Creditor Insurance in Southern and Western Europe : Market Research Report

Creditor Insurance in Southern and Western Europe

Published: Sep. 1, 2008 - 170 Pages

0.0 EXECUTIVE SUMMARY: In recent years, the creditor insurance markets of Italy and Spain have advanced most rapidly; Across all eight nations, the market reached €25.69 billion in gross written premiums in 2007…; … within which cover for temporary incapacity and unemployment makes up a significant amount; A reduction in growth for creditor policies will inevitably occur in the short to medium-term future; Creditor insurance can provide a valuable source of commissions to banks and other lenders; Providers of creditor insurance can be grouped into five main categories; Captive underwriters of creditor insurance are most widespread in Belgium and Portugal; In several countries, more emphasis will be placed on product design, pricing and distribution…; … creating opportunities for alternative intermediaries and underwriters of creditor insurance; … with a number of factors throwing up opportunities for new distribution relationships
1.0 INTRODUCTION: Rationale; Across 18 European countries, creditor insurance was worth around €35.1 billion in 2007…; … although it remains a poorly documented market for a variety of reasons; Finaccord; PartnerBASE™; Methodology; The research is based on a survey covering 568 banks and other lending institutions; Definitions
2.0 REGIONAL OVERVIEW: Introduction; Market analysis - lending; Total retail lending balances approach €5 trillion in Southern and Western Europe; The impact of the international ‘credit crunch’ will reduce mortgage growth rates during 2008…; … with a similar effect being felt in Southern and Western Europe’s non-mortgage credit sector; rates for total retail lending balances differ substantially from country to country; Growth rates for total retail lending balances differ substantially from country to country; In terms of total retail lending per capita, Ireland surges ahead of the Netherlands and the UK; Average residential mortgage balances per capita in Italy remain stubbornly low…; … in spite of the fact that owner occupation rates are comparatively high; Consumer credit per capita in Spain overtakes the UK although remains below Ireland; Non-mortgage credit declines as a proportion of total retail lending in all countries in the region; Rapid growth in credit cards in Portugal and Spain offsets weaker progress elsewhere; … with the number of cards issued in the UK remaining virtually static between 2003 and 2007; Pay later cards per capita in Spain could soon reach the levels of France and the UK; Market analysis - creditor insurance; A dearth of published market and competitor data makes creditor insurance difficult to measure; Broadly defined, the total market is worth in the region of €25.69 billion in gross written premiums; Narrowly defined, the UK accounts for a higher proportion of the regional total; Mortgage-related policies represent the largest component of the market when defined broadly; The high value of mortgage-related creditor insurance boosts the size of the French market…; while the UK holds a disproportionately large market for loan payment protection insurance; … while the UK holds a disproportionately large market for loan payment protection insurance; can also be measured as a percentage of total life, accident and health insurance; Markets can also be measured as a percentage of total life, accident and health insurance; Creditor insurance is likely to have grown most rapidly in Spain over the 2003-7 period; Most creditor insurance policies are organised by means of a link with a single, external partner…; … although captive insurers are present in all eight countries and joint venture entities in four; International competitors - creditor insurance; Competitors in creditor insurance in Europe can be segmented into five main categories; APRIL Financial Services is seeking to position itself as a leading independent provider…; … and is a sister company to Axéria Prévoyance within France’s fast-growing April Group; Cardif secured almost €2.9 billion in gross premiums written from creditor insurance in 2007…; … with a 25% growth rate in international markets excluding the Netherlands and the UK; Genworth Financial underwrites payment protection policies in 17 territories other than the US…; … with a sales strategy based on over 600 bancassurance and other distribution relationships
3.0 BELGIUM: Introduction to the banking sector; In spite of substantial restructuring, Belgium’s banking market remains crowded; Dexia, Fortis, ING and KBC lead the way…; … although numerous medium-sized and small banking ventures challenge their dominance; Market analysis - lending; Retail mortgages and consumer credit in Belgium continue to make solid progress…; … although credit and other pay later cards per capita remain relatively low at 0.35 in 2007; Approaching one half of card issuers have developed an option for payment protection insurance; A number of smaller lending institutions promote comparatively simple creditor insurance policies; Competitor analysis - creditor insurance; Banque CPH and Crédit Agricole have both launched new captive underwriting entities; For mortgage-related policies, partnerships are limited to smaller and medium-sized lenders…; … although Cardif has carved out a leadership position in personal lending / motor finance; Several other underwriters of creditor insurance hold one major relationship each in Belgium; Market size - creditor insurance; Future outlook; Policies linked to mortgages and consumer finance may continue to deliver reasonable growth
4.0 FRANCE: Introduction to the banking sector; Mutual and co-operative banks continue to play a substantial role in French retail banking…; … although they face competition in the retail lending sector from a variety of different quarters; Market analysis - lending; Home loans continue to outpace non-mortgage credit in the French retail lending market…; … with credit and other pay later cards in circulation moving up at a steady rate…; … assisted by a change in co-branding rules that occurred during the second half of 2007; Product analysis - creditor insurance; Several lending institutions in France do not offer payment protection insurance; Over three quarters of creditor insurance policies in France incorporate cover for unemployment; Competitor analysis - creditor insurance; Captive underwriters are less influential in creditor insurance than in mainstream bancassurance; Banque Accord began underwriting creditor policies through Dublin-based captives in July 2008…; … following the lead of Finaref whose captives are generating strong growth in France and abroad; AXA and CNP remain the dominant providers of creditor insurance in the French market…; … with sales of creditor insurance boosting the performance of CNP both at home and abroad; Five other underwriters also lay claim to two or more exclusive distribution mandates in France; April Assurances has positioned itself as a leading independent distributor of creditor insurance; With Aviva Emprunteur, Aviva Assurances is seeking to target under-served market segments; Market size - creditor insurance; Future outlook; A variety of factors are causing changes in the way in which creditor insurance is sold in France; Credit brokers hold a relatively low distribution share of mortgage and non-mortgage lending
5.0 IRELAND: Introduction to the banking sector; A variety of lending institutions owned by foreign parents challenge the traditional incumbents; Credit unions also play a significant role in the Irish retail lending market; Market analysis - lending; Retail lending balances in Ireland more than double over the 2003-7 time frame…; … although the market for credit and other pay later cards records more modest progress; Product analysis - creditor insurance; Provision of payment protection cover by Irish lending institutions is close to universal…; … and the policies promoted in the market are, with only a few exceptions, fully comprehensive; Competitor analysis - creditor insurance; Captive underwriters are used for creditor insurance by several Irish banking institutions…; … although external insurers are likely to account for a majority of business underwritten; Assurant Solutions has entered the market through a pair of innovative distribution agreements; Market size - creditor insurance; Future outlook; The Financial Regulator has tightened up the rules for selling payment protection insurance
6.0 ITALY: Introduction to the banking sector; Four, or arguably five, retail banking groups lay claim to a genuinely nationwide network…; … although these are being challenged by an array of ambitious regional competitors…; … as well as several insurer-owned banks and banks falling under foreign ownership; Italy also plays host to a considerable number of specialised lending institutions…; … including central card issuing entities and automotive finance captives and joint ventures; Market analysis - lending; Italy’s retail lending market advances but remains relatively small in per capita terms…; … although credit and other pay later cards per capita lie above several other countries; Product analysis - creditor insurance; A minority of card issuers have yet to establish a program for card payment protection insurance; Comprehensive coverage within loan-related policies is now the norm in Italian creditor insurance; Competitor analysis - creditor insurance; A variety of operating models is in evidence for provision of payment protection insurance…; … although captives and joint ventures are in evidence for a number of major lenders…; … with the duo of Eurizon Vita and Eurizon Tutela likely to be the largest of these; AXA MPS Assicurazioni and Chiara Vita have recently been reconfigured as joint ventures…; … as has CNP UniCredit Vita although it exerts influence on only a part of the UniCredit network; Banco Popolare has reorganized its insurance business with Fondiaria SAI and Aviva; Numerous underwriters continue to jostle for creditor insurance distribution mandates; Cattolica Assicurazioni announced a new joint venture with Iccrea Banca in August 2008; CNP possesses other bancassurance partners in Italy in addition to Cofidis and UniCredit; Genworth Financial and Net Insurance experience contrasting fortunes in the Italian market; Market size - creditor insurance; Future outlook; Credit intermediaries play a significant role in the mortgage and non-mortgage lending sectors…; … although the main battle will be to secure distribution through major banks and lending entities
7.0 NETHERLANDS: Introduction to the banking sector; The integration of ABN AMRO and Fortis Bank brings about further market concentration…; … albeit a number of smaller institutions offer increasing competition to the ‘big three’…; … and credit brokers account for a sizeable proportion of both mortgage and non-mortgage loans; Market analysis - lending; A highly developed mortgage sector outpaces non-mortgage credit in the Netherlands…; … and consumer demand for credit and other pay later cards remains sluggish; Product analysis - creditor insurance; Lenders focused on distribution through intermediaries are less likely to offer creditor insurance; Typically, payment protection insurance policies in the Netherlands are fully comprehensive; Competitor analysis - creditor insurance; Lending entities have adopted a range of approaches to offering creditor insurance; ABN AMRO has announced its intention to terminate its joint venture with Delta Lloyd; The Warranty Group claims the highest number of exclusive links with Dutch lending institutions…; … although Cardif, Cassidy Davis and Genworth Financial are among its competitors in this area; Cardif’s gross premiums written in the Netherlands have contracted in recent years…; … while those of CreditLife International have surged largely thanks to one major partnership; Market size - creditor insurance; Future outlook; The Dutch market for creditor insurance may struggle to deliver much organic growth
8.0 PORTUGAL: Introduction to the banking sector; For a relatively small market, Portugal’s retail lending sector remains comparatively fragmented…; … although Cetelem and Groupe LaSer have agreed to combine their local subsidiaries; Market analysis - lending; The markets for mortgage and non-mortgage credit in Portugal deliver solid growth…; … and the number of credit and other pay later cards in circulation is expanding rapidly; Product analysis - creditor insurance; For forms of lending not linked to credit cards, payment protection insurance is widely offered; Portuguese banks are typically generous in packaging ‘free’ insurance with their credit cards; Over 80% of creditor insurance policies marketed in Portugal are fully comprehensive; Competitor analysis - creditor insurance; Captive insurers and joint ventures play a prominent role in Portuguese creditor insurance…; Cardif and Genworth Financial account for a majority of non-captive distribution partnerships; Market size - creditor insurance; Future outlook; Beyond the short term, the outlook for creditor insurance in Portugal seems fairly propitious
9.0 SPAIN: Introduction to the banking sector; The main wave of consolidation in Spanish retail banking has now taken place; Many of Spain’s savings banks are characterised by an independent, entrepreneurial spirit; A number of overseas entrants play a significant role in the retail lending sector; Specialised lenders and automotive captives complete the list of potential creditor partners; Market analysis - lending; Lending to Spanish households continued to surge between 2003 and 2007…; … and rampant demand on the part of consumers spurs the credit card sector to similar heights; Product analysis - creditor insurance; Options for creditor insurance linked to mortgage and non-mortgage loans are ubiquitous; The availability of cover for unemployment has advanced rapidly in recent years; Competitor analysis - creditor insurance; Captives and joint ventures constitute an important feature of creditor insurance in Spain…; … although some institutions outsource aspects of creditor insurance to external underwriters; AXA, Cardif and Caser rank among the leading underwriters of creditor insurance in Spain…; … but face no shortage of competition from a variety of other specialist and non-specialist firms; Market size - creditor insurance; Future outlook; In spite of the inevitable decline in growth of retail lending, the market remains attractive…; … although the potential for distribution through credit brokers seems comparatively limited
10.0 UNITED KINGDOM: Introduction to the banking sector; Question marks hang over many medium-sized and smaller lending entities in the UK…; … although there is still no shortage of competitors in spite of the challenging market conditions; Market analysis - lending; The UK’s over-blown consumer lending market begins to level off in the second half of 2007…; … and the mature credit card market began to decline gently from 2005 onwards; Product analysis - creditor insurance; Payment protection cover continues to be marketed widely by lending institutions in the UK…; … although several major players have discontinued sales of certain forms of creditor policy; The components of mortgage-related insurance are often sold on an unbundled basis in the UK; Competitor analysis - creditor insurance; A variety of operating models are in evidence for the provision of creditor insurance in the UK…; … with several of the larger lending institutions have elected to use captive underwriters…; …as a means of enhancing the profits that they can generate from this activity; The leading competitors are being challenged by up to a further ten non-captive underwriters; Cardif Pinnacle and St Andrew’s Group are prominent as partners in consumer finance markets; Direct Group and Paymentshield are among firms exploiting other opportunities in the market…; … with Towergate having acquired both the latter company and British Insurance; Market size - creditor insurance; Future outlook; Regulatory factors may bring about substantial changes in the market for creditor insurance…; … although latent demand among borrowers will produce opportunities for competitors
GRAPHICS / TABLES: Entities contacted for the research in Southern and Western Europe, segmented by type and by country; Total retail lending balances outstanding in Southern and Western Europe segmented by country, 2003-7; Total retail lending balances outstanding in Southern and Western Europe segmented by country, 2003-7 (data); Retail mortgage bals. outstanding in Southern and Western Europe segmented by country, 2003-7; Retail mortgage balances outstanding in Southern and Western Europe segmented by country, 2003-7 (data); Retail non-mortgage balances outstanding in Southern and Western Europe segmented by country, 2003-7; Retail non-mortgage balances outstanding in Southern and Western Europe segmented by country, 2003-7 (data); Size versus growth in total retail lending balances outstanding in Southern and Western Europe, 2003-7; Size versus growth in retail mortgage bals. outstanding in Southern and Western Europe, 2003-7; Size versus growth in retail non-mortgage balances outstanding in Southern and Western Europe, 2003-7; Total retail lending balances outstanding per capita in country, 2003-7; Total retail lending balances outstanding per capita in Southern and Western Europe segmented by country, 2003-7 (data); Retail mortgage balances outstanding per capita in Southern and Western Europe segmented by country, 2003-7; Retail mortgage lending balances outstanding per capita in Southern and Western Europe segmented by country, 2003-7 (data); Owner occ. rates in Southern and Western Europe segmented by country, latest data available; Retail non-mortgage balances outstanding per capita in Southern and Western Europe segmented by country, 2003-7; Retail non-mortgage lending balances outstanding per capita in Southern and Western Europe segmented by country, 2003-7 (data); Retail non-mortgage balances outstanding as % of total retail lending balances outstanding in Southern and Western Europe, 2003-7; Retail non-mortgage balances outstanding as % of total retail lending balances outstanding in Southern and Western Europe, 2003-7 (data); Total number of credit / pay later cards in issue in Southern and Western Europe, 2003-7; Total number of credit / pay later cards in issue in Southern and Western Europe, 2003-7 (data); Size versus growth in credit / pay later cards in issue in Southern and Western Europe, 2003-7; Total number of credit / charge cards in issue per capita in Southern and Western Europe, 2003-7; Total number of credit / charge cards in issue per capita in Southern and Western Europe, 2003-7 (data); Approximate value of the creditor insurance market in Southern and Western Europe, broadly and narrowly defined, segmented by country, 2007; Approximate value of the creditor insurance market in Southern and Western Europe, broadly and narrowly defined, segmented by underlying product, 2007; Approximate value of the creditor insurance market in Southern and Western Europe, broadly defined, segmented by country and underlying lending product, 2007; Approximate value of the creditor insurance market in Southern and Western Europe, broadly defined, segmented by country and underlying lending product, 2007 (data); Approximate value of the creditor insurance market in Southern and Western Europe, narrowly defined, segmented by country and underlying lending product, 2007; Approximate value of the creditor insurance market in Southern and Western Europe, narrowly; defined, segmented by country and underlying lending product, 2007 (data); Approximate value of the creditor insurance market in Southern and Western Europe, broadly defined,; as a percentage of total life, accident and health insurance premiums, segmented by country, 2007; Approximate average annual growth rates for the creditor insurance market in Southern and Western Europe, broadly defined, segmented by country, 2003-7; Segmentation of operating models used for creditor ins. in Southern and Western Europe, 2007; Segmentation of operating models used for creditor insurance in Southern and Western Europe, 2007 (data); Size and growth of the retail lending market in Belgium, 2003-7; Number of credit and other pay later cards in issue and per capita in Belgium, 2003-7; Lender penetration of creditor insurance policies by product in Belgium, 2008; Risks covered by creditor insurance policies in Belgium, 2008; Operating models for creditor insurance in Belgium, 2008; Partner market shares for creditor insurance in Belgium, 2008; Approximate gross written premiums for creditor insurance in Belgium segmented by underlying product, 2007; Size and growth of the retail lending market in France, 2003-7; Number of credit and other pay later cards in issue and per capita in France, 2003-7; Lender penetration of creditor insurance policies by product in France, 2008; Risks covered by creditor insurance policies in France, 2008; Operating models for creditor insurance in France, 2008; Partner market shares for creditor insurance in France, 2008; Approximate gross written premiums for creditor insurance in France segmented by underlying product, 2007; Size and growth of the retail lending market in Ireland, 2003-7; Number of credit and other pay later cards in issue and per capita in Ireland, 2003-7; Lender penetration of creditor insurance policies by product in Ireland, 2008; Risks covered by creditor insurance policies in Ireland, 2008; Operating models for creditor insurance in Ireland, 2008; Partner market shares for creditor insurance in Ireland, 2008; Approximate gross written premiums for creditor insurance in Ireland segmented by underlying product, 2007; Size and growth of the retail lending market in Italy, 2003-7; Number of credit and other pay later cards in issue and per capita in Italy, 2003-7; Lender penetration of creditor insurance policies by product in Italy, 2008; Risks covered by creditor insurance policies in Italy, 2008; Operating models for creditor insurance in Italy, 2008; Partner market shares for creditor insurance in Italy, 2008; Approximate gross written premiums for creditor insurance in Italy segmented by underlying product, 2007; Size and growth of the retail lending market in the Netherlands, 2003-7; Number of credit and other pay later cards in issue and per capita in the Netherlands, 2003-7; Lender penetration of creditor insurance policies by product in the Netherlands, 2008; Risks covered by creditor insurance policies in the Netherlands, 2008; Operating models for creditor insurance in the Netherlands, 2008; Partner market shares for creditor insurance in the Netherlands, 2008; Approximate gross written premiums for creditor insurance in the Netherlands segmented by underlying product, 2007; Size and growth of the retail lending market in Portugal, 2003-7; Number of credit and other pay later cards in issue and per capita in Portugal, 2003-7; Lender penetration of creditor insurance policies by product in Portugal, 2008; Risks covered by creditor insurance policies in Portugal, 2008; Operating models for creditor insurance in Portugal, 2008; Partner market shares for creditor insurance in Portugal, 2008; Approximate gross written premiums for creditor insurance in Portugal segmented by underlying product, 2007; Size and growth of the retail lending market in Spain, 2003-7; Number of credit and other pay later cards in issue and per capita in Spain, 2003-7; Lender penetration of creditor insurance policies by product in Spain, 2008; Risks covered by creditor insurance policies in Spain, 2008; Operating models for creditor insurance in Spain, 2008; Partner market shares for creditor insurance in Spain, 2008; Approximate gross written premiums for creditor insurance in Spain segmented by underlying product, 2007; Size and growth of the retail lending market in the UK, 2003-7; Number of credit and other pay later cards in issue and per capita in the UK, 2003-7; Lender penetration of creditor insurance policies by product in the UK, 2008; Risks covered by creditor insurance policies in the UK, 2008; Operating models for creditor insurance in the UK, 2008; Partner market shares for creditor insurance in the UK, 2008; Approximate gross written premiums for creditor insurance in the UK segmented by underlying product, 2007

Abstract

Finaccord’s report titled Creditor Insurance in Southern and Western Europe offers updated and detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, in eight countries. Often categorised as a niche market, creditor insurance was worth around €25.69 billion in gross written premiums in the region in 2007, including coverage for life and permanent disability as well as the temporary disability and unemployment elements. Moreover, with sustainable growth likely in many markets and with profit margins relatively high, creditor insurance remains an attractive business for both lending institutions and underwriters to cultivate. Drawing on the results of a survey of over 560 lending institutions in eight countries (Belgium, France, Ireland, Italy, the Netherlands, Portugal, Spain and the UK), the report analyses the provision of creditor insurance by lending institutions, variances in provision by underlying lending product, operating models for provision of creditor insurance and partnership configurations. Moreover, the PartnerBASE™ database that accompanies the report details each of the c. 830 creditor insurance marketing initiatives traced by Finaccord meaning that the report and database together will provide you with the definitive guide to current and future opportunities in creditor insurance in Southern and Western Europe. You may be able to use this report and the PartnerBASE™ that accompanies it in one or more of the following ways: appreciate the magnitude of the opportunity in creditor insurance in Southern and Western Europe: this is turning into an increasingly mainstream market; assess the extent to which the provision of temporary incapacity and unemployment modules within creditor insurance policies is gaining ground in Southern and Western Europe; identify partnership opportunities for creditor insurance and how these may differ between opportunities for administration and underwriting; understand the supply structure for creditor insurance in Southern and Western Europe and whether specialists are winning business by virtue of their focused approach; gain insight into the international presence of leading creditor insurance market participants including AXA, Cardif, CNP, Finaref Assurances, Genworth Financial and The Warranty Group. For further information about this study, please click on the links below to access the table of contents and report prospectus.

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2/13/2012 - 30

Creditor Insurance in Southern and Western Europe

Table of Contents

Abstract