|
Published by: Mintel International Group Ltd.
Published: Jul. 1, 2008 - 109 Pages
Table of Contents
- Issues in the Market
- Abbreviations
- Market in Brief
- Premiums hit by the credit crunch and slower debt markets
- Figure 1: GWP earned from PPI policies (£m), 2001-07
- Pain is felt across all market segments
- Figure 2: The changing structure of the PPI market, by sector, 2005-07
- Are the good times over?
- The regulatory double whammy
- Competition Commission - time for action?
- A market lacking innovation but some interesting developments
- Loan and card providers the largest players in the market
- Figure 3: The largest PPI providers, by GWP, 2006
- It’s the distribution system, stupid
- A tougher market yes, but still a big target to aim for…
- …but beware the Soft Underbelly
- Internal Market Environment
- Key points
- A challenging few years
- Figure 4: Timeline of events in the creditor insurance market, 2005-08
- Under fire from all quarters
- Criticism leads to regulatory action
- OFT takes up the baton and refers PPI
- Competition Commission takes over
- CC shows its thinking
- Competition Commission signals the good times are over
- Treating Customers Fairly (TCF)
- Financial Services Authority gets tough
- Comparative tables introduced
- FSA pays special attention to the PPI market
- Implications
- ‘Sell once, generate income over many’ business model
- Figure 5: Breakdown of terminations for PPI (2002-06) as percentage of policies at start of the year
- Proposed new insolvency laws
- Broader Market Environment
- Key points
- A debt-led market
- Figure 6: The value of personal sector debt (mortgages and consumer credit) and as a proportion of total PDI, at current prices, 1997-2007
- Market expansion relies on new debt
- Figure 7: The value of personal net lending (mortgages and consumer credit), at current prices, not seasonally adjusted, 1997-2008
- Mortgage debt the main loser from the crunch
- Figure 8: The changing patterns of new lending as a result of the credit crunch, Q1 2006-Q4 2007
- Interest rates: the cost factor
- Figure 9: UK inter-bank, three months’ offer rate and selected UK bank base rates, January 2000-April 2008
- Loss of income
- Unemployment: a driver and cost factor
- Figure 10: Unemployment levels, 1994-2007
- Accidents and sickness
- Figure 11: Road accident casualties, 2000-06
- Accidents at work
- Figure 12: Fatalities and injuries to employees and members of the public, 2002/03-2006/07
- High proportion of adults have had serious illnesses
- Figure 13: General health, long-standing illness and acute sickness in England, by survey year (percentage of adults), 1997-2006
- Implications
- Competitive Context
- Key points
- Critical illness
- Figure 14: Value sales of new critical illness policies, by type of policy, 2000-07
- Income protection
- Figure 15: New sales of individual IP, by volume and value, 2000-07
- Non-insured products
- Consumer savings
- Figure 16: The number of months consumers could survive without any income, 1997-2007
- Strengths and Weaknesses in the Market
- Figure 17: Creditor insurance SWOT analysis, 2008
- Market Size and Forecast
- Key points
- The credit slowdown and criticism take their toll
- Figure 20: GWP of the creditor insurance market, 2001-07
- The pain is widespread as the market structure remains relatively stable
- Figure 21: The breakdown of GWP of the creditor insurance market, by sector, 2001-07
- Prospects for the future?
- Key points
- Credit card sector hit by slower lending and bad publicity
- Figure 22: Credit card PPI GWP (£m) and annual growth (%), 2001-07
- Personal loan sector hardest hit since 2005
- Figure 23: Personal loan PPI GWP (£m) and annual growth (%), 2001-07
- Mortgage PPI sales: on a downward path but…
- Figure 24: MPPI new sales and the number of policies outstanding, 2001-07
- …mortgage GWP holds up better than other sectors of the market
- Figure 25: Mortgage PPI GWP (£m) and annual growth (%), 2001-07
- ASU MPPI becoming less popular
- Figure 26: Sales of new MPPI policies (000), by type of cover, 2001-07
- Other PPI sales also hit by broad market trends
- Figure 27: Other PPI GWP (£m) and annual growth (%), 2001-07
- Retail credit the main ‘other’ category
- Figure 28: The structure of the ‘other’ category, 2007
- Forecast
- Restructuring of the PPI market leads to short-term decline of the market
- Figure 29: Forecast at constant prices, negative scenario
- Figure 30: Gwp of the creditor insurance market, Forecast with negative impact of ppi regulations, at current prices, 2001-13
- Figure 31: Forecast at constant prices, Positive scenario, 2003-13
- Figure 32: GWP in the creditor insurance market, Forecast with positive impact of ppi regulations, at current prices, 2001-13
- Factors used in the forecast
- Market Share
- Key points
- Over 100 providers but a ‘closed’ market
- The ‘usual suspects’ dominate the provider market
- Figure 33: Estimated share of PPI GWP, 2006
- No relationship between policy numbers and market share
- Figure 34: The number of PPI policies offered by the major providers, May 2008
- Aviva is the largest underwriter
- Figure 35: The largest underwriters of credit insurance (share of GWP), 2006
- Companies and Products
- Key points
- 125 providers split across three key segments
- Credit card policies: ASU policies dominate
- Figure 36: Structure of the credit card PPI sector, by type of policy available, May 2008
- Some card providers pull back
- Personal loan products: ASU policies with life cover dominate
- Figure 37: Structure of the personal loan PPI sector, by type of policy available, May 2008
- A retreat from the loan market
- Mortgage payment protection: does exactly what it says on the tin?
- Figure 38: Structure of the mortgage loan PPI sector, by type of policy available, May 2008
- Credit cards: one policy for all cards
- Personal loans: aiming for the Gold Standard
- Mortgage PPI: More fragmentation and more standalone providers
- The Main Underwriters: The Big Boys dominate
- Figure 39: The main underwriters of the ASU element of credit card and personal loan PPI policies, May 2008
- Figure 40: The main underwtirers of the life element of credit card and personal loan PPI policies, May 2008
- Loan and card ASU: keeping it in the family
- Figure 41: The main credit card underwriters and their provider partners, May 2008
- Figure 42: The main personal loan underwriters and their provider partners, May 2008
- MPPI segment: untied underwriters the most important
- Figure 43: The main underwtirers of mortgage PPI policies, by number of policies, May 2008
- Figure 44: The main mortgage underwriters and their provider partners, May 2008
- Brand Communication and Promotion
- Key points
- Little media activity
- Figure 45: PPI adspend, 2006/07 and 2007/08
- Direct mail key marketing channel
- Figure 46: Media mix for creditor insurance adspend, year to 31 March 2008
- Channels to Market
- Key points
- Distributors control the market
- Figure 47: Breakdown of the credit insurance market, by destination of GWP, 2006
- High profits for distributors
- Figure 48: Distributor profit margins on the sale of PPI, 2006
- Debt and PPI a single product?
- Face to face and telephone the prime sales channels for consumers
- Figure 49: The source of purchase of PPI products purchased in the last 12 months, December 2007
- Volume sales show a stronger bias towards face to face and telephone
- Figure 50: The main sales channels, by the number of policies sold by the 12 largest PPI providers, 2006
- Direct sales of growing importance
- Figure 51: The distribution channels used to sell mortgage PPI policies+, May 2008
- Rise of online sales
- Figure 52: PPI policies+ which have information available online, May 2008
- Online quotations a growing feature in the loan and mortgage segments
- Figure 53: Loan and mortgage PPI policies+ which have online quotes available, May 2008
- Online purchasing less common but a growing feature
- Figure 54: Policies+ which can be purchased online, May 2008
- The Consumer: Credit and PPI Ownership
- Key points
- The popularity of PPI wanes
- Figure 55: The ownership of PPI policies, by type, 2006 and 2008
- You must have something to protect - but not too much
- Figure 56: Ownership levels of key PPI products by gender, age, socio-economic group, working status, household income, ACORN category and tenure, April 2008
- Implications
- You need someone to love
- Figure 57: Ownership levels of key PPI products, by marital status, lifestage and presence of children, April 2008
- Key marketing media
- Figure 58: Ownership levels of key PPI products, by technology usage, Internet usage and TV received, April 2008
- Use traditional media selectively
- Figure 59: Ownership levels of key PPI products, by TV region, daily newspaper readership, commercial TV viewing and supermarket used, April 2008
- Target market penetration
- Figure 60: Credit ownership, April 2008
- Penetration lowest in the credit card segment
- Figure 61: Penetration of PPI products into the target market, April 2008
- PPI providers: penetrated the young and middle-income adults
- Figure 62: The penetration+ of PPI products, by gender, age, socio-economic group, household income and ACORN group, April 2008
- Family factor is key
- Figure 63: The penetration+ of PPI products, by marital status, detailed lifestage groups and presence of children, April 2008
- Negative coverage hitting sales?
- Figure 64: The penetration+ of PPI products, by TV region, newspaper readership, TV received and supermarket used, April 2008
- The Consumer: Attitudes and Beliefs
- Key points
- PPI offers peace of mind
- Figure 65: PPI holders agreeing with the statement. ‘The peace of mind it gives me is definitely worth the cost’, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status and tenure, April 2007
- Implications
- High awareness of the negative publicity
- Figure 66: Consumer agreement with the statement: ‘You have seen negative media coverage about payment protection products’, by gender, age, socio-economic group, marital status, lifestage and presence of children, April 2008
- Is the broadsheet press largely responsible?
- Figure 67: Consumer agreement with the statement: ‘You have seen negative media coverage about payment protection products’, by TV region, technology usage, daily newspaper readership and commercial TV viewing, April 2008
- Has the negative publicity taken its toll?
- How will the bad publicity impact on the market in the future?
- Figure 68: Awareness of bad publicity and willingness to take out PPI in the future, April 2008
- Implications
- How hard is the hard sell?
- Figure 69: Agreement with the statement ‘You have felt under pressure to take out payment protection insurance when you have taken out a loan/credit card’, by detailed lifestage groups, April 2007
- But the hard sell could be proving a turn-off to PPI holders
- Figure 70: Is the hard sell proving a turn-off to PPI holders?, April 2008
- Figure 71: Awareness of the hard sell and the willingness to take out PPI on debt products in the future, April 2008
- Implications
- Competitor products could be a serious threat or an opportunity
- Hybrid IP/PPI appeals to the mid-market
- Figure 72: Adults agreeing with the statement: ‘I'd prefer a policy that pays me a percentage of my monthly salary, so I can use the money to pay for whatever I like and not just my debt repayments’, by gender, age, socio-economic group, working status, tenure, daily newspaper readership, TV received and supermarket used, April 2007
- Implications
AbstractThere can be few finance markets that have hit the headlines to the same degree as the creditor insurance market has over the past 18 months. A market which, until 2005, was robust and highly (excessively?) profitable now faces fundamental changes in terms of its distribution structure and sales tactics - always the core drivers of sales - and its pricing. And yet, despite all the criticism, the public see real value in holding a policy that can repay their debts should they suffer a loss of income due to unemployment, accident or sickness. If expenditure on PPI is falling, this mainly reflects a downturn in the underlying debt markets rather than a significant rejection of the concept of PPI.
The coming few years will see a market in transition: expenditure on PPI policies is likely to remain weak as consumers seek to reduce their reliance on debt and regulatory changes are likely to result in significant changes in distribution, sales tactics and pricing.
This report covers the recent developments in the market, with a particular emphasis on the current wave of regulatory interest and the potential impact that this will have on the market.
The report additionally offers:
- An investigation into the internal and broader social, legal and economic factors impacting on the market
- An overview of the market’s competitive context, its strengths and weaknesses, insights and opportunities
- The views of leading experts
- An examination of recent and projected market growth
- An appraisal of the supply side of the market, including market shares of the largest underwriters
- A review of product innovation, distribution and promotion
- An overview of general consumer financial activity
- The results of Mintel’s independently commissioned consumer research, which offers insight into the leading characteristics, attitudes and behaviours of policyholders
- Special further analysis (using cluster modelling) to enable deeper understanding of the core target market.
Get Full Details About This Report >>
|
|
US: 800.298.5699
Int'l: +1.240.747.3093
|
|
|
