Table of Contents
Executive Summary
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- The market
- Value of new income protection premiums expected to grow
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- Figure 1: Forecast of new individual income protection premiums, at current prices, 2007-17
- Income protection relies on intermediaries
- Market factors
- Income protection gap remains at £190 billion
- Widespread changes to the benefits system
- Sickness Absence Review
- ABI claims reporting standard
- Promising signs for the mortgage market
- Effects of the PPI scandal still being felt
- Regulation overview
- Gender-neutral pricing
- Consumer Insurance Act
- Companies, products and innovations
- Friends Life has the largest market share
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- Figure 2: Market share of the top five providers of new individual income protection, based on volume sales, 2011
- Openwork launches Life Calc app
- Canada Life extends offering
- Drewberry launches quotation system
- The consumer
- Just over a fifth of people have some form of income protection
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- Figure 3: Protection product ownership, March 2013
- Cost is the main barrier to income protection ownership
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- Figure 4: Reasons for not owning income protection, March 2013
- Clarity and financial incentives are needed to boost sales
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- Figure 5: Motivators for purchasing income protection, March 2013
- People’s view of their health may not reflect the truth
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- Figure 6: Consumer view of current health, March 2013
- Two thirds of people have concerns about their health impacting their ability to work
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- Figure 7: Concerns around inability to work due to health reasons, March 2013
- People expect their savings and the state to help them when unable to work
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- Figure 8: Means of meeting financial commitments when unable to work, March 2013
- What we think
Issues in the Market
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- How can awareness of income protection be increased?
- Will the state benefit review change the way people think about protection?
- How can income protection be made more attractive to consumers?
- Can income protection escape the association with PPI?
- Will short-term income protection be the saviour of the industry?
Trend Application
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- Healthy living rather than financial insurance could become a preferred option
- Income protection providers need to accept the negatives
- Young people face more uncertainties than just their health
Market Drivers
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- Key points
- Income protection gap remains at £190 billion
- Welfare state changes will create opportunities for income protection
- Sickness Absence Review aims to get people back to work
- Income protection is excluded from initial Simple Products development
- ABI industry standard on claims reporting
- Published claims rates look encouraging
- Employment rate shows signs of recovery
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- Figure 9: Employment, January 2000-March 2013
- Income squeeze impacts affordability of protection products
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- Figure 10: Percentage change in RPI and average weekly earnings (regular pay only), January 2008-March 2013
- An improvement in the mortgage market is good news for IP
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- Figure 11: Volume of house purchase loans, by type of borrower, 2006-12
- Short-term income protection can help to boost the market
- Gender equalisation provided a sales boost in 2012
- Consumer Insurance Act places the onus on insurers
Competitor Products
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- Key points
- Other protection products take precedence for consumers
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- Figure 12: Number of individual protection policies in force, by type, 2011
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- Figure 13: Overview of the key differences between income protection and ASU cover, May 2013
- PPI scandal and its impact on the industry
SWOT Analysis
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- Figure 14: Income protection SWOT analysis, April 2013
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Who’s Innovating?
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- Key points
- Openwork launches second adviser protection app
- Canada Life extends its case management offering
- Quotation system launched by Drewberry
Market Size and Forecast
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- Key points
- 1.3 million income protection policies in force
- New policy numbers and premium values increase in 2012
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- Figure 15: New individual income protection sales and average premium, 2008-12
- Large increase in group income protection sales
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- Figure 16: Volume and value of new group income protection sales, 2008-12
- Moderate growth expected in the income protection premium market
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- Figure 17: Forecast of new individual income protection premiums, at current prices, 2007-17
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- Figure 18: Forecast of new individual income protection premiums, at current prices, 2007-17
- Forecast methodology
Market Share
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- Key points
- Friends Life is the top provider of new income protection
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- Figure 19: Market share of the top five providers of new individual income protection, based on volume sales, 2011
Companies and Products
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- Aviva
- Legal & General
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- Figure 20: Key financial data for Legal & General (housing and protection business segment), 2011 and 2012
- Friends Life
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- Figure 21: Key financial data for Friends Life, 2011-12
- LV=
- Royal London Group
Brand Communication and Promotion
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- Key points
- A 12% year-on year increase in overall protection product adspend…
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- Figure 22: Total advertising expenditure on protection products, by product category, 2009-13
- …but a 29% decrease in income protection adspend in 2012
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- Figure 23: Total advertising expenditure on income protection, 2009-13
- Unum dominates income protection adspend
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- Figure 24: Advertisers of income protection, by adspend, 2011-13
- A note on adspend
Channels to Market
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- Key points
- Types of intermediary operating in the income protection market
- Tied advisers see share of income protection distribution increase
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- Figure 25: Distribution of new regular income protection premiums, by channel, 2009-12
- Impact of the RDR on income protection distribution
Protection Product Ownership
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- Key points
- Income protection ownership is not widespread
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- Figure 26: Protection product ownership, March 2013
- Multiple protection product ownership is not common
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- Figure 27: Repertoire for protection product ownership, March 2013
- Mortgage holders and parents are much more likely to have cover
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- Figure 28: Protection product ownership, by age, tenure and presence of children, March 2013
- Ownership higher amongst wealthier people
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- Figure 29: Protection product ownership, by gross annual household income, March 2013
Barriers to Income Protection Ownership
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- Key points
- Affordability is the main barrier to income protection ownership
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- Figure 30: Reasons for not owning income protection, March 2013
- Younger people keen on keeping themselves healthy
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- Figure 31: Most popular reasons for not owning income protection, by age, March 2013
Increasing the Appeal of Income Protection
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- Key points
- Consumers crave clarity from income protection providers
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- Figure 32: Motivators for purchasing income protection, March 2013
- Goodwill gestures could boost trust
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- Figure 33: Motivators for purchasing income protection, by reasons for not owning income protection, March 2013
Consumer Perspective on Health and Risk
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- Key points
- Nearly half of people rate their health as good…
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- Figure 34: Consumer view of current health, March 2013
- …but two thirds have concerns over their ability to draw an income
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- Figure 35: Concerns around inability to work due to health reasons, March 2013
- Confidence in health decreases from age 45
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- Figure 36: Consumer view of current health, by age, March 2013
- Poor health leads to concerns about ability to work
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- Figure 37: Concerns around inability to work due to health reasons, by consumer view of current health, March 2013
- Those in rude health would respond to health-based discounts
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- Figure 38: Motivators for purchasing income protection, by consumer view of current health, March 2013
- Health concerns prompt protection product ownership
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- Figure 39: Protection product ownership, by concerns around inability to work due to health reasons, March 2013
- Those not concerned about health more likely to rule out income protection purchase
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- Figure 40: Motivators for purchasing income protection, by concerns around inability to work due to health reasons, March 2013
Financial Provisions for Inability to Work
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- Key points
- Majority of people would rely on savings when unable to work…
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- Figure 41: Means of meeting financial commitments when unable to work, March 2013
- …but more than a fifth of people have no savings or investments
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- Figure 42: Savings levels, March 2013
- Financial back-up plans vary with age
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- Figure 43: Most popular means of meeting financial commitments when unable to work, by age, March 2013
- Those in poor health least likely to have savings
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- Figure 44: Savings levels, by consumer view of current health, March 2013
- Consumers unaware that their savings might not be up to the job
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- Figure 45: Savings levels, by means of meeting financial commitments when unable to work, March 2013
Appendix – Market Size and Forecast
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- Figure 46: Best- and worst-case forecasts for new individual income protection premiums, at current prices, 2009-17
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Appendix – Protection Product Ownership
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- Figure 47: Most popular protection product ownership, by demographics, March 2013
- Figure 48: Next most popular protection product ownership, by demographics, March 2013
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- Figure 49: Repertoire for protection product ownership, by demographics, March 2013
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Appendix – Barriers to Income Protection Ownership
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- Figure 50: Most popular reasons for not owning income protection, by demographics, March 2013
- Figure 51: Next most popular reasons for not owning income protection, by demographics, March 2013
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Appendix – Increasing the Appeal of Income Protection
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- Figure 52: Most popular motivators for purchasing income protection, by demographics, March 2013
- Figure 53: Next most popular motivators for purchasing income protection, by demographics, March 2013
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Appendix – Consumer Perspective on Health and Risk
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- Figure 54: Consumer view of current health, by demographics, March 2013
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- Figure 55: Concerns about inability to work due to health reasons, by demographics, March 2013
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Appendix – Financial Provisions for Inability to Work
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- Figure 56: Most popular means of meeting financial commitments when unable to work, by demographics, March 2013
- Figure 57: Next most popular means of meeting financial commitments when unable to work, by demographics, March 2013
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- Figure 58: Level of investible assets, by demographics, March 2013
- Figure 59: Level of investible assets continued, by demographics, March 2013
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