Table of Contents
Introduction and Abbreviations
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- Report methodology
- Market definitions
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Executive Summary
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- There is a considerable income protection gap…
- …with the majority of workers without cover
- New individual IP business being driven by the mortgage sector
- Fewer suppliers in the marketplace
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- Market shares of top five providers in individual income protection market, 2002
- IFAs gaining ground in the individual sector
- Advertising expenditure on IP much less than on critical illness cover
- The main findings of Mintel’s consumer research – penetration of IP
- 16% of the sample have had previous experience of long-term illness
- Attitudes towards state versus independent provision
- Market outlook
Product Background
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- The basic principle of income protection
- Various definitions of incapacity create confusion
- The option of extending the deferred period to reduce premiums
- Guaranteed versus reviewable policies
- Average sums insured falling
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- Average annual benefits for new individual income protection policies, 1998-2002
- Other protection products should complement rather than replace IP
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- New sales of individual income protection versus critical illness cover, 1998-2002
Market Factors
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- A burgeoning workforce
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- Size of the total workforce and the proportions unemployed and self-employmed, 1993-2007
- Growing gap between incapacity benefit claimants and beneficiaries
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- Number of incapacity benefit claimants versus beneficiaries, Q1 1998-Q2 2003
- Workers have a one in 12 chance of suffering an incapacity
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- Incapacity benefit claimants, by rate of benefit, in second quarter, 1998-2003
- Over 1 million people have been receiving IB for more than five years
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- Duration on incapacity benefit, by gender, 2nd Quarter 2003
- Chances of illness increase with age
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- Number of incapacity benefit claimants, by gender, age and region, 2nd Quarter 2003
- Average incapacity benefit has hardly changed in six years
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- Average weekly value of incapacity benefit versus average weekly earnings for full-time employees, 1998-2003
- Individual income protection increasingly sold alongside mortgages
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- New loans for house purchase, remortgages and further advances, 1998-2002
- Protecting loved ones is a powerful message
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- Proportion of working men and women with children and mortgages (various combinations), November 2003
- An issue of cost?
- Alternative sources of income – a third of households have no savings
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- Distribution of household savings, by family status and amount, 2001/02
- IP as an employee benefit to acquire and retain staff
- The cost of IP claims has doubled in five years
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- Benefits paid on income protection insurance, 1998-2002
- Rehabilitation to facilitate an early return to work
- Government proposals and future targets
Market Size
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- Around 3.6 million lives covered by income protection
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- Total income protection market breakdown, 2002
- Group premium revenues keep on rising…
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- Group income protection – premium revenues, at current and constant prices, 1998-2003
- …as do regular premiums from individual policies
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- Individual income protection – regular premiums, at current and constant prices, 1998-2003
- Average new individual IP premium has fallen since 1998
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- New sales of individual income protection policies, by volume and value, 1998-2003
- Mortgage-related individual IP sales helping to drive market growth
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- Proportion of new individual income protection sales by mortgage and non-mortgage-related business, 1998-2003
Key Players
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- Increasing market contraction
- Top five providers have 59% volume share of new individual business
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- Top five providers of new individual income protection policies in 2002
- Top five in the group IP sector have an even greater share
- Selected Company Profiles
- Canada Life
- Countrywide Assured
- HSBC Life
- Legal & General
- Norwich Union Healthcare
- Scottish Provident
- UnumProvident
Distribution and the Internet
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- IFAs have increased their share of new individual IP sales
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- New individual income protection policies, by distribution channel, 1998-2003
- FSA no longer to classify IP as high-risk
Advertising and Promotion
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- Total expenditure on advertising income protection fell by 65% in 2002/03
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- Total advertising expenditure on income protection and related products, 2001/02 and 2002/03
- Press adspend up, but direct mail expenditure falls dramatically
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- Total advertising expenditure on income protection, by main media channel, 2001/02 and 2002/03
- Just two companies accounted for over 80% of the total adspend in 2002/03
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- Advertising expenditure on income protection, by advertiser, 2001/02 and 2002/03
The Consumer
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- Just over one in eight consumers say they have income protection…
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- Ownership of IP and other related insurance products, 2001 and 2003
- …yet an even greater proportion have mortgage payment protection
- Penetration of income protection among workers rises to over a fifth
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- Ownership of income protection and other related insurance products – all respondents versus full- and part-time workers only, November 2003
- Multiple product ownership or general confusion?
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- Correlation between owners of income protection and other related insurance products, November 2003
- Women are far less likely to have income protection than men
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- Ownership of income protection and other related insurance products, by gender, age and socio-economic group, November 2003
- Those aged 25-44 show the greatest propensity to have IP
- A fifth of cohabiting couples have income protection – a greater proportion than married couples
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- Ownership of income protection and other related insurance products, by marital status, lifestage, Mintel’s Special Groups and working status, November 2003
- A quarter of full-time workers have income protection
- Families are also more prone to having it
- Just over a third of single earners have income protection
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- Ownership of income protection and other related insurance products, by household size, household structure and tenure, November 2003
- The more people earn, the more they want to protect their income
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- Ownership of income protection and other related insurance products, by gross annual housheold income, TV region and ACORN categories, November 2003
- Internet users and broadsheet readers show above-average take-up of IP
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- Ownership of income protection and other related insurance products, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2003
- Just over one in six have had an extended period off work due to illness or injury
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- Percentage of people who have had more than three months off work due to illness, injury or redundancy, by frequency – all respondents versus workers only, November 2003
- Those with protection are less likely to have had extended time off work
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- Percentage of people who have had more than three months off work due to illness, injury or redundancy, by frequency and ownership of income protection and other related products, November 2003
- The risks increase with age
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- Percentage of people who have had more than three months off work due to illness or injury and percentage who have been made redundant, by gender, age, socio-economic group and lifestage, November 2003
- Those renting have as much need for IP as those who own their homes with a mortgage
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- Percentage of people who have had more than three months off work due to illness or injury and percentage who have been made redundant, by working status, annual household income, tenure and TV region, November 2003
- Television advertising of IP could raise awareness and boost sales
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- Percentage of people who have had more than three months off work due to illness or injury and percentage who have been made redundant, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2003
- Three in five consumers do not think they have adequate protection against loss of earnings
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- Level of agreement to three statements, 2001 and 2003
- Those who have insurance protection are more confident…
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- Level of agreement to three statements, by ownership of IP and related products, November 2003
- …while those who have experienced incapacity or redundancy are less assured
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- Level of agreement to three statements by those who have had more than three months off work due to illness or injury and those who have been made redundant, November 2003
- Income protection consumer typologies
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- Segmentation of working respondents into five typology groups, November 2003
- A third of 18-24-year-olds are hot prospects
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- Customer typologies, by gender, age, socio-economic group and lifestage, November 2003
- The propensity to be well shielded increases with household income
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- Customer typologies, by annual household income, TV region and ACORN categories, November 2003
- Two in five renters are hot prospects, while a similar proportion of mortgage owners are well shielded
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- Customer typologies, by marital status, household size and tenure, November 2003
- Using the TV and popular tabloids to reach the target audience
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- Customer typologies, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2003
The Future
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- Bridging the income protection gap will continue to pose the biggest challenge
- Fewer suppliers will mean increased business for those who remain
- Raising awareness, widening choice and addressing cost
- Interest in group IP will also increase, particularly short-term cover policies
- Developing a hybrid product is on the cards
- Increasing the state retirement age will have implications for IP providers
- Over-prescriptive regulation could further contract the market…
- …while depolarisation will create opportunities
Forecast
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- Revenue premiums from group IP to increase by 60% over five years
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- Forecast of premium revenues from group income protection schemes in force, at constant and current prices, 2003-07
- Individual IP sector will grow less strongly
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- Forecast of premium revenues from individual income protection policies in force, at constant and current prices, 2003-07
- The overall picture
- Factors incorporated
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