Table of Contents
Introduction
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- Report scope and market definition
- Abbreviations
Executive Summary
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- The market
- Standard model predicts slow premium growth
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- Figure 1: Forecast of total new individual term assurance premiums, at current prices – fan chart, 2007-17
- Recent performance
- Market factors
- Greater regulation and mixed economic backdrop
- Rising claims costs
- Changing homeownership trends
- Company, brands and innovation
- A concentrated market
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- Figure 2: Market shares of the top five providers of individual term assurance, based on volume of new sales, 2012
- Product innovation
- Advertising activity
- Distribution trends
- The consumer
- Overall penetration of life cover
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- Figure 3: Segmentation of UK adult population, by life insurance provision, March 2013
- Ownership of the main policy types
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- Figure 4: Ownership of life insurance and related protection products, March 2013
- Main reasons for eschewing cover
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- Figure 5: Top eight reasons for not having life insurance, March 2013
- Sources used or consulted before purchase
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- Figure 6: Sources used/consulted to help select policy/provider, March 2013
- Factors influencing policy choice
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- Figure 7: Factors influencing policy selection, March 2013
- General attitudes towards protection insurance
- Identifying new prospects
- What we think
Issues in the Market
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- What are the short-term prospects for life insurers?
- What impact are online aggregators having on this market?
- Why do more than half the population eschew cover?
- How can providers broaden the appeal of term assurance?
- What is the argument for a simple life cover product?
- Will the average premium continue to fall?
Trend Application
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- Trend: Help Me Help Myself
- Trend: Let’s Make a Deal
- 2015: Brand Intervention
Market Drivers
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- Key points
- Life insurance industry is shaped by a broad range of factors
- Recent and forthcoming regulation, legislation and new initiatives
- Tough economic backdrop has mixed implications for insurers
- Depressed housing market hampers growth in the mortgage term sector
- The privately rented sector continues to expand
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- Figure 8: UK housing stock, by tenure, 1991-2011
- Housing transactions continue to run well below pre-crisis levels
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- Figure 9: Number of UK residential property transactions with a value of £40,000 upwards – seasonally adjusted, Q1 2007-Q4 2012
- 2012 saw modest growth in first-time buyer and home mover loans
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- Figure 10: Number of loans for house purchase, by type of borrower, 2007-12
- Average sums assured linked to mortgage advances
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- Figure 11: Average sum insured for new term assurance policies versus average first-time buyer advance, 2003-12
- Assumptions are based on mortality rates
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- Figure 12: Number of deaths in England and Wales, by age and gender, 2011
- Increasing longevity has helped to alleviate pressure on premiums
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- Figure 13: Period life expectancy from birth for men and women, 1985-2035
- People are living longer, but not necessarily in good health…
- … leading to rising claim costs on protection policies
Competitor Products
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- Key points
- More than half of all UK adults have no form of life cover
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- Figure 14: Segmentation of UK adult population, by life insurance provision, March 2013
- Death-in-service benefit should be view as a supplementary rather than alternative option
- There are more whole-of-life than term policies in force
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- Figure 15: Number of individual protection policies in force, by type, 2011
- Some 45% of new mortgage term and 35% of protection term assurance sales included critical illness cover in 2012
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- Figure 16: Critical illness rider benefits as a proportion of new individual term assurance business, 2008-12
Market SWOT Analysis
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- Figure 17: Term assurance market – strengths, weaknesses, opportunities and threats, 2013
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Who’s Innovating?
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- Key points
- Slowdown in product development
- BGL subsidiary launches direct-only life cover
- Direct Life develops universal application for protection advisers
- Providers start to add protection products to adviser platforms
Market Size and Forecast
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- Key points
- Business in force
- Sales of term assurance were up 5% in 2012…
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- Figure 18: New individual term assurance sales and average annual premium, 2008-12
- … driven mainly by a strong rise in protection term business…
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- Figure 19: Volume of new individual regular-premium term assurance policy sales, by policy type, 2008-12
- … where the average cost of a new policy continues to fall
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- Figure 20: Average new premium – mortgage term versus protection term, 2008-12
- Slow premium growth forecast
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- Figure 21: Forecast of total new term insurance premiums, at current prices – fan chart, 2007-17
- Figure 22: Forecast of new individual critical illness premiums, at current and constant prices, 2008-17
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Legal & General strengthens its market-leading position
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- Figure 23: Top five providers of individual term assurance, by sales volumes, 2012
Companies and Products
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- Legal & General
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- Figure 24: Key financial data for Legal & General, 2011-12
- Aviva
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- Figure 25: Key financial data for Aviva plc, 2011-12
- LBG and Scottish Widows
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- Figure 26: Key financial information for LBG’s insurance division, 2011-12
- Friends Life
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- Figure 27: Key financial data for Friends Life, 2011-12
- Royal London Group (Scottish Provident and Bright Grey)
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- Figure 28: Key financial information for Royal London Group, 2011-12
Brand Communication and Promotion
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- Key points
- Above-the-line advertising on life insurance products is fairly limited
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- Figure 29: Total advertising expenditure on life assurance products, by product category, 2009-13
- Aviva is once again the leading advertiser of term assurance
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- Figure 30: Top ten advertisers of (term) life insurance products, 2011-13
- TV, direct mail and online account for the majority of adspend
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- Figure 31: Advertising expenditure on (term) life insurance products, by media type, 2011-13
Channels to Market
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- Key points
- Most term assurance business is sold with advice
- IFAs wrestle share of the mortgage term market away from tied advisers
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- Figure 32: Mortgage term assurance premiums, by distribution channel, 2008-12
- IFAs enjoy an even greater share of the protection term sector
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- Figure 33: Protection term assurance premiums, by distribution channel, 2008-12
Ownership of Life Insurance and Related Protection Products
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- Key points
- Survey background
- Having dependents and a mortgage increases the attraction of life cover…
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- Figure 34: Ownership of life insurance, by all adults, those with children and mortgage holders, March 2013
- … and similarly, critical illness cover
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- Figure 35: Ownership of related protection insurance products, by all adults, those with children and mortgage holders, March 2013
- Nearly one in three term assurance policyholders also have critical illness cover
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- Figure 36: Ownership related protection products, by term life insurance policyholders, March 2013
- Take-up of life cover is highest among those aged 35-54
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- Figure 37: Ownership of life insurance and related protection products, by age, March 2013
- The typical term assurance policyholder
Sources Consulted Prior to Purchase
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- Key points
- Most policyholders consulted an adviser before purchase
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- Figure 38: Sources used/consulted to help select policy/provider, by type of policy held, March 2013
- Younger adults are more likely to turn to web aggregators and social networking sites
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- Figure 39: Sources used/consulted to help select policy/provider, by age, March 2013
Factors Influencing Purchase
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- Key points
- Price governs policy selection
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- Figure 40: Factors influencing policy selection, by type of policy held, March 2013
- Only a minority are influenced by presence on price comparison site
Take-up Barriers
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- Key points
- Cost is the top barrier to take-up
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- Figure 41: Reasons for not having life insurance, March 2013
- A minority avoid cover due to health concerns
- Parents and renters are least able to afford cover
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- Figure 42: Reasons for not having life insurance, by presence of children in household and tenure, March 2013
- How age factors into the equation
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- Figure 43: Reasons for not having life insurance, by age, March 2013
Attitudes Towards Life Insurance
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- Key points
- Most people appreciate the need for the cover...
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- Figure 44: Agreement with statements about the importance and relevance of life insurance, March 2013
- ... particularly those who have it
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- Figure 45: Agreement with statements about the importance and relevance of life insurance, by ownership of life insurance, March 2013
- Two thirds of UK adults believe that it’s easy to arrange insurance online
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- Figure 46: Agreement with statements about ease of arranging cover and product flexibility, March 2013
- Two thirds of UK adults believe that it’s easy to arrange insurance online
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- Figure 47: Agreement with statements about ease of arranging cover and product flexibility, by ownership of life insurance, March 2013
Upcoming Lifestage Events and Insurance Purchase Intentions
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- Key points
- Important lifestage events facilitate the need for the cover
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- Figure 48: Lifestage events and insurance-related plans within the next 12 months, March 2013
- Over 3 million new prospects
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- Figure 49: Lifestage events and insurance-related plans within the next 12 months, by most popular ownership of life insurance, March 2013
Appendix – Definitions and Industry Regulation
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- Main types of life insurance
- Other long-term protection policies
- Short-term insurance protection policies
- Additional regulatory milestones occurring within the past few years
- Other noteworthy initiatives
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 50: Forecast of new individual term assurance premiums – best- and worst-case scenarios, at current prices, 2012-17
- Market forecast by sector
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- Figure 51: Forecast of new individual term assurance premiums, by sector, at current prices, 2008-17
- Mortgage term sector forecast
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- Figure 52: Forecast of new mortgage term assurance premiums, at current prices – fan chart, 2007-17
- Figure 53: Forecast of new mortgage term assurance premiums, 2012-17
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- Figure 54: Forecast of new mortgage term assurance premiums – best- and worst-case scenarios, at current prices, 2012-17
- Protection term sector forecast
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- Figure 55: Forecast of new protection term assurance premiums, at current prices – fan chart, 2007-17
- Figure 56: Forecast of new protection term assurance premiums, 2012-17
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- Figure 57: Forecast of new protection term assurance premiums – best- and worst-case scenarios, at current prices, 2012-17
- Forecast methodology
- Fan chart explanation
Appendix – Ownership of Life Insurance and Related Protection Products
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- Figure 58: Ownership of life insurance, by demographics, March 2013
- Figure 59: Ownership of related protection products, by demographics, March 2013
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Appendix – Sources Consulted Prior to Purchase
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- Figure 60: Most popular sources used/consulted to help select policy/provider, by demographics, March 2013
- Figure 61: Next most popular sources used/consulted to help select policy/provider, by demographics, March 2013
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Appendix – Factors Influencing Purchase
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- Figure 62: Top five factors influencing policy selection, by demographics, March 2013
- Figure 63: Next five most popular factors influencing policy selection, by demographics, March 2013
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- Figure 64: Least popular factors influencing policy selection, by demographics, March 2013
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Appendix – Take-up Barriers
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- Figure 65: Top five reasons for not having life insurance, by demographics, March 2013
- Figure 66: Next four most common reasons for not having life insurance, by demographics, March 2013
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- Figure 67: Other reasons for not having life insurance, by demographics, March 2013
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Appendix – Attitudes Towards Life Insurance
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- Figure 68: Agreement with statements about the importance and relevance of life insurance, by demographics, March 2013
- Figure 69: Agreement with statements about ease of arranging cover and product flexibility, by demographics, March 2013
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Appendix – Upcoming Lifestage Events and Insurance Purchase Intentions
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- Figure 70: Lifestage events planned over the next 12 months, by demographics, March 2013
- Figure 71: Life insurance-related plans within the next 12 months, by demographics, March 2013
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