UK Term Assurance Market Research Report 2014

Increased mortgage lending in 2013 did not result in a corresponding increase in new term assurance sales. Regulatory demands have made cross-selling term assurance products less of a focus for intermediaries. Developing profitable and efficient direct-to-consumer channels will therefore become an increasingly important priority for providers in order to reduce their reliance on intermediaries.

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Table of Content

Introduction

Report scope and market definition
Abbreviations

Executive Summary

The market
Term assurance sales dip in 2013
Slow premium growth predicted for the term assurance market
Figure 1: Forecast of total new individual term assurance premiums, at current prices – fan chart, 2009-19
Market factors
Improving housing market yet to benefit the term assurance market
Regulation has slowed advised sales
Company, brands and innovation
Legal & General leads the market
Figure 2: Top five individual term assurance providers, by sales volumes, 2013
Little innovation in the term assurance market
Adspend increased by 52% in the 12 month to May 2014
Only around a tenth of term assurance sales non-advised in 2013
The consumer
A quarter of consumers own term life insurance
Figure 3: Ownership of life insurance products, May 2014
The majority of life insurance policies are purchased with advice
Figure 4: Sources consulted when purchasing a life insurance policy, May 2014
The majority of consumers are positive about the application process
Figure 5: Ways of arranging term assurance, May 2014
Starting a family is the main trigger for taking out life insurance
Figure 6: Triggers for arranging life insurance, May 2014
Consumers are aware of the importance of owning life insurance, but often fail to purchase
Figure 7: Attitudes towards life insurance, May 2014
What we think

Issues and Insights

Direct-to-consumer channels will become increasingly important for providers
The facts
The implications
Consumers require financial education in order to close the protection gap
The facts
The implications

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Trend Application

Term assurance providers should illustrate the dangers of not having life protection
Quick quotes for simple policies
Engaging with consumers early to help them lock-in low premiums

Market Drivers

Key points
The improved economic outlook should benefit the term assurance market
Increasing number of housing transactions has failed to boost the term assurance market
Figure 8: Number of UK residential property transactions with a value of £40,000 upwards – seasonally adjusted, Q1 2007-Q1 2014
More first-time buyers presents opportunities for the term assurance market
Figure 9: Number of loans for house purchase, by type of borrower, 2007-13
Term assurance and whole of life policies dominate the protection market
Figure 10: Number of individual protection policies in force, by type, 2011-12
Term assurance policies are almost guaranteed to pay out claims
Figure 11: Number of claims paid out across the protection industry, 2013
Regulation and legislation
Gender directive distorts sales figures in the life insurance industry
Introduction of MMR will mean that mortgage advisers are short of time
The introduction of the RDR has resulted in a reduction of bancassurance sales
Solvency II Directive continues to be delayed

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