Table of Contents
Issues in the Market
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- Key issues
- Definition
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- Figure 1: The categorisation of life protection policies, 2009
- Abbreviations
Future Opportunities
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- K.I.S.S.
- Too Many Complications
- So simplify things
- Get consumer-led
- Mintel Inspire: Focus on the Niche
- Target the female pound…
- …and young couples
- Embrace the internet model
Market in Brief
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- Protection gaps remains large
- Premiums continue to fall
- L&G and Aviva fight for market leadership
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- Figure 2: Life company rankings, by new regular-premium life business, 2008
- Distribution
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- Figure 3: The changing distribution pattern of new, regular life premiums+, 2006-09
- IFA and provider targets
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- Figure 4: The number of adults in the core target group for a life offer, by type, July 2009
Internal Market Environment
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- Key points
- Consumers remain under-protected…
- …because many don’t want to face up to the inevitable…
- …and misjudge the costs
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- Figure 5: The Annual rate of growth in the life insurance and all consumer spending price deflators, 2001 Q1-2009 Q1
- Many do not trust the financial services industry...
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- Figure 6: Agreement with trust statements about financial advisers, December 2008
- The government steps in to help…
- And the industry starts a fightback
- An improvement in customer service standards
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- Figure 7: Financial services firms complained about, by sector, 2006/07-2008/09
- Of ICOBs, COBS, TCF and RDR
- Movement to give consumers more premium information…
- …and pay for advice as a standalone service
- What impact will RDR have on the consumer?
- Will consumers abandon investment-led products?
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- Figure 8: Consumer happiness with financial advisers’ fees, December 2008
- The danger to RDR spread to the pure protection market
- The impact of inheritance tax changes
- Extension to the moratorium on genetic testing
Broader Market Environment
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- Key points
- Consumers cut back in past recessions but protected life policies
- But is this recession different?
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- Figure 9: The percentage of total consumer expenditure takan by on life insurance+, 1970-2009
- With-profits sales likely to be hit
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- Figure 10: Internet investments, by insurance company long-term funds, Q1 2004-Q1 2009
- Improving longevity cuts the cost of life cover
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- Figure 11: Cohort expected age of death+ at age 50, 60 and 70, 1981-2051
- More older adults will change the product mix
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- Figure 12: UK population, by age bracket, 2006-31
Strengths and Weaknesses in the Market
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- Figure 13: Life protection products – strengths and weaknesses in the market, 2009
- Strengths
- Weaknesses
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Who’s Innovating?
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- Key points
- Flexibility and speed feature in new launches
- L&G focuses on reducing the need for GP reports…
- …as Zurich streamlines sales
- Direct-to-consumer instant acceptance policies
- Postcode pricing moves from annuities to life protection
- Making life easier for new parents
- Bringing the funeral and over-50s markets together
Trade Perspective
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- Trust and education key future challenges…
- …as is the potential impact of RDR
- Some signs of improvement in the next 12 months…
- …as access to advice increases
- Price driven mentality must change
- A greater focus on needs not price
- Simpler products coming onto the market
- Multichannel distribution to continue
- Over-50 and funeral plan markets converging…
- …and could benefit from the RDR
- Competition in Over 50 Market growing in scale and intensity
Market Size and Forecast
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- Key points
- Expenditure on life insurance falters in the recession
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- Figure 14: Consumer expenditure on life insurance+, seasonally adjusted, Q1 2005-Q1 2009
- Policy sales up but premiums harder to generate
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- Figure 15: Premiums (£m) and policy sales (000) of new single life, regular premium life policies, 2002-09
- Term assurance the most popular
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- Figure 16: Premiums of new single life, regular premium life policies, by type of policy, 2005-09
- Guaranteed acceptance policies the main growth segment
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- Figure 17: New policy sales of single life, regular premium life policies, by type of policy, 2005-09
- Endowment sales hit by the housing market
- Policies outstanding fall below 30 million for first time in a decade…
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- Figure 18: The number of single premium and regular premium life policies in force at year end, 1998-2009
- …but the average level of cover tops £50,000
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- Figure 19: The average level of cover (£000) on regular premium life policies outstanding at year end, 1998-2008
- Forecast
- The slow road to recovery
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- Figure 20: Life insurance premium income, 2005-14
- Factors used in the forecast
Segment Performance
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- Key points
- Housing market decline hits term and endowment sales
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- Figure 21: The value of new premiums for term assurance and endownment policies, by type, 2006-09
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- Figure 22: Term assurance market segmentation, 2005-09
- Other term insurance generates higher average premiums
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- Figure 23: The average premiums on new term assurance policies written, by policy type, 2006-09
- Over-50 plans drive the whole-of-life sector
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- Figure 24: Whole-of-life market segmentation, 2006-09
- Average new premium on non-linked policies now under £180
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- Figure 25: The average premiums on new whole-of-life policies written, by policy type, 2006-09
Market Share
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- Key points
- Aviva challenge L&G for market leadership
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- Figure 26: Life company rankings, by new regular-premium life business, 2007 and 2008
- HSBC and Prudential the star performers
- While it’s a four-horse race in the investment sector
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- Figure 27: Life company rankings, by new regular-premium unit-linked and with-profits life business, 2008
- L&G and Aviva command the pure protection market
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- Figure 28: Life company rankings, by new regular-premium non-linked+ life business, 2008
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- Figure 29: Top five providers of whole-of-life policies, by volume, 2008
Companies and Products
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- Key points
- New guaranteed acceptance life insurance plans continue to come to market…
- …as life offices look to generate more business on a non-advised basis
- Quality over quantity
- Improved operational efficiency leading to job losses
- Company snapshots
- Legal & General
- Aviva
- Royal London Group
- Aegon Scottish Equitable
- HSBC
- Skandia Life
- Friends Provident
- Zurich Financial Services Group
- AXA Life
Brand Communication and Promotion
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- Key points
- Brand and image building of paramount importance…
- Main media advertising is skewed towards guaranteed acceptance plans
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- Figure 30: Main media expenditure on life insurance, by type, 2005-08
- Direct mail the most used medium
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- Figure 31: Breakdown of main media expenditure on life insurance+, by media, 2005-08
- AXA outspends its rival by a wide margin
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- Figure 32: Expenditure on advertising and promoting life insurance+, by company, 2005-08
- Aviva goes down the sponsorship route
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- Figure 33: The share of voice+ for life insurance, 2008
Channels to Market
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- Key points
- Three main types of intermediary
- IFAs hold share in a declining market…
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- Figure 34: The changing distribution pattern of new, regular life premiums+, 2006-08
- But the growth segment of the market tends to go direct
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- Figure 35: Percentage breakdown of new individual regular premiums, by type of policy and distribution channel, 2008
- Bancassurance strongly linked to the mortgage market
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- Figure 36: Percentage breakdown of new individual regular premiums, by bancassurance and other channels, 2008
- IFA increase their share of mortgage-related term sales…
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- Figure 37: The breakdown of new regular-premium mortgage term assurance premiums, by channel, 2006-09
- …and lead the non-mortgage market
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- Figure 38: The breakdown of new regular-premium other term assurance premiums, by channel, 2006-09
- Direct sales growing strongly in the whole-of-life sector
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- Figure 39: The breakdown of new regular-premium whole-of-life insurance premiums, by channel, 2006-09
- The move to bancassurance
- Competition in Over 50 Market growing in scale and intensity
The Consumer – Ownership of Life Products
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- Key points
- Half the population has life cover…
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- Figure 40: Ownership of life insurance and other protection products, July 2009
- Implications
- …and the proportion of adults covered is rising
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- Figure 41: Ownership of life insurance and other protection products, Jun 2008- July 2009
- Over-50 life plans seen as add-on policies?
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- Figure 42: The average number of life and related policies held, by type of policy owned, July 2009
- Implications
- Can over-50 plans help tap non-holders?
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- Figure 43: Ownership of life-related protection products, by life insurance ownership, June 2008
- Implications
- Affluence determines ownership levels…
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- Figure 44: Ownership of any type of life assurance policy/plan, by socio-economic group, household income, and ACORN group, July 2009
- …as do age and lifestage triggers
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- Figure 45: Ownership of any type of life assurance policy/plan, by age, lifestage and special groups, July 2009
- Investment-linked plans more popular with the affluent
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- Figure 46: Ownership of specific life assurance policies/plans, by socio-economic group, household income and ACORN group, July 2009
- Over-50s plans more popular with the less affluent
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- Figure 47: Ownership of specific life assurance policies/plans, by age, special groups and household tenure, July 2009
The Consumer – Buying or Renewing a Life Plan
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- Key points
- Eight out of ten adults would consider a life offer, or 38.9 million targets
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- Figure 48: Consumer attitudes to the methods they would consider for buying and renewing a life policy, July 2009
- Pressing the flesh remains popular
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- Figure 49: Consumer attitudes to the methods they would consider for buying and renewing a life policy, by willing to buy, July 2009
- Implications
- Internet usage shows the strongest variations by wealth
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- Figure 50: The willingness to use the internet to buy or renew a life policy, by socio-economic group, household income, ACORN group and household tenure, July 2009
- Implications
- Lifestage and children also influence the preference for the internet
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- Figure 51: The willingness to use the internet and telephone to buy or renew a life policy, by age, lifestage and presence of children in the home, July 2009
- Channel preferences strongly associated with financial confidence
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- Figure 52: Consumer attitudes to the methods they would consider for buying and renewing a life policy, by willing to buy, by attitudes to financial advice and financial confidence, July 2009
- The affluent need IFAs the most but don’t recognise this
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- Figure 53: Internet Confidence+ in arranging a life policy on their own without advice, by socio-economic group, household income, ACORN group and household tenure, July 2009
- The young want advice but look to the internet first…
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- Figure 54: Internet Confidence+ in arranging a life policy on their own without advice, by age, lifestage and special group, July 2009
- Because they don’t know where else to turn
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- Figure 55: Agreement with the statement “I don't know where I’d be able to get trustworthy advice”, July 2009
- Two distinct types of internet users
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- Figure 56: Breakdown of adults who would consider using to internet to buy/renew a life policy, 2009
- Implications
The Consumer – Trust and Affordability
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- Key points
- The good news: The life industry is trusted
- But a lack of trust still restricts policy sales
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- Figure 57: The ownership of life policies, by trust in life companies, July 2009
- More good news: Not many consumers think it is an expensive luxury
- But the bad news is that six million adults are affected
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- Figure 58: The ownership of life policies, by the perception that life insurance is too expensive+, July 2009
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- Figure 59: The view that life insurance is too expensive+, by age and socio-economic group, special group and children, July 2009
- Implications
The Consumer Targets
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- Key points
- Three strategies for increased sales
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- Figure 60: The broad targets for the life industry, July 2008
- Dissecting the targets by attitudes towards life insurance
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- Figure 61: Segmentation based upon attitudes towards life insurance, July 2009
- Almost 25 million in the prime target group…
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- Figure 62: The number of adults in the prime target group for a life offer, by type, July 2009
- But does the industry want to target them all?
- 15 million core targets overall but less than 5 million new sales targets
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- Figure 63: The number of adults in the core target group for a life offer, by type, July 2009
- Working mothers offer good sales prospects to IFAs
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- Figure 64: IFA sales targets, by detailed lifestage, July 2009
- Implications
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- Figure 65: The importance of women as targets for the life industry, July 2009
- Pre-/no family couples good prospects for providers…
- But older affluent couples are also valuable targets
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- Figure 66: Provider sales targets, by detailed lifestage, age and socio-economic group, July 2009
Appendix – Market Size and Trends
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- Figure 67: Individual life insurance business in force at year end, 2003-08
- Figure 68: Individual life insurance business in force at year end, by product, 2003-08
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Appendix – Channels to Market
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- Figure 69: New individual regular premium business, by type of policy and distribution channel, 2008
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Appendix – The Consumer Ownership
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- Figure 70: Consumer life insurance ownership, July 2009
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- Figure 71: IFA sales target, by demographics, July 2009
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- Figure 72: Insurance provider sales target, by demographics, july 2009
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