Table of Contents
Executive Summary
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- The market
- Period of inconsistent growth continues …
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- Figure 1: New individual term assurance sales and average annual premiums, 2014-18
- … driven by the non-mortgage related market
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- Figure 2: Volume of new individual regular-premium term assurance policy sales, by policy type, 2014-18
- Average term assurance payout reaches record high
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- Figure 3: Total value and average claims paid for term assurance, 2015-18
- Companies and brands
- AIG Life term assurance sales increase by over 60%
- New gender-specific brands hope to make an impact
- The consumer
- Scope for greater penetration in the life insurance market
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- Figure 4: Ownership of life insurance and other protection products, March 2019
- Only one in five are likely to take out life insurance
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- Figure 5: Likelihood to take out a life insurance policy, March 2019
- Consumers favour direct channels when arranging life cover
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- Figure 6: Ranking of preferred channels when taking out a new life insurance policy, March 2019
- Fast and simple life insurance applications appeal but consumers also want more guidance
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- Figure 7: Attitudes towards life insurance applications, March 2019
- Open banking benefits can encourage life insurance customers to share their financial data
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- Figure 8: Incentives to share personal and financial data with life insurance providers, March 2019
- Over-reliance upon savings as an alternative to life insurance
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- Figure 9: Alternatives to life insurance, March 2019
- Providers are missing an opportunity during the mortgage application process
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- Figure 10: Non-ownership of life insurance among mortgage owners, March 2019
- What we think
Issues and Insights
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- Providers have an opportunity to re-engage with the mortgage market
- The facts
- The implications
- Greater segmentation can give life insurance a more relevant feel
- The facts
- The implications
The Market – What You Need to Know
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- Period of inconsistent growth continues …
- … driven by the non-mortgage related market
- The non-advised market goes from strength to strength
- Average term assurance payout reaches record high
Market Size and Forecast
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- Growth continues to fluctuate in the term assurance market
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- Figure 11: New individual term assurance sales and average annual premiums, 2014-18
- 2017 sees the number of in-force polices rise to pre-2014 levels
- Growth in the direct-to-consumer market will drive future sales
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- Figure 12: Forecast of new individual term assurance volume sales, 2014-24
- Figure 13: Forecast of new individual term assurance premiums, 2014-24
- Forecast methodology
Market Segmentation
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- Mortgage-linked policies lose their market share
- Technology could drive more mortgage-linked sales in future
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- Figure 14: Volume of new individual regular-premium term assurance policy sales, by policy type, 2014-18
- Premium gap continues to widen
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- Figure 15: Average new annual premium – Mortgage term versus other term, 2014-18
- Scope for greater cross-selling of critical illness cover
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- Figure 16: Critical illness rider cross-sell rate – Mortgage term versus other term, 2013-18
Channels to Market
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- Mortgage term market remains reliant upon independent advice
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- Figure 17: Distribution of new mortgage term assurance business, by channel, 2015-18
- Non-advised market continues to grow
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- Figure 18: Distribution of new other term assurance business, by channel, 2015-18
- Bancassurance market remains flat
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- Figure 19: Number of new term assurance contracts sold via bancassurance, 2014-18
Market Drivers
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- Average term assurance payout reaches record high
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- Figure 20: Total value and average claims paid for term assurance, 2015-18
- Average sum assured falls in 2018
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- Figure 21: Average sum assured for new term assurance sales, 2014-18
- Growth stalls in the housing market
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- Figure 22: Volume of house purchase loans, by type of borrower, 2012-18
- FCA focuses on the ‘uninsurable’
- Smokers and regular drinkers are on the decline
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- Figure 23: Proportion of cigarette smokers and regular drinkers of alcohol, 2005-17
- Insurers turn to wearable tech to mitigate risk and encourage healthy living
Companies and Brands – What You Need to Know
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- AIG Life term assurance sales increase by over 60%
- Brands are increasingly targeting specific segments of the market
- New partnerships and open banking can improve access to cover
- Beagle Street tops life insurance adspend
Market Share
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- Legal & General continues to dominate market …
- … while AIG Life sees new sales increase dramatically
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- Figure 24: Top five providers of individual term assurance, by sales volume, 2016-18
Competitive Strategies
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- New technology and partnerships support growth of the direct to consumer market
- Through Open Banking …
- … and new channels to market
- New products and services look to target specific segments of the market
- Scottish Widows is looking to more simplified terminology to improve engagement
- Through new partnerships AIG is looking to extend its reach
- To the mortgage market …
- … and to those looking to improve their health and wellbeing
- Aviva improves its bereavement support offering
Advertising and Marketing Activity
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- Over-50s plans continue to dominate life insurance advertising spend
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- Figure 25: Total above-the-line, online display and direct mail advertising expenditure on life insurance and over 50’s guaranteed acceptance plans, 2016/17-2018/19
- Beagle Street tops total spend for the second year running
- Vitality boosts adspend as it promotes exercise-linked benefits
- New gender-specific brands enter the top 10
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- Figure 26: Top ten advertisers of above-the-line, online display and direct mail advertising expenditure on life insurance, 2017/18-2018/19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Scope for greater penetration in the life insurance market
- Only one in five are likely to take out life insurance
- Consumers favour direct channels when arranging life cover
- Fast and simple life insurance applications appeal but consumers also want more guidance
- People can be persuaded to share data for personalised recommendations
- Over-reliance upon savings as an alternative to life insurance
- Providers are missing an opportunity during the mortgage application process
Protection Product Ownership
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- Over 60% do not have any form of life cover
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- Figure 27: Ownership of life insurance and other protection products, March 2019
- Over half of mortgage owners have life insurance
- Opportunity for greater targeting of renters
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- Figure 28: Ownership of life insurance and other protection products, by housing situation, March 2019
- 13% are unsure about the type of cover they hold
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- Figure 29: Type of life insurance policy held, March 2019
Likelihood to Consider Life Insurance
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- Just 21% are likely to take out life insurance
- Opportunities exist to take a new approach to cover
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- Figure 30: Likelihood to take out a life insurance policy, March 2019
- Younger generations show most interest in taking out cover in the future
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- Figure 31: Likelihood to take out a life insurance policy, by generation, March 2019
Consumer Preferences for Arranging Life Insurance
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- Consumers prefer to arrange their policy directly
- Interest in banks is not reflected in the market
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- Figure 32: Ranking of preferred channels when taking out a new life insurance policy, March 2019
- Scope for greater product segmentation in the market
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- Figure 33: Important factors when taking out a life insurance policy, March 2019
- Ongoing conditions a greater factor for those without protection
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- Figure 34: Important factors when taking out a life insurance policy, by protection product ownership, March 2019
Attitudes towards Life Insurance Applications
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- Consumers want a fast and simple application process …
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- Figure 35: Attitudes towards life insurance applications, March 2019
- … but a compromise is required as people also want access to more personal advice
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- Figure 36: Response to the statement ‘When applying for a life insurance policy I would like to be able to access advice about my personal circumstances’, by interest in a basic life insurance application, March 2019
Data Sharing Incentives
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- Technology will help to drive personalised recommendations
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- Figure 37: Incentives to share personal and financial data with life insurance providers, March 2019
- … and can reinvigorate the bancassurance channel
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- Figure 38: Incentives to share personal and financial data with life insurance providers, by top ranking of preferred channels when taking out a life insurance policy, March 2019
Alternatives to Life Insurance
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- Most plan to rely on their savings
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- Figure 39: Alternatives to life insurance, March 2019
- New initiatives can encourage younger consumers to consider alternatives
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- Figure 40: Alternatives to life insurance, by age, March 2019
Life Insurance and Mortgage Applications
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- Insurers are missing out on a large proportion of the mortgage market …
- …while new partnerships and technology can help prevent a missed opportunity
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- Figure 41: Non-ownership of life insurance among mortgage owners, March 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Total market volume forecast
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- Figure 42: Forecast of new individual term assurance sales – best and worst case scenarios, 2019-2024
- Total market value forecast
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- Figure 43: Forecast of new individual term assurance premiums – best and worst case scenarios, at current prices, 2019-24
- Market sector forecast: mortgage term assurance
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- Figure 44: Forecast of new individual mortgage term assurance volume sales, 2014-24
- Figure 45: Forecast of new individual mortgage term assurance premiums, 2014-24
- Market sector forecast: other term assurance
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- Figure 46: Forecast of new individual other term assurance volume sales, 2014-24
- Figure 47: Forecast of new individual other term assurance premiums, 2014-24
- Forecast methodology
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