance policy
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- Figure 63: Ownership of protection products, by typologies based upon attitudes towards life insurance, June 2008
- Two thirds of mid-to-high earners are Hot Targets
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- Figure 64: Segmentation based upon attitudes towards life insurance, by gender, age, socio-economic group, lifestage, working status, income, tenure and TV region, June 2008
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