Table of Contents
Introduction
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- Report scope
- Abbreviations
Executive Summary
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- The market
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- Figure 1: Forecast of new individual IP premiums, 2005-15
- Figure 2: Forecast of new individual CIC premiums, 2005-15
- Existing business remains under pressure
- The IP market remained broadly flat in 2010...
- ... while the CI market performed even better than this
- Market factors
- A sector that suffers from high consumer apathy
- Claims statistics have improved considerably for CIC
- An abundance of regulatory and political changes
- The decline in the mortgage market
- Companies, brands and innovation
- HSBC and Friends Provident lead the IP market
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- Figure 3: Top five providers of new individual IP policies, by volume, 2009
- Legal & General is the market leader for CIC
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- Figure 4: Top five providers of new individual CI policies, by volume, 2009
- Providers are focusing on price rather than innovation
- The consumer
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- Figure 5: Ownership of protection products, April 2011
- A fifth of the population own IP and/or CIC
- Affordability and price perceptions are the main barriers
- Half of non-policyholders simply aren’t interested
- What we think
Issues in the Market
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- How do consumers feel about protection products?
- What can providers do to make these products more appealing?
- How has the economic slowdown affected the market?
- Should providers use a different targeting approach?
Future Opportunities
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- Making more of the healthy lifestyle angle
- Making the most of your credentials
Internal Market Environment
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- Key points
- The income protection gap has stabilised
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- Figure 6: Income protection gap (measured by annual benefit), 2005-09
- Consumer apathy and confusion abound
- The push for simplified products
- Claims statistics for CIC have improved significantly...
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- Figure 7: Total CI claims paid and proportion of successful claims, by top five providers, 2008 and 2009
- ... especially relating to non-disclosure
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- Figure 8: Proportion of CI claims declined due to non-disclosure, by top five providers, 2008-10
- New ABI guidelines on non-disclosure
- Still some way to go on IP claims statistics
- Tighter FSA rules on oral disclosure
- CIC vs IP – the potential for mis-selling
- The impact of the ECJ gender ruling
- The impact of the RDR
- The impact of welfare reform
- The impact of the Solvency II Directive
Broader Market Environment
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- Key points
- The decline in house sales has had a direct impact
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- Figure 9: Number of new mortgages granted, by type, Jan 2007-Jan 2011
- The decline in owner-occupiers also presents a challenge
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- Figure 10: Housing stock in England, by tenure, 1981-2009/10
- The squeeze on incomes is bad news for providers...
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- Figure 11: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
- ... although the majority of people are managing okay
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- Figure 12: Consumers’ financial situation, April 2009-April 2011
- Rising unemployment may also hit discretionary spending
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- Figure 13: UK unemployment rate, Q1 2005-Q4 2010
- Growth in the AB population is better news for providers
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- Figure 14: Forecast adult population trends, by socio-economic group, 2005-15
- The impact of rising cancer incidence rates
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- Figure 15: Age-standardised (European) incidence rates, all cancers excluding non-melanoma skin cancer, by gender, UK, 1993-2007
Competitive Context
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- Key points
- Creditor insurance could be considered a substitute...
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- Figure 16: Estimated GWP in the creditor insurance market, 2005-09
- ... although the market has been decimated
SWOT Analysis
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- Figure 17: Long-term protection products market – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- The ABI+ race is officially underway in the CI market
- Budget policies to suit the current climate
- Holloway Friendly introduces tele-medical underwriting
- Aviva increases resources available to advisers
- Bupa offers customers a free health assessment
Market Size and Forecast
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- Key points
- New business increased substantially in 2010
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- Figure 18: New individual CI sales, by volume and value, 2005-10
- Existing IP business is under pressure
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- Figure 19: Total number of regular premium individual IP policies in-force, regular premium income and maximum benefits insured per annum, 2004-09
- ... but the decline in new business has stabilised
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- Figure 20: New regular premium individual IP sales (by volume and value), and average annual premiums, 2005-10
- Customer retention is equally tough in the CI sector...
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- Figure 21: Total number of regular premium individual standalone CI policies in-force, regular premium income and maximum benefits insured per annum, 2004-09
- The vast majority of policies sold are rider benefit...
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- Figure 22: New individual CI sales, by type, 2005-10
- ... with most policies sold alongside term assurance
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- Figure 23: New individual CI rider benefit sales, by type of connected insurance policy, 2005-10
- Forecast
- The IP market is likely to remain flat for the next few years...
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- Figure 24: Forecast of new individual IP premiums, 2005-15
- ...with a similar picture expected for CIC
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- Figure 25: Forecast of new individual CIC premiums, 2005-15
- Forecast methodology
Market Share
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- Key points
- HSBC is the leading IP provider...
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- Figure 26: Top five providers of new individual IP policies, by volume, 2009
- ... while Legal & General tops the CIC league table
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- Figure 27: Top five providers of new individual CI policies, by volume, 2009
Companies and Products
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- 2010 – a year of consolidation
- Company profiles
- Aviva
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- Figure 28: Financial performance of Aviva, 2009-10
- Legal & General
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- Figure 29: Financial performance of Legal & General, H1 2009-H1 2010
- Resolution (Friends Life)
- Royal London Group (Scottish Provident and Bright Grey)
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- Figure 30: Financial performance of Royal London Group, 2009-10
- Scottish Widows (Lloyds Banking Group)
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- Figure 31: Financial performance of Lloyds Banking Group (Insurance Segment), H1 2009-H1 2010
- LV=
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- Figure 32: Financial performance of LV=, H1 2009-H1 2010
Brand Communication and Promotion
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- Key points
- Combined IP and CIC adspend has increased since 2008
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- Figure 33: Topline adspend for IP and CIC, by sector, 2008-10
- A sector with a relatively small number of advertisers
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- Figure 34: Leading advertisers of IP and CIC (combined adspend), 2010
Channels to Market
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- Key points
- IFAs account for the majority of IP sales at present...
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- Figure 35: Distribution of new individual IP regular premiums, by channel, 2005-10
- ... but the RDR could change things
- IFAs are also dominant in the CI sector
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- Figure 36: Distribution of new individual CI rider benefit premiums, by channel, 2005-10
- Bancassurers play a larger role
Product Ownership and Sources of Emergency Finance
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- Key points
- Over half of UK adults own protection products
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- Figure 37: Ownership of protection products, April 2011
- A sector which is all about lifestage
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- Figure 38: Ownership of protection products, by demographics, April 2011
- Demonstrating the link with life insurance
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- Figure 39: Protection product cross-holdings, April 2011
- Most would rely on their savings if they were in trouble
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- Figure 40: Likely sources of emergency finance, April 2011
- Young adults favour the Bank of Mum and Dad...
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- Figure 41: Most likely sources of emergency finance, by demographics, April 2011
- ... while low earners are more reliant on benefits
- Making the case for government support
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- Figure 42: Likely sources of emergency finance, by ownership of protection products, April 2011
Reasons for Not Having Cover
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- Key points
- Many believe that policies are overpriced and unaffordable...
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- Figure 43: Reasons for not owning long-term protection products, April 2011
- ...although for others, these products simply aren’t relevant
- Affluent people appear to be the most sceptical
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- Figure 44: Reasons for not owning long-term protection products, by demographics, April 2011
- Products lack relevance to the over-55s
- People with PPI may be a better target
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- Figure 45: Reasons for not owning long-term protection products, by ownership of protection products, April 2011
- Savers question the value of protection products
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- Figure 46: Reasons for not owning long-term protection products, by likely sources of emergency finance, April 2011
Maximum Price Expectations
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- Key points
- People without cover have unrealistic price expectations
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- Figure 47: Maximum prepared to pay for a long-term protection product, April 2011
- It may be worth talking to young people early
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- Figure 48: Maximum prepared to pay for a long-term protection product, by demographics, April 2011
- Heavy internet users may also be a good target
- Positive signs from existing PPI owners
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- Figure 49: Maximum prepared to pay for a long-term protection product, by ownership of protection products, April 2011
- Focusing on the family protection angle
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- Figure 50: Maximum prepared to pay for a long-term protection product, by likely sources of emergency finance, April 2011
- Confusion lies at the heart of the problem
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- Figure 51: Reasons for not owning long-term protection products, by maximum prepared to pay for a long-term protection product, April 2011
Targeting Opportunities
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- Key points
- Life-only Lovers are weak on other protection products
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- Figure 52: Ownership of protection products, by target groups, April 2011
- Protection Advocates can rest assured
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- Figure 53: Likely sources of emergency finance, by target groups, April 2011
- Breaking down the barriers of the Life-only Lovers
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- Figure 54: Reasons for not owning long-term protection products, by target groups, April 2011
- The Apathetic Majority have low price expectations
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- Figure 55: Maximum prepared to pay for a long-term protection product, by target groups, April 2011
- Protection Advocates have distinct lifestage characteristics
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- Figure 56: Target groups, by demographics, April 2011
Appendix – Broader Market Environment
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- Figure 57: Prevalence of cigarette smoking (proportion of population), 1974-2009
- Figure 58: Average weekly alcohol consumption (units) in England, by age and gender: 1998-2009
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Appendix – Forecast
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- Figure 59: Forecast of new individual IP premiums, 2010-15
- Figure 60: Forecast of new individual CIC premiums, 2010-15
- Figure 61: Forecast of new individual IP sales, by value, 2005-15
- Figure 62: Forecast of new individual IP sales, by volume, 2005-15
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- Figure 63: Forecast of new individual CIC sales, by value, 2005-15
- Figure 64: Forecast of new individual CIC sales, by volume, 2005-15
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Appendix – Channels to Market
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- Figure 65: Distribution of new individual standalone CI premiums, by channel, 2005-10
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Appendix – Product Ownership and Sources of Emergency Finance
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- Figure 66: Ownership of protection products, April 2011
- Figure 67: Ownership of protection products, by demographics, April 2011
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- Figure 68: Ownership of protection products, by demographics, April 2011 (continued)
- Figure 69: Likely sources of emergency finance, by demographics, April 2011
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- Figure 70: Likely sources of emergency finance, by demographics, April 2011 (continued)
- Figure 71: Use of multiple sources of emergency finance, April 2011
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Appendix – Reasons for Not Having Cover
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- Figure 72: Reasons for not owning long-term protection products, by demographics, April 2011
- Figure 73: Reasons for not owning long-term protection products, by demographics, April 2011 (continued)
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Appendix – Maximum Price Expectations
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- Figure 74: Maximum prepared to pay for a long-term protection product, by demographics, April 2011
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Appendix – Targeting Opportunities
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- Figure 75: Target groups, by demographics, April 2011
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