Table of Contents
Introduction and Abbreviations
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- Scope of the report
- Market definitions
- Other relevant reports
- Global information and research
- Key sources
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Realising the whole-of-life potential
- Asset-backed lending strategy for the over-60s worth exploring
- Appeal to ex-smokers with lower premiums
- Educate to build on trust
- Emphasise the importance of reading small print
- Be flexible
- Use the Internet to target existing customers
Executive Summary
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- Changing social trends
- Other factors driving the market
- The size of the UK life insurance market
- The competitive landscape
- Product penetration
- Key target groups
- Consumer attitudes
- Market outlook
Market Background
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- Life insurance crosses the protection and investment divide
- Market dynamics and motivations to purchase
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- Figure 1: Life insurance – the ‘higher, higher’ model
- The main product types
- Term assurance
- Whole-of-life insurance
- Endowment insurance
- Writing under trust
- Taxing times: a note about POAT
Market Drivers
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- Demographic and Social Trends
- Assessing the risks and underwriting the policy
- Mortality rates reduced dramatically over the 20th Century
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- Figure 2: Age-standardised mortality rate for all causes, by gender, in England and Wales, 1901-2004
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- Figure 3: Age distribution of registered deaths in England and Wales, by gender, 2004
- Life-expectancy continues to rise
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- Figure 4: Life-expectancy at age 50 and 65 for men and women, 1981-2051 (actual and projected)
- Proportion of cigarette smokers has declined since 1996
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- Figure 5: Cigarette smoking status in GB, by gender, 1996-2004
- Changing lifestyles could raise premium rates
- Assessing the HIV risk fairly
- An update on using genetic data
- Nearly a third of all households have sole occupants
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- Figure 6: Total number of GB households and one-person housedholds, 1961-2004
- Housing market statistics
- Number of property transactions takes a dive in 2005
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- Figure 7: Number of property transactions in England, Wales and Northern Ireland, 1995-2005
- Resurgence in the FTB market forecast
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- Figure 8: Total number of loans for house purchase, by type of borrower, 1998-2005
- Implications of rising house prices
- Economic and Investment Conditions
- Less dynamic, but still reasonably favourable
- Conditions improve for equity investment
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- Figure 9: FTSE 100 and FTSE All Share – daily index movements, August 1998-August 2005
- Regulatory developments
- A changing regulatory landscape
- Consumer protection and treating customers fairly
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- Figure 10: Treating customers fairly at every stage of the product lifecycle
- Clarify policy terms to avoid confusion and reduce number of declined claims
Market Size and Trends
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- Penetration of whole-of-life assurance has fallen by a third over the past five years...
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- Figure 11: Ownership of life insurnance, by type, 2000-05
- …while take-up of term insurance has grown steadily
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- Figure 12: When policy taken out, by type, 2000-05
- Business in force contracts
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- Figure 13: Individual life insurance business in force at year end, 2001-04
- Figure 14: Number of individual life insurance policies in force at year end, by product type, 2001-04
- Value of benefits paid exceeded net premium income in 2003 and 2004
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- Figure 15: Benefits paid on life insurance policies and as a proportion of total premiums, 2001-04
- The main culprits behind the protection gap
- New business recedes in 2004
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- Figure 16: An overview of new life business, by industry classification and premium income, 2003 and 2004
- Number of new contracts takes a tumble
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- Figure 17: Number of new individual regular-premium life policies written, 1999-2005
- New premium income also on the slide
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- Figure 18: Value of new individual regular-premium life protection, by premium income, 1999-2005
- Mortgage sector accounts for a growing proportion of new term business
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- Figure 19: Number and value of new mortgage-linked and other term assurance contracts, 1999-2005
- The general picture disguises significant price volatility
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- Figure 20: Average annual new individual regular life premium, by type, 1999-2005
Key Players and the Competitive Environment
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- Intense price competition
- Life insurer rankings
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- Figure 21: Top 15 suppliers of new regular-premium life business, 2002-04
- Legal & General leads the way in the term assurance sector
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- Figure 22: Top five suppliers of individual term assurance, based on new business volumes, 2004
- AXA Sun Life dominates whole-of-life
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- Figure 23: Top five suppliers of individual whole-of-life assurance, based on new business volumes, 2004
Distribution and the Internet
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- The changing distribution landscape
- New alliances
- Tailored products
- A growing proportion of consumers have purchased term assurance directly from an insurance company
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- Figure 24: Source used to buy term life assurance, 2000-05
- Single-tie intermediaries account for the largest segment of new term assurance business
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- Figure 25: Distribution of mortage-related and other term insurance based on premium income, 2000-05
- A fifth of whole-of-life policyholders bought their policy from a direct insurer
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- Figure 26: Source used to buy whole-of-life life insurance policy, 2000-05
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- Figure 27: Distribution of whole-of-life insurance, based on premium income, 2000-05
- Online opportunities
- Three in five adults are Internet users
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- Figure 28: Internet penetration – GB, by gender, socio-economic group, age, lifestage, working status and region, 2001-05
- As yet, very limited online sales of life and pension products
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- Figure 29: Websites browsed and purchased from, by type of financial product, 2002-05
Advertising and Promotion
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- Total adspend on life insurance products has declined
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- Figure 30: Total advertising expenditure on life insurance and protection products, by sector, 2001-05
- Big brand names feature in the top ten
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- Figure 31: Top ten advertisers of life insurance and protection products, 2001-05
- Heavy reliance on direct mail to promote the benefits of life cover
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- Figure 32: Distribution of life insurance advertising expenditure, by main media, 2001-05
Consumer Financial Activity
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- About the Financial Activity Bulletin
- High activity levels from June 2005 onwards
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- Figure 33: Savings, investment, borrowing and debt repayment – consumers’ expected activity, at quarterly intervals, March 2004-June 2005
- Younger respondents looking to refresh their financial affairs
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- Figure 34: Expected financial activity, by socio-demographic and income groups, June 2005 and average for the last 14 quarters
- Greater activity than a year ago
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- Figure 35: Leading financial activities planned in the next six months, at quarterly intervals, June 2004-June 2005
- Housing market indicators pick up sharply
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- Figure 36: Intended mortgage and property purchase activity, June 2003-June 2005
- Better summer sales prospects for regular life and pension premiums
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- Figure 37: Intended life and pensions activity, Q3/Q4 2002-Q2/Q3 2005
- Key target groups
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- Figure 38: Main target groups for life pension, by age, socio-economic group, household income, region and working status, June 2005
- HSBC and Halifax have gained the most ground
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- Figure 39: Leading main financial services providers’ market shares, at quarterly intervals, June 2004-June 2005
- HBOS is strong in life and pensions
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- Figure 40: Proportion expecting to undertake various financial activities in the next six months, June 2005
- The Scottish banks will have the most active customer base
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- Figure 41: Activity levels of main financial providers’ customer bases, June 2005
The Consumer and Product Ownership
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- Nearly half of all adults do not own any form of life protection cover
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- Figure 42: Ownership of life insurance and other protection products, August 2005
- Rising house prices offset the pain of an endowment shortfall
- Ownership increases up the socio-economic scale...
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- Figure 43: Ownership of life insurance and other protection products, by gender, age and socio-economic group, August 2005
- ...and peaks in the 45-54 age group
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- Figure 44: Ownership of life insurance and other protection products, by age group, August 2005
- Working couples are a major recipient group...
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- Figure 45: Ownership of life insurance and other protection products, by marital status, lifestage, Mintel’s Special Groups and working status, August 2005
- ...while young, single people are least likely to have any life cover
- Income and tenure are key to take-up
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- Figure 46: Ownership of life insurance and other protection products, by tenure, household income, region and ACORN category, August 2005
- Internet users record above-average take-up
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- Figure 47: Ownership of life insurance and other protection products, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, August 2005
- The more affluent are more likely to have whole-of-life cover
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- Figure 48: Ownership of life insurance, by type, and lapsed policyholders, by gender, age and socio-economic group, August 2005
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- Figure 49: Ownership of life insurance, by type, and lapsed policyholders, by working status, household income and tenure, August 2005
- Is life insurance worth having?
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- Figure 50: ‘Life insurance is worth having’, by type of life cover held, August 2005
- There is less agreement among the retired
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- Figure 51: ‘Life insurance is worth having’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Do consumers trust insurance companies?
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- Figure 52: ‘Insurance companies can be trusted to pay out’, by type of life cover held, August 2005
- The young-to-middle age groups are least confident
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- Figure 53: ‘Insurance companies can be trusted to pay out’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- A contract of the utmost good faith
- Do applicants really read all the policy terms and conditions?
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- Figure 54: ‘I don't read all the small print whenever I take out a new insurance policy’, by type of life cover held, August 2005
- The middle-age groups and full-time workers are among the least likely to read small print
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- Figure 55: ‘I don't read all the small print whenever I take out a new insurance policy’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Should smokers pay more?
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- Figure 56: ‘Smokers should pay higher life insurance premiums’, by type of life cover held, August 2005
- Groups who are more likely to smoke are more likely to disagree
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- Figure 57: ‘Smokers should pay higher life insurance premiums’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Do consumers mind insurance firms knowing their medical background?
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- Figure 58: ‘I don't/wouldn't mind insurance companies knowing my medical history’, by type of life cover held, August 2005
- ABs and high earners are least happy about insurers knowing their medical history
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- Figure 59: ‘I don't/wouldn't mind insurance companies knowing my medical history’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Are a lot of insurance products a waste of money?
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- Figure 60: ‘A lot of insurance products are a waste of money’, by type of life cover held, August 2005
- Most insurance is not worth buying say three in four 55-64-year-olds
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- Figure 61: ‘A lot of insurance products are a waste of money’, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Further analysis
Consumer Attitudes and Targeting Opportunities
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- CHAID analysis
- What is CHAID analysis?
- The main target groups identified
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- Figure 62: Target groups identified for the life insurance and protection market, August 2005
- Just over a quarter of adults have two or more protection products
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- Figure 63: Number of protection product types owned, August 2005
- A decision to buy life insurance can lead to a decision to buy other forms of protection
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- Figure 64: Specific ownership breakdown, by number of protection product types owned, August 2005
- The more people earn, the more they seek protection
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- Figure 65: Number of protection product types held, by gender, age, socio-economic group, working status, household income and tenure, August 2005
- Product relationships
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- Figure 66: Ownership of selected financial products by all respondents, those with life cover and those with a mortgage, August 2005
- A desire to protect dependents is main motivational driver
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- Figure 67: Main factors influencing decision to purchase, by current and lapsed policyholders, August 2005
- Three fifths of policyholders were driven to purchase by one key factor
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- Figure 68: Number of factors influencing decision to purchase by current policyholders, August 2005
- Main target groups
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- Figure 69: Key target groups for top seven influencing factors, August 2005
- Cluster analysis
- What is cluster analysis?
- Life insurance customer clusters
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- Figure 70: Life insurance customer clusters, August 2005
- Security Seekers are influenced by multiple factors
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- Figure 71: Main factors influencing decision to purchase, by life insurance customer clusters, August 2005
- Lapsed customer groups comprise a greater proportion of Pragmatists
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- Figure 72: Life insurance customer clusters, by ownership of product, August 2005
- ABs are more than five times as likely as Es to be Security Seekers
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- Figure 73: Life insurance customer clusters, by gender, age and socio-economic group, August 2005
- A quarter of families are Security Seekers
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- Figure 74: Life insurance customer clusters, by marital status, lifestage, Mintel’s Special Groups and working status, August 2005
- The least well-off are more Family Focused
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- Figure 75: Life insurance customer clusters, by tenure, gross annual household income, region and ACORN category, August 2005
- Broadsheet readers are most likely to be Conformist
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- Figure 76: Life insurance customer clusters, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, August 2005
Industry Views
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- TCF in practice
- Breathing life into the market
- Opportunities abound in the new distribution environment
- Still fairly limited use made of outsourcing by life offices
The Future
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- Mixed fortunes
- A revival in the FTB market should help term sales
- Pension simplification offers tax relief on PTA...
- ...but not all advisers will be able to recommend it, as things stand
- Whole-of-life suffering from uneven regulation
- Restoring consumer trust
- Less emphasis on upfront commission in the future, perhaps
Forecast
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- Term assurance sales will decline in 2006 before picking up again in 2007
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- Figure 77: Forecast of the number of new regular-premium individual term and whole-of life policies written, 2005-10
- New premium income boosted by price rises
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- Figure 78: Forecast of the value of new regular-premium individual term and whole-of life policies written, at current and constant prices, 2005-10
- A note about endowments
- Factors incorporated
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