TERM ASSURANCE - UK - JUNE 2019

TERM ASSURANCE - UK - JUNE 2019

Jun 2019 Mintel Life InsuranceN/A Price :
$ 1995

The term assurance market has experienced a period of inconsistent growth in recent years; however, 2018 marked the third successive year of growth in terms of sales of new contracts. This growth can largely be attributed to the non-mortgage related market with non-advised direct to consumer policies increasing in popularity. Policies linked to a mortgage have experienced little growth, with people shunning the traditional route of arranging a policy with their mortgage adviser. Consumers are favouring faster life insurance applications, although this may come at a cost for those with ongoing conditions, or who are looking for a more personalised experience.

“Faster and simpler applications have made term assurance more appealing. However, the growth of direct to consumer products means that there needs to be a shift in the way that providers target new customers. Those with specific insurance needs or ongoing conditions need to be made aware that they have options, while the introduction of products to different segments, such as parents or renters, with specific benefits attached can help to improve its relevance.”

Table of contents
OVERVIEW
What you need to know
Products covered in this report
Intermediary market definitions
EXECUTIVE SUMMARY
The market
Period of inconsistent growth continues …
Figure 1: New individual term assurance sales and average annual premiums, 2014-18
… driven by the non-mortgage related market
Figure 2: Volume of new individual regular-premium term assurance policy sales, by policy type, 2014-18
Average term assurance payout reaches record high
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
Figure 4: Ownership of life insurance and other protection products, March 2019
Only one in five are likely to take out life insurance
Figure 5: Likelihood to take out a life insurance policy, March 2019
Consumers favour direct channels when arranging life cover
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
Figure 7: Attitudes towards life insurance applications, March 2019
Open banking benefits can encourage life insurance customers to share their financial data
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
Figure 9: Alternatives to life insurance, March 2019
Providers are missing an opportunity during the mortgage application process
Figure 10: Non-ownership of life insurance among mortgage owners, March 2019
What we think
ISSUES AND INSIGHTS
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
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
Growth continues to fluctuate in the term assurance market
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
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
Mortgage-linked policies lose their market share
Technology could drive more mortgage-linked sales in future
Figure 14: Volume of new individual regular-premium term assurance policy sales, by policy type, 2014-18
Premium gap continues to widen
Figure 15: Average new annual premium – Mortgage term versus other term, 2014-18
Scope for greater cross-selling of critical illness cover
Figure 16: Critical illness rider cross-sell rate – Mortgage term versus other term, 2013-18
CHANNELS TO MARKET
Mortgage term market remains reliant upon independent advice
Figure 17: Distribution of new mortgage term assurance business, by channel, 2015-18
Non-advised market continues to grow
Figure 18: Distribution of new other term assurance business, by channel, 2015-18
Bancassurance market remains flat
Figure 19: Number of new term assurance contracts sold via bancassurance, 2014-18
MARKET DRIVERS
Average term assurance payout reaches record high
Figure 20: Total value and average claims paid for term assurance, 2015-18
Average sum assured falls in 2018
Figure 21: Average sum assured for new term assurance sales, 2014-18
Growth stalls in the housing market
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
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
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
Legal & General continues to dominate market …
… while AIG Life sees new sales increase dramatically
Figure 24: Top five providers of individual term assurance, by sales volume, 2016-18
COMPETITIVE STRATEGIES
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
Over-50s plans continue to dominate life insurance advertising spend
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
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
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
Over 60% do not have any form of life cover
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
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
Figure 29: Type of life insurance policy held, March 2019
LIKELIHOOD TO CONSIDER LIFE INSURANCE
Just 21% are likely to take out life insurance
Opportunities exist to take a new approach to cover
Figure 30: Likelihood to take out a life insurance policy, March 2019
Younger generations show most interest in taking out cover in the future
Figure 31: Likelihood to take out a life insurance policy, by generation, March 2019
CONSUMER PREFERENCES FOR ARRANGING LIFE INSURANCE
Consumers prefer to arrange their policy directly
Interest in banks is not reflected in the market
Figure 32: Ranking of preferred channels when taking out a new life insurance policy, March 2019
Scope for greater product segmentation in the market
Figure 33: Important factors when taking out a life insurance policy, March 2019
Ongoing conditions a greater factor for those without protection
Figure 34: Important factors when taking out a life insurance policy, by protection product ownership, March 2019
ATTITUDES TOWARDS LIFE INSURANCE APPLICATIONS
Consumers want a fast and simple application process …
Figure 35: Attitudes towards life insurance applications, March 2019
… but a compromise is required as people also want access to more personal advice
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
Technology will help to drive personalised recommendations
Figure 37: Incentives to share personal and financial data with life insurance providers, March 2019
… and can reinvigorate the bancassurance channel
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
Most plan to rely on their savings
Figure 39: Alternatives to life insurance, March 2019
New initiatives can encourage younger consumers to consider alternatives
Figure 40: Alternatives to life insurance, by age, March 2019
LIFE INSURANCE AND MORTGAGE APPLICATIONS
Insurers are missing out on a large proportion of the mortgage market …
…while new partnerships and technology can help prevent a missed opportunity
Figure 41: Non-ownership of life insurance among mortgage owners, March 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Total market volume forecast
Figure 42: Forecast of new individual term assurance sales – best and worst case scenarios, 2019-2024
Total market value forecast
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
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
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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