Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Distribution of protection products is IFA-dependent
- Term assurance distribution
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- Figure 1: Total new premiums for individual regular-premium term assurance policies written, by distribution channel and policy type, 2007-H1 2012
- Critical illness distribution
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- Figure 2: Distribution of new individual CI rider benefit premiums, by channel, 2008-H1 2012
- Income protection distribution
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- Figure 3: Distribution of new individual IP premiums, by distribution channel, 2009-H1 2012
- Market factors
- Protection product payout rates can offer the industry a boost
- Uncertainty in the housing market worrying for protection sales
- FSA stats show 6% drop in number of advisers
- Overview of regulation changes
- The RDR
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- Figure 4: RDR business impact over the next 12 months, August 2012
- Solvency II
- Gender-neutral pricing
- Companies, products and innovations
- Product and service innovations
- The IFA
- Barriers to generating new life and protection business
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- Figure 5: Barriers to life and protection sales, August 2012
- Changes in client behaviour
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- Figure 6: Changes in client behaviour, August 2012
- Provider support
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- Figure 7: Ways to improve life and protection sales to clients, August 2012
- What we think
Issues in the Market
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- How will the protection market fare post-RDR?
- How can the industry overcome the difficulties around consumer awareness and understanding?
- How can the industry keep up with technologically advanced consumers?
- How can intermediaries justify their position in the protection market?
- How will the protection market look for intermediaries as we enter 2013?
Trend Application
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- Changes in lifestyle require flexibility in protection cover
- Youngsters can learn from their parents and ensure they are protected
- Releasing seniors’ savings to protect the young
Market Drivers
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- Key points
- Protection gaps have to be addressed as welfare support decreases
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- Figure 8: Income protection gap (measured by annual benefit), 2005-10
- Target market size
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- Figure 9: Ownership of life protection and health insurance products, March 2012
- Fears about facing mortality put people off
- Treasury group recommends launch of simple life protection product
- Disclosing payout rates can build consumer confidence
- GDP figures provide hope for 2013
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- Figure 10: UK GDP growth – percentage change, latest quarter on previous quarter, Q1 2009-Q3 2012
- Mortgage market fluctuations impact protection sales
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- Figure 11: Residential housing transactions (seasonally adjusted), Q1 2007-Q2 2012
- First-time buyers provide a boost for pure protection sales in Q1 2012
- Increased longevity means lower protection premiums
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- Figure 12: Cohort life expectancy at age 60, by gender, 1981-2060
- Major insurers make changes to improve protection offerings
- Attempts to boost income protection take-up
Regulatory Environment
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- Key points
- RDR will pose challenges for advisers and the protection market
- FSA reports 6% drop in number of advisers prior to RDR
- Complaints about IFAs continue to fall
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- Figure 13: Financial services firms complained about, by sector, 2007/08-2011/12
- Taxation of protection business
- Gender-neutral pricing could push up premiums across the board
- Mortgage Market Review could reduce mortgage activity
- Solvency II could also contribute to higher premiums
- Capital adequacy rules postponed
SWOT Analysis
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- Figure 14: SWOT Analysis
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Who’s Innovating?
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- Key points
- PruProtect offering wealth manager range prior to RDR
- Zurich launches revamped microsite
- LV= launches budget IP offering
- Exeter Family Friendly launches new website
- Life quote protection app launched by Openwork
- Advisers plan new financial educational charity
Protection Market Size
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- Key points
- Term assurance
- Term assurance market falls back slightly in 2011
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- Figure 15: Volume and value of new individual regular-premium term assurance policy sales, 2007-H1 2012
- Mortgage-related new premium term assurance sales fall back in 2011
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- Figure 16: Volume and value of new individual regular-premium term assurance policy sales, by policy type, 2007-H1 2012
- Critical illness
- Growth in the CI market is encouraging
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- Figure 17: New individual CI sales, by volume and value, 2008-H1 2012
- Standalone CI sales account for a small proportion of new business
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- Figure 18: New individual CI sales, by type, by volume and value, 2008-H1 2012
- Term assurance is the largest selling partner of CI policy sales
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- Figure 19: New individual CI rider benefit sales, by volume and value and type of insurance, 2007-H1 2012
- Income protection
- Policy sales increase as average annual premium costs decrease
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- Figure 20: New individual income protection sales, by value and volume, and average annual premiums, 2007-H1 2012
Distribution Overview
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- Key points
- Life and protection channels to market rely heavily on intermediaries
- Term assurance
- IFAs have the edge in the term assurance market
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- Figure 21: Total new premiums for individual regular-premium term assurance policies written, by distribution channel and policy type, 2007-H1 2012
- Critical illness
- CI rider benefit sales dominated by intermediaries
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- Figure 22: Distribution of new individual CI rider benefit premiums, by channel, 2008-H1 2012
- IFAs account for the majority of standalone CI premiums
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- Figure 23: Distribution of new individual standalone CI premiums, by channel, 2007-H1 2012
- Income protection
- Just over half of new IP premiums are sold by IFAs
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- Figure 24: Distribution of new individual IP premiums, by distribution channel, 2009-H1 2012
- Direct sales opportunities are limited in the protection market
Intermediary Company Profiles
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- Sesame Bankhall Group
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- Figure 25: Key financial data for Sesame Bankhall Group Limited, 2010 and 2011
- Openwork
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- Figure 26: Key financial data for Openwork Limited, 2009 and 2010
- Intrinsic Financial Services
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- Figure 27: Key financial data for Intrinsic Financial Services Limited, 2010 and 2011
- Positive Solutions
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- Figure 28: Key financial data for Positive Solutions Financial Services Limited, 2009 and 2010
- LifeSearch Limited
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- Figure 29: Key financial data for LifeSearch Limited, 2010 and 2011
- Cavendish Online
Brand Communication and Promotion
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- Key points
- Adspend on protection products jumps in 2011/12
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- Figure 30: Overview of total adspend on protection products, 2009/10-2011/12*
- IP advertising is responsible for the overall jump in adspend
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- Figure 31: Adspend on protection products, by category, 2009/10-2011/12
- Unum accounts for almost a quarter of all protection product adspend
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- Figure 32: Top 15 advertisers of protection products, 2011/12
- TV advertising dominates over other protection advertising methods
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- Figure 33: Overview of media type used to advertise protection products, 2011/12
- Advertising in intermediary and trade press declines by over 50%
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- Figure 34: Adspend in intermediary and trade press*, 2010/11 and 2011/12
The IFA – Challenges in the Life and Protection Market
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- Key points
- The challenging economy is the main barrier to life and protection sales
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- Figure 35: Barriers to life and protection sales, 2011 and 2012
- IFAs and insurers can work to educate customers
- Point-of-sale advantage and better offers direct from insurers a concern
- Adviser confidence has not changed in the last six months
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- Figure 36: Adviser confidence levels, August 2012
- IFAs worried about housing market confidence
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- Figure 37: Impact of consumer confidence in the housing market, August 2012
The IFA – Client Behaviour
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- Key points
- Changes in client priorities are harming protection product sales
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- Figure 38: Changes in client behaviour, August 2012
- Independent consumers pose a risk to advisers
- Consumers developing a taste for technology
- Simplicity and customer focus are needed to improve product awareness
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- Figure 39: Ways to improve life and protection sales to clients, August 2012
- Consumer purchase triggers
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- Figure 40: Life insurance purchase triggers, May 2012
The IFA – Protection Industry Approach to RDR
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- Key points
- Fears of negative business impact from the RDR
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- Figure 41: RDR business impact, August 2012
- One in ten advisers are unsure of their post-RDR plans
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- Figure 42: Business model plans, August 2012
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