Table of Contents
Introduction
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- Definitions and report scope
- Term assurance
- Abbreviations
Executive Summary
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- The market
- Market size and forecast
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- Figure 1: Forecast for total value of new individual regular-premium term assurance policy sales, 2006-16
- Channels to market
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- Figure 2: Total new premiums (£m) for individual regular-premium term assurance policies written, by distribution channel, 2005-10
- Market factors
- Difficult economic conditions remain a challenge
- European Court of Justice gender ruling and Solvency II
- Mortgage lending holding back term assurance sales
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- Figure 3: Number of monthly mortgage approvals for home purchase, January 2004-January 2011
- Adviser fallout could hurt the market
- Companies, brands and innovation
- The top five providers sold 68% of new policies in 2010
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- Figure 4: Term assurance providers, by new individual sales, 2010
- Brand promotion
- Who’s innovating?
- The consumer
- Product ownership levels
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- Figure 5: Life insurance ownership, May 2011
- Purchase triggers
- Attitudes towards life insurance
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- Figure 6: Attitudes towards life insurance, May 2011
- What we think
Issues in the Market
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- How will changes in the adviser landscape impact term assurance sales?
- To what extent is consumer understanding, or lack of it, hurting the term assurance market?
- How can protection providers improve their image and tackle consumer scepticism?
- Do consumers overlook long-term benefits to achieve short-term savings?
- Can insurance providers create or market additional term assurance triggers, beyond covering debt?
Future Opportunities
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- Educating consumers about taking life cover now
- Using statistics to improve trust
Internal Market Environment
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- Key points
- The protection gap remains at £2.4 trillion
- Consumer engagement and education is lacking
- Lack of consumer awareness leads many to misjudge costs…
- …and distrust insurance providers
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- Figure 7: Financial services firms complained about, by sector, 2007/08-2010/11
- ABI issues new guidelines to speed up payouts…
- …while the government is set to introduce new rules
- ECJ gender ruling to impact policy prices…
- ...and Solvency II could do the same
- RDR could lead to a shortage of advice
Broader Market Environment
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- Key points
- A decline in mortgage lending holding back the market
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- Figure 8: Number of monthly mortgage approvals for home purchase, January 2004-March 2011
- Difficult economic climate squeezing household incomes
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- Figure 9: GDP quarterly percentage change, Q1 2004-Q1 2011
- Consumers cut back on discretionary items
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- Figure 10: The annual rate of growth in the life insurance and all consumer spending price deflators, Q1 2004-Q4 2010
- Increased life expectancy pushes premiums down
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- Figure 11: Cohort expected age of death+ at age 60, by gender, 1981-2058
SWOT Analysis
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- Figure 12: Term assurance – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Aviva pilots new teleclaims process
- PruProtect develops education cover
- Life Cover for All launches in the UK
- Ageas Protect and Friends Life simplify writing policies in trust
- Ageas Protect offers a Low Start option
Market Size and Forecast
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- Key points
- The term assurance market remains relatively steady
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- Figure 13: Volume and value of new individual regular-premium term assurance policy sales, 2005-11
- Non-mortgage-related sales holding up the market…
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- Figure 14: Volume of new individual regular-premium term assurance policy sales, by policy type, 2005-10
- …with a similar trend in term assurance premiums
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- Figure 15: Value of new individual regular-premium term assurance policy sales, by policy type, 2005-10
- Average cost of cover declines sharply
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- Figure 16: Average annual premiums on new individual regular-premium term assurance policies written, by policy type, 2005-10
- Prices driven down by changes in life expectancy and sums assured
- Existing book of business fell in 2009
- Forecast
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- Figure 17: Forecast for total value of new individual regular-premium term assurance policy sales, 2006-16
- Figure 18: Forecast for total value of new individual regular-premium term assurance policy sales, 2006-16
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- Figure 19: Forecast for total volume of new individual regular-premium term assurance policy sales, 2006-16
- Figure 20: Forecast for total volume of new individual regular-premium term assurance policy sales, 2006-16
- Forecast methodology
- Factors used in the forecast for term assurance
Market Share
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- Key points
- Legal & General remains the market leader for term assurance
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- Figure 21: Top five term assurance providers, by new individual sales, 2010
- Top five companies command 68% of new term assurance sales
Companies and Products
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- Aviva
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- Figure 22: Key financial data for Aviva, 2009 and 2010
- Friends Life (Friends Provident and AXA UK)
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- Figure 23: Key financial data for Friends Provident Holdings (UK) Plc, 2009 and 2010
- Legal & General
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- Figure 24: Key financial data for Legal & General, 2009 and 2010
- RBS/NatWest
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- Figure 25: Key financial data for RBS Group, 2009 and 2010
- Figure 26: Key financial data for UK Retail Banking Division – RBS Group, 2009 and 2010
- Royal London Group (Scottish Provident and Phoenix Life)
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- Figure 27: Key financial data for Royal London Group, 2009 and 2010
- Scottish Widows
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- Figure 28: Key financial data for Lloyds Banking Group (Insurance Segment), 2009 and 2010
Brand Promotion and Communication
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- Key points
- Life protection advertising spend driven by over-50s plans
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- Figure 29: Breakdown of top-level life protection* advertising expenditure, by sub-category, 2008-10
- Aviva has the biggest adspend in the life protection/term assurance market
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- Figure 30: Top ten advertisers of life protection/term assurance, 2008-10
- Direct mail is the most popular method of advertising
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- Figure 31: Advertising expenditure on term assurance, by media type, 2010
Channels to Market
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- Key points
- IFAs command 59% of total new term assurance premiums
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- Figure 32: Total new premiums (£m) for individual regular-premium term assurance policies written, by distribution channel, 2005-10
- IFAs are even more dominant in the non-mortgage-related sector
Product Ownership Levels
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- Key points
- More than half of UK adults do not own a life insurance policy
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- Figure 33: Life insurance ownership, May 2011
- Lack of consumer awareness about product ownership
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- Figure 34: Life insurance ownership, by gender and age, May 2011
- Families most likely to have some form of life cover
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- Figure 35: Life insurance ownership, by lifestage and presence of children, May 2011
- Ownership levels higher among the more affluent
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- Figure 36: Life insurance ownership, by socio-economic group, household income and tenure, May 2011
- Buying a home is a big term assurance driver
Purchase Triggers
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- Key points
- Getting a mortgage is the biggest life insurance policy driver
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- Figure 37: Purchase triggers, May 2011
- Protecting dependents is also important to consumers
- Many consumers have no prompt to obtain life insurance
- However, lack of consumer interest depends on consumer lifestyles
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- Figure 38: Key purchase triggers, by age, lifestage and presence of children, May 2011
- Scots are more likely to consider life insurance
- Difference in attitudes between consumers with and without cover
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- Figure 39: Purchase triggers, by life insurance ownership, May 2011
- Shutting the stable door?
Attitudes towards Life Insurance
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- Key points
- A third of consumers aware of the need to have life insurance...
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- Figure 40: Attitudes towards life insurance, May 2011
- ...with almost the same number of consumers ruling themselves out
- Trust is an issue for many consumers
- Consumers concerned about value…
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- Figure 41: Attitudes towards life insurance, by life insurance ownership, May 2011
- …and cost of life insurance products
- Currently 5% of the adult population are considering life insurance
Targeting Opportunities
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- Key points
- Key target groups
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- Figure 42: Key life insurance target groups, May 2011
- Figure 43: Attitudes towards life insurance, by target groups, May 2011
- Life Insurance Advocates
- The Unengaged/Apathetic consumers
- Brand Driven
- Life Insurance Sceptics
- Advocates and Brand Driven consumers most likely to have life cover
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- Figure 44: Life insurance ownership, by target groups, May 2011
- Getting a mortgage/buying a house top purchase trigger for all groups
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- Figure 45: Purchase triggers, by target groups, May 2011
Appendix – Market Size and Forecast
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- Figure 46: Best- and worst-case forecast for total value of new individual regular-premium term assurance policy sales, 2011-16
- Figure 47: Best- and worst-case forecast for total volume of new individual regular-premium term assurance policy sales, 2011-16
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Appendix – Channels to Market
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- Figure 48: Total new premiums for individual regular-premium term assurance policies written, by distribution channel and policy type, 2005-10
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Appendix – Product Ownership Levels
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- Figure 49: Life insurance ownership, by demographics, May 2011
- Figure 50: Life insurance ownership, by demographics, May 2011 (continued)
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Appendix – Purchase Triggers
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- Figure 51: Purchase triggers, by demographics, May 2011
- Figure 52: Purchase triggers, by demographics, May 2011 (continued)
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Appendix – Attitudes towards Life Insurance
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- Figure 53: Attitudes towards life insurance, by demographics, May 2011
- Figure 54: Attitudes towards life insurance, by demographics, May 2011
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Appendix – Targeting Opportunities
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- Figure 55: Target groups, by demographics, May 2011
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