UK Term Assurance 2011
Article by Mary859
Introduction
The UK term assurance market is in an increasingly tough market where financial conditions have not managed to strengthen enough to witness annual growth. Providers and distributors will need to adopt a dynamic approach to advertising and identify key prohibitors of the market. This report focuses on the strengths and weaknesses of the mortgage and non- mortgage related term assurance markets.
Features and benefits
* Strategies to achieve growth in new business as RDR encourages advisors to gravitate towards the protection market.* Identify new distribution opportunities as providers expand their levels of consumer engagement.* Benchmark against peers within the UK term assurance market.* Enhance knowledge of the macro economy and how it drives or inhibits the sale of term assurance.
Highlights
In line with a falling and now stagnant mortgage market, mortgage related term has continued to decline in new business premiums since 2008 where new business recorded £242.7m and declined further to £228.5m in 2010.
Current RDR proposals state that advisor charging will not apply to pure protection products allowing IFAs to continue receiving commission on its sales. It is predicted these proposals to be a positive driver of protection sales through IFAs.
Demand for the product relies heavily on consumers’ attitudes towards the product as well as on the macroeconomic environment of the industry. The circumstances surrounding consumer engagement will differ and the market will see demand increase the more the consumer has to protect.
Table Of Contents
UK Term Assurance 2011
OVERVIEW
CatalystSummary
EXECUTIVE SUMMARY
Term assurance dominates the UK protection marketRetail Distribution Review regulations will impact positively on the protection marketIFAs remain the dominant distribution channel for term assuranceTechnological innovations will help to grow the market
MARKET CONTEXT
Term assurance dominates the UK protection market in terms of new businessMortgage related term assurance has suffered alongside a collapsed UK mortgage marketNon-mortgage related term assurance increased in popularity under the uncertain economic climateThe rider market is an essential component of term businessRider products allow a menu style format for protectionThe rider market has witnessed an overall decline in new business between 2006 and 2010There are key drivers and inhibitors of the term assurance marketThe supply of term assurance continues to be weighed by uncertain economic conditions surrounding the marketDemand for term assurance will be bolstered by consumers’ willingness to spendNegative press discourages consumers from the protection marketThe economic environment is dissuading consumers from taking up protectionLow interest rates create a disincentive for consumers to save, creating an opportunity for sales of term assurance
CONSUMER CONTEXT
More than half of UK consumers do not have life insuranceAge is a key determinant of term assurance holdingsLife events trigger consumers to take out a life insurance policyLife insurance holding increases in line with incomeConsumers generally do not seek advice before taking out a life policyThe channel of purchase varies significantly with ageIntermediaries remain the dominant provider for term assuranceConsumers believe they have no need for or cannot afford life insuranceUK consumers desire protection products to offer a guaranteed payoutA strong reputation is deemed highly important by consumers
COMPETITOR FOCUS
The top 10 players account for 97% of the term assurance marketAviva writes £73.74m of new business premiums in the term assurance marketLegal & General is the market leader in decreasing term assuranceProviders of term assurance reveal strategic differencesProviders are innovating their underwriting process for greater efficiencyProviders are enhancing distribution partnerships, building stronger relationships within the industryProviders find new ways of engaging with consumers to promote the benefits of protection
DISTRIBUTION DYNAMICSTerm distribution remains heavily weighted within the independent financial advisor channelIFAs’ sales of non-mortgage related term assurance grew by 14% between 2006 and 2010Regulatory issues are one factor driving changes in the distribution of term assuranceAggregator sites have the potential to open the market up to new customers
THE FUTURE TERM ASSURANCE MARKETThe term market will remain flat throughout 2012Datamonitor predicts that mortgage related term will witness steady growth over the next five yearsNon-mortgage related term business will decline in visibility as providers focus their efforts on other protection productsWhole-of-life will continue to be popular among high net worth individualsIncome protection will witness low but positive growthCritical illness will continue to have a strong presence in the rider marketLong-term care will play an increasingly important role within the protection marketDatamonitor predicts that IFAs will remain the dominant distribution channel over the next five yearsSingle-tie distribution will continue to dominate sales of mortgage related term assuranceKey macroeconomic drivers will be impacting the term market going forwardLittle growth in GDP is expected over the next five years to 2015With the unemployment rate relatively high, it is hard to predict consumers’ reaction to term assuranceThe base rate deters consumers from savingForecasts for increasing mortgage lending will be a driver for term assurance going forwardThe post-RDR landscape highlights an opportunity for the protection marketRegulatory issues may gravitate IFAs towards protectionTechnological innovations are a hindrance at presentProviders need to be seen as partners in customers’ life plans and should focus on a comprehensive service to shift emphasis away from priceThe emphasis must shift from price to quality in order to differentiate the productPayment of insurance needs to be quicker if it is to escape negative publicity
APPENDIXData tablesDefinitionsCritical illnessIncome protectionTerm assuranceDecreasing term assuranceLevel term assuranceMortgage related term assuranceABI definitions of distribution channelsIndependent financial advisors (IFAs)Direct sales forcesSingle-tied agentsOtherFurther readingAsk the analystDisclaimer
LIST OF TABLES
Table: UK protection market: new business premiums (£m) APE, 2006-10Table: Term assurance market: new business premiums (£m) APE, 2006-10Table: Total regular premium life market: new business premiums (£m) adjusted for rider products, 2006-10Table: Bank of England base rate, 2007 to July 2011Table: Product penetration within key financial services products (%)Table: Penetration of life insurance holding according to ageTable: Life insurance holding according to marital statusTable: Why consumers do not hold a life policyTable: Top 10 providers of term assurance by new business (£m) and market share (%), 2010Table: The top 10 players in the term assurance market: compound annual growth (%), 2006-10Table: Non-mortgage related term assurance: new business premiums segmented by distribution channel (£m) annual premium equivalent, 2006-10Table: Mortgage related term assurance: new business premiums segmented by distribution channel (£m), 2006-10Table: Protection market: new business premiums (£m) annual premium equivalent, 2011f-15fTable: UK macroeconomic factors: 2011f-15fTable: Term assurance with rider market: new business premiums (£m) annual premium equivalent (APE), 2006-10Table: Life insurance holding, split by income bandTable: The channel of uptake for life insurance according to age bandTable: Percentage of consumers who use the various channels of distributionTable: Reasons for not holding a life policyTable: Term assurance distributionTable: Mortgage related term segmented by distribution channel (£m) APE, 2011f-15fTable: Non-mortgage related term segmented by distribution channel (£m) APE, 2011f-15f
LIST OF FIGURES
Figure: Term assurance dominates the UK protection marketFigure: Non-mortgage related term has taken away market share from mortgage related termFigure: Term assurance dominates the rider marketFigure: Key drivers and inhibitors that affect supply and demand in the term assurance marketFigure: Current accounts have the highest penetration rate of the financial services productsFigure: The lower age bands are the least likely to own a life insurance productFigure: Married couples are more likely to own a life insurance productFigure: Higher income consumers are more likely to purchase life insuranceFigure: Consumers are indifferent when it comes to researching life insuranceFigure: Those in the “middle” age brackets prefer to take up their term assurance online and by telephoneFigure: Intermediaries are the first port of call for many consumers wishing to take out term assuranceFigure: Many consumers are unaware of the need for financial protectionFigure: Affordability prevents most age groups from the uptake of term assuranceFigure: A guaranteed lump sum is the feature that attracts most consumers to a protection productFigure: Providers should have an established reputation and come highly recommendedFigure: Aviva accounts for 21% of the term assurance marketFigure: Legal & General commands the top spot for decreasing term assuranceFigure: The Aviva advertising campaign featuring Paul WhitehouseFigure: Savings related term assurance: new business premiums segmented by distribution channel (£m), 2006-10Figure: Mortgage related term assurance: new business premiums segmented by distribution channel (£m), 2006-10Figure: The protection market is predicted to witness fairly flat growthFigure: IFAs will continue to be the dominant distribution channel for non-mortgage related term assuranceFigure: Single-tie distribution will retain its market share of mortgage related term assurance
http://www.reportsnreports.com/reports/134889-uk-term-assurance-2011.html
Browse All Financial Services Market Research Reports
About Us:
ReportsnReports is an online library of over 100,000+ market research reports and in-depth market research studies & analysis of over 5000 micro markets. We provide 24/7 online and offline support to our customers. Get in touch with us for your needs of market research reports.
Contact:
Mr.Priyank7557 Rambler road,Suite727,Dallas,TX75231Tel: + 1 888 391 5441E-mail: sales@reportsandreports.com
