UK Critical Illness and Income Protection 2007

Published by: Datamonitor

Published: Jun. 19, 2007 - 45 Pages

Table of Contents

TABLE OF CONTENTS

Overview

Catalyst

Summary

Methodology

Executive Summary

Market Focus

Sector Issues

Competitor Issues

Distribution Dynamics

Market Focus

This report examines the UK individual Income Protection and Critical Illness Insurance market

Income Protection continues to play a niche role in the UK protection market

Both CII and IP continue to see declining sales in terms of policy numbers

Business in force is an important measurement of lapse rates in the market

The total UK protection market is forecast to grow by a compound annual rate of 2.6% between 2007 and 2011

Sector Issues

The ABI introduced a new and improved Statement of Best Practice for Critical Illness Cover

The Income Protection Task Force seeks to raise awareness about Income Protection Insurance

Income protection has huge potential but is still a relatively complicated product

Competitor Issues

In CII, the top 5 players share more than 50% of the UK market among them

In IP, the top 5 players share almost two-thirds of the UK market among them

Providers try to adapt and enhance their products to meet regulator and customer needs

Distribution Dynamics

IFAs continue to dominate the income protection market

After an initial surge, new business of critical illness through tied channels has declined since 2004

Multi-tied financial advisors are forecast to seize a reasonable proportion of the income protection market over the next 5 years.

IFAs will retain their dominance of the stand alone critical illness market

Appendix

Definitions

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

TABLE OF FIGURES

Figure 1: Income Protection continues to play a niche role in the UK protection market

Figure 2: Accelerated and standalone CII policies have both been experiencing poor sales performances

Figure 3: Individual IP sales saw further declines in 2005 but not as strong as a year earlier

Figure 4: Income protection new business vs business in force

Figure 5: Critical Illness new business vs business in force

Figure 6: New business in stand-alone critical illness products is forecast to increase by a compound annual rate of 5.7%.

Figure 7: In CII, the top 5 players share more than 50% of the UK market among them

Figure 8: In IP, the top 5 players share almost two-thirds of the UK market among them

Figure 9: Bancassurers have lost a significant proportion of market share in the income protection market

Figure 10: Single ties sales of Critical illness have declined since 2004

Figure 11: Multi-tie financial advisors are forecast to make inroads into the income protection market between 2007 and 2011

Figure 12: Independent advisors will retain their majority share of the critical illness market

TABLE OF TABLES

Table 1: New business premiums in individual protection, 2002-2006, £m APE

Table 2: Total number of premium sales for individual IP and individual CI policies, 2002-2005

Table 3: Income protection new business vs business in force 2001-2005

Table 4: Critical Illness new business vs business in force, 2001-2005 £m

Table 5: Forecast individual protection products 2007-2011, £m

Table 6: Top 5 players in the CII market in terms of numbers of policies sold in 2005 and previous ranking

Table 7: Top 5 players in the IP market in terms of numbers of policies sold in 2005 and previous ranking

Table 8: Income protection distribution 2002-2006, £m APE

Table 9: Stand alone Critical illness distribution 2002-2006, £m APE

Table 10: Forecast income protection distribution 2007-2011, £m APE

Table 11: Forecast stand alone critical illness distribution 2007-2011, £m APE

Abstract

Examines the markets for Critical Illness and Income Protection in the UK, looking at the relative sizes of the markets and assessing the future of these protection products

This report provides a comprehensive analysis of the individual Income Protection and individual Critical Illness Insurance markets

Assesses the factors that have driven these markets to their current levels and forecasts premium income growth in the individual protection market

Looks at the Income protection and Critical Illness markets in terms of new business, number of policies sold and distribution

In 2006, new business premiums in IP stood at GBP50m, compared to total CII sales of GBP287m. However, sales of stand-alone CII products were only valued at GBP36m in 2006, thus lower than IP sales. It is as a rider product that sales of CII are vastly outstripping IP.

The ABI is implementing changes which include a new standard description of CI to help ensure that consumers see a consistent explanation of the product; ensuring that, even if consumers do not read the full definitions, they will get a much clearer view about what is covered and what is not.

The Income Protection Taskforce has developed a series of recommendations including suggestions on improved underwriting, marketing and better enforcement of regulations

Provides historic and forecast data for the UK individual protection market.

Utilizes in-depth primary research to provide the answers to how the markets have arrived at the point they have and what the future holds.

Identifies areas and product features where and where development is needed if these products are to continue to survive.

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