What you need to know
2018 was a challenging year for the UK funerals market. Following a period of strong and steady growth, a build-up of pressure around rising costs and funeral poverty prompted regulatory interest and negative media headlines. Providers have sought to pre-empt the impact of possible intervention from the CMA by cutting costs and increasing pricing transparency, particularly at the value end of the market. This is already having a negative impact on profit margins and revenue among the sector’s larger providers.
Pre-paid funeral plans have also been the subject of a separate investigation by HM Treasury and, as a consequence, will be regulated by the FCA from 2021. Sales of plans fell by 15% in 2018 and look set to decline further in 2019. Providers in this market will need to rebuild trust and find ways to modernise their products to appeal to a wider base of customers going forward.
Overall drivers for the market remain favourable. Unlike many other consumer markets, there is an assured level of demand, while a growing and ageing population should drive up the number of funerals over the longer-term. The key challenge for providers is adapting their products and services to take account of changing behaviour, preferences and expectations among consumers.
Products covered in this Report
This Report provides a broad context of the UK funerals market, with an additional focus on the market for pre-paid funeral plans. It provides a market size and a five-year forecast for both markets, as well as looking at the key factors driving the market. The strategies of key players are examined, along with an overview of advertising activity. Mintel’s exclusive research looks at attitudes and behaviours towards planning funerals, including the consideration given to making plans, barriers to funeral planning and interest in pre-paid plans.
For the purposes of this Report, Mintel has used the following definitions:
Pre-paid funeral plans – a plan that allows the upfront payment of a funeral, either in instalments or via one-off payment to a plan provider or funeral director. Plans vary in terms of what elements are included and most providers offer different levels of plan to cover from basic to more elaborate funeral options.
Over-50s life insurance – a form of whole of life insurance, sometimes referred to as Guaranteed Acceptance plans. Policyholders typically pay a monthly amount to receive a lump sum benefit upon death. Unlike funeral plans, there is flexibility as to how this money can be used, such as leaving a legacy to family, although some plans include a Funeral Benefit Option which ensures the money is paid to a funeral director to meet funeral costs.
Some over-50s policies are marketed as funeral plans and provide different tiers of cover depending on the choice of funeral. Policyholders must meet all the required payments to receive a payout and any money paid in cannot be recovered if the policy is cancelled. These products are covered in more detail in Mintel’s Over-50s Guaranteed Acceptance Life Insurance – UK, June 2019 Report.
Funeral plans – in this Report, the term funeral plan is typically used to describe a wider range of plans that are marketed as a way of paying for funeral costs. This includes pre-paid plans and some guaranteed acceptance plans that are promoted as funeral plans. From a consumer perspective, the difference in these offerings is likely to be negligible.
