UK Critical Illness Insurance 2004

Transcription

1 A Datamonitor brief timely UK Critical Illness Insurance 2004 Reacting to the latest news breaking in your industry Publication Date: Apr-04 Product Code: Available as part of the Protection report package Turn to page 6 for fu l details focused The critical illness insurance (CII) market has been under tremendous pressure over the last few years as claims have soared, survival rates have increased, and great strides in medical science have made serious conditions detectable much earlier. Hundreds of hours of analyst time distilled into a few pages primary research Moreover, serious questions are being raised as to the long-term viability of CII, especially guaranteed products. This report examines the CII market, its drivers and its future. Unique survey data and interview results thought-provoking For details of all Datamonitor Financial Services briefs, go to: Fresh opinions and out-of-the-box thinking

2 UK Critical Illness Insurance 2004 timely Scope and coverage of the brief Reacting to the latest news breaking in your industry Draws on information from a range of sources: ABI market size and distribution statistics, Swiss Re information, secondary sources and primary interviews with leading players Market size and drivers of CII from 2000 to 2003, split by product: stand alone, term with rider, endowment with rider and whole life with rider Forecasts of premiums up to 2008, split by product and analyzing the key drivers of potential growth Analysis of the top competitors, their market share and CII strategies, plus an examination of the distribution landscape, trends and future outlook Key findings and brief highlights The total CII market will experience low steady growth to 2008, increasing to a value of 389 million. Growth will be driven by term and stand-alone products, while endowment and whole life will continue to suffer. Bancassurers will increase CII business, particularly non-mortgage related business as they seek to exploit their customer base further. The fortunes of the CII market are inextricably linked to the types of policies on which it piggybacks. In 2003 the most important CII product was term with rider premiums, accounting for 85% of new premium income. Consumers have clearly taken advantage of lower term prices following revisions to UK mortality statistics and a strong housing market. In 2002, the top five providers accounted for 60%, illustrating the highly concentrated nature of this market. The top 5 have increased their size and share at the expense of smaller players who have found it difficult to compete. Smaller insurers have dropped out of the market altogether, leading larger players to capture even more of the market. Reasons to buy this brief Market forecast: Identify the future of the market, its potential, the key drivers and opportunities for developing winning products Market data: Understand market and distribution trends and drivers in the total life market and its individual product areas Competitor intelligence: Appreciate the key market competitors, their strengths and weaknesses to build successful strategies and boost business For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

3 UK Critical Illness Insurance 2004 focused Table of contents Hundreds of hours of analyst time distilled into a few CHAPTER 1 THE UK LIFE ASSURANCE 2004 REPORT - How this briefing fits into the overall UK Life Assurance 2004 report suite - Report methodology CHAPTER 2 EXECUTIVE SUMMARY Critical illness within the protection market Market size and growth - Forces at work in the critical illness market - Critical illness pressures - Term policies have powered growth in critical illness Mortgage and non-mortgage related business The distribution landscape Competitive dynamics - Comings and goings - The major players - Prudential's critical mistake The future decoded - Future market drivers - Distribution forecast CHAPTER 3 INTRODUCTION What is this report about? Who is the target reader? How to use this report Sources of data The products explained - With rider - Stand alone - Pricing of products - What counts as a critical illness? CHAPTER 4 CRITICAL ILLNESS WITHIN THE PROTECTION MARKET The savings market has become less attractive Strong growth in total premium new protection business - Term products make up the lion's share of the regular premium market CHAPTER 5 MARKET SIZE AND GROWTH Forces at work in the critical illness market - Prudential's critical mistake - Financial pressures - ABI code of conduct - Sales buoyant until Term policies riding high until 2002 Strong mortgage market fuelled term sales - Endowment misselling - Increased levels of re-mortgaging - Increasing levels of buy to let mortgages Re-pricing churn due to price falls in term has driven new business Falls in CII prices boosted with rider sales until Low and stable average sums assured mask significant changes in the market - Policy sales stalled in Term market premium income starting to slow in 2003 Price increases in 2003 are dampening the market New generation products - fact or fiction? CHAPTER 6 MORTGAGE AND NON-MORTGAGE RELATED BUSINESS - Maturing market no longer reliant on mortgages to generate sales - Term makes up the the lion's share of non-mortgage related sales - Threat to future growth? - Mortgage market dominated by term with rider sales Penetration of term sales is high - Are difficult times ahead? - Opportunity for further sales to existing clients? CHAPTER 7 THE DISTRIBUTION LANDSCAPE Product perspective - Bancassurance and tied agents growing market share of term with rider - IFAs increasing share of stand-alone market - IFAs take majority share of depleted endowment market - DSF still has large share of whole life market but is losing to IFAs - Business mix perspective CHAPTER 8 COMPETITIVE DYNAMICS - New entrants and exits Analysis of the top five players Leading competitor profiles - Norwich Union - Scottish Provident - Prudential's critical mistake For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

4 UK Critical Illness Insurance 2004 primary research Unique survey data and interview results CHAPTER 9 THE FUTURE DECODED Forecast assumptions for market size 'Hard' economic variables 'Soft' social and political factors Realistic scenario: the 2003 slowdown continues - Housing market and consumer debt slow - Consumer awareness and demand increase - Savings market recovers - Term with rider products slow - No recovery in endowment with rider Pessimistic scenario: Increasing prices discourage would-be subscribers Forecast assumptions for distribution - IFAs are expected to maintain a stable share of the overall term market - Banks will gain share at the expense of the DSF and tied agents CHAPTER 10 APPENDIX LIST OF TABLES Table 2: CII market split by stand alone and with rider new business premiums Table 3: Single versus regular new business premiums in the protection market, Table 4: Detailed breakdown of individual protection market new business premium income, Table 5: CII new business premium income, Table 6: Top five players in the individual critical illness market by number of policies, Table 7: CII market forecast, split by product type, f Table 8: Pessimistic Scenario Forecasts, f Table 9: Savings and protection market new business premium income Table 10: Individual protection market new business premium income Table 11: Number of policies sold Table 12: Mortgage related new business premium income, Table 13: Non mortgage related new business premium income, Table 14: Distribution channels by new business premiums and market share, Table 15: Distribution channels' market share of CII products, Table 16: Critical illness premium forecasts, split by distribution channel, f LIST OF FIGURES Figure 1: Structure of the UK Life Assurance 2004 report suite Figure 2: UK Life Assurance 2004: Report Methodology Figure 3: Protection market has been gaining share at the expense of savings related business Figure 4: Term with rider has grown significantly to dominate new business sales Figure 5: Average term with rider sums assured have been stable over time Figure 6: Number of policies term polices sold grew strongly until 2003 Figure 7: Non mortgage related sales accounted for more than half of premium income in 2003 Figure 8: Term makes up the majority of non-mortgage related business Figure 9: Non mortgage related business slows in 2003 Figure 10: Little difference between H1 and H sales suggests the slowdown cannot be attributed to capacity issues Figure 11: Term has a dominant share of mortgage related business Figure 12: Penetration of CII add-ons to mortgage related sales is high Figure 13: UK remortgaging sector has slowed in late 2003 Figure 14: Bancassurance channel has grown market share of term Figure 15: DSF losing share of stand alone business Figure 16: The size of direct salesforce channel has shrunk to less than one tenth of its previous size over the past ten years Figure 17: IFAs are the only significant channel for remaining endowment sales Figure 18: DFS has larger share of whole life with rider market Figure 19: The top five players accounted for 60.4 per cent of the market in 2002 Figure 20: Consumer credit and remortgaging levels are forecast to slow considerably Figure 21: Savings market recovers as stock market picks up and companies and IFAs push with-profit sales Figure 22: Slow down in term growth experienced in 2003 set to continue Figure 23: IFAs believe they can increase CII business in 2004 Figure 24: Mortgage related endowments will not see a recovery Figure 25: Market falls as term sales drop Figure 26: Bancassurance continues to grow share at the expense of DSF and tied agent channels For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

5 thought-provoking UK Critical Illness Insurance 2004 Datamonitor: Your total information solution Fresh opinions and out-of-the-box thinking Datamonitor is a premium business information company helping 5,000 of the world's leading companies across the Automotive, Consumer Markets, Energy, Financial Services, Healthcare and Technology sectors. Our products and services are specifically designed to support our clients key business processes - from corporate strategy to competitive intelligence. We provide an independent and trustworthy source of data, analysis and forecasts to improve these processes and ultimately, to help grow your business. Corporate Strategy & Business Planning Product Development & Commercialization Targeting & Influencing the Market Market & Competitive Intelligence Quality Data Expert Analysis Future Forecasts Make more effective strategic and business decisions Accelerate delivery of commercial success Assess and influence your commercial and market environment Maintain or obtain critical competitive advantage HELPING TO GROW YOUR BUSINESS No-one speaks louder than our clients Abbey National ABN AMRO AIB Bank American Express Aviva AXA Bank of Ireland Barclays Bank Berlinerische Lebensversicherung BNP Paribas BUPA Capital One Citibank Commerzbank AG Co-Operative Bank Crédit Agricole Crédit Lyonnais Credit Suisse Deutsche Bank Diners Club International Dresdner Bank Europay Fidelity Investment Services Fortis GE Capital HBOS HFC Hiscox Insurance HSBC HypoVereinsbank ING Interpay Invesco Legal & General Lloyds of London Lloyds TSB M&G Group MBNA National Australia Group (UK) Ltd Nationwide Building Society Nordea Prudential Royal & SunAlliance Royal Bank of Scotland Scottish Widows Skandia International Standard Life Swiss Re UK UBS AG Visa Zurich For 91% of our clients, Datamonitor research helps their company to respond to competitive threats Source: Datamonitor Customer Research

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