1. Term & Health Watch 2018 – insights presentation to Protect
Ron Wheatcroft, Technical Manager, 6 July 2018

2. Agenda The market mood High level data summary
Term assurance, critical illness and whole life
Income protection
Market opinions

3. The market mood generally
Optimism for growth
"For me, simply the amount of innovation in individual protection during 2017 is a sign of a vibrant market; with established brands reinventing themselves and the prospect of a new insurer too." Independent consultant
Broadening coverage
"The main highlight for me has been the emergence of new solutions for customers who typically find it difficult to buy insurance. Flexible plans were delivered that appreciate how a customer’s health can change over the course of a policy, and new products were launched to cater for customers with severe or multiple health conditions." Product provider
Better engagement with government
"It was great to see the Building Resilient Households Group effectively engage with DWP to progress discussion on the interaction of protection benefits in claim with means-tested Universal Credit" Product provider
Improved services
"The industry has slowly realised that, as 7Families proved conclusively, 'help insurance' (third party benefits such as RedArc and Best Doctors) is just as important as paying out money." Product provider

4. High level data summary

5. In ,972,692 new term assurance, whole life, critical illness and income protection policies were sold. An of 11.6%
All Term Life (with & without CI)  13.1% (+172,132)
Income Protection  2.8% (+3,270)
GA Whole Life  5.8% (+15,883)
UW Whole Life (with & without CI)  -26.7% (-6,842)
All Critical illness (incl. SACI)  21.1% (+91,883)

6. Term Assurance and Critical Illness Cover

7. New term assurance sales 2013 -2017
13.1%

8. Total new individual term sales, by volume 2014 - 2017
Product type
2014
2015
2016
2017
% change 2016/2017
LTA without CI
522,649
555,907
594,216
664,317
11.8
Relevant life
16,372
21,790
27,746
29,349
5.8
LTA with CI
211,694
203,945
201,614
255,564
26.8
DTA without CI
239,001
225,582
247,213
277,272
12.2
DTA with CI
232,043
196,174
199,253
212,316
6.6
FIB without CI
25,748
24,680
25,803
20,640
-20.0
FIB with CI
2,770
2,854
2,599
1,743
-32.9
Other term without CI
29,165
24,766
18,311
23,220
Other term with CI 6 88
2,212
6,678
201.9
Total
1,279,448
1,255,786
1,318,967
1,491,099
13.1

9. All CI cover, by policy type 2013 - 2017
2014
2015
2016
2017
% change 2016/2017
Term with CI
423,020
446,513
403,061
405,678
476,301
17.4
WL with CI
653
718
387 97
123
26.8
Stand-alone CI
22,006
18,208
26,679
28,588
49,699
73.8
Total
445,679
465,439
430,127
434,363
526,246
21.2

10. Growth in directly-authorised and direct business
Directly authorised term sales, including with CI, increased by 18.3%
Directly authorised CI sales increased by 13.7%,
Direct Term sales, including with CI, increased by 22.6%
Direct CI sales increased by 216%

11. All term assurances, with and without CI benefits, top five providers by volume of new sales, 2017

12. All CI policies, acceleration of life cover and stand alone, top five providers by volume of new sales, 2017

13. Whole Life

14. Guaranteed acceptance Non-linked underwritten Unit-linked underwritten
New Whole Life sales; unit-linked, non-linked and guaranteed acceptance
2014
2015
2016
2017
Guaranteed acceptance
243,181
261,137
276,164
292,047
Non-linked underwritten
30,092
32,550
25,508
18,640
Unit-linked underwritten
718
387 97
123
Total
273,991
294,074
301,769
310,810

15. Whole life, top five providers by volume of new sales, 2017

16. Income Protection

17. Total income protection sales 2014 - 2017
2.78%

18. New individual IP sales written on “to retirement” and on a one, two, five year and 'other' maximum benefit payment term, by volume
2014
2015
2016
2017
% change 2016/17
IP (excluding LPT)
63,339
66,167
58,661
62,053
5.8
IP 1 year limited payment term
2,200
2,383
3,314
6,193
86.9
IP 2 year limited payment term
17,329
33,271
46,041
41,573
-9.7
IP 5 year limited payment term
9,402
2,360
1,948
8,211
321.5
IP 'other' limited payment term
4,619
3,121
7,850
3,054
-61.1

19. Average sum assured 2014 2015 2016 2017 % Change 2016/2017
2014
2015
2016
2017
% Change 2016/2017
IP (excluding LPT)
15,008
15,320
15,438
17,334
12.28
Income protection 1 year limited payment term
15,621
14,725
15,382
15,024
-2.33
Income protection 2 year limited payment term
12,397
12,398
12,889
13,446
4.32
Income protection 5 year limited payment term
7,657
11,877
12,844
16,155
25.78
Income protection 'other' limited payment term
16,395
16,824
20,534
24,934
21.43

20. All income protection sales, top five providers by volume of new sales, 2017

21. Market opinions and opportunities for growth 30 Product Providers, 4 independent intermediaries and a mixture of consultants and service suppliers to the market.

22. Independent financial adviser
Mortgages
Length of sales process
Apathy – market parties and consumers?
Fear of conduct risk issues, particularly banks
Positive views about initiatives to make protection an integral part of the mortgage process
Little call for more regulation to drive the sales process to protection
Key themes:
"As an industry we have to get back to talking to every customer about the need for protection and being more persuasive. We cannot just hide behind the time argument, I did not have the time the client did not have the time etc."
Product provider
"Proactive, personalised messaging that engages people with need for building financial resilience. Banks too afraid of conduct risk of mis-selling to actively do this, but no real way to approach mass market."
"Apathy is probably the greatest barrier we face, but lack of education and awareness are also now key contributors…However, we are now starting to see a changing tide in the mortgage market, with an increased number of mortgage providers starting to integrate protection back into the mortgage sales process, with some mandating the inclusion of protection awareness in the process and utilising data in delivering a semi-underwritten offer and reducing the time needed to complete a protection quote."
Independent financial adviser

23. Key themes: Financial Resilience Lack of awareness Education
Better integration of State and private sector benefits
Key themes:
"I believe that Universal Credit should be overhauled to ensure that prudent planners are not penalised for taking out insurance."
Independent financial adviser
"Universal Credit is a hugely complex system that will have implications for customers, advisers and providers. I would like to see the Government work with providers to ensure that customers are not penalised for protecting themselves against the impacts of illness and injury.“
Product provider
"There has been a historical assumption that you pay National Insurance (note the word insurance) and therefore you are 'insured' through the state and will be looked after. More awareness of what the Government will and critically WILL NOT provide is key."
Product provider
“ ‘Financial resilience’ should be a statement that is heard often, spoken by the Government, by banks, by insurers, by estate agents. Anyone who deals with financial services or the purchase or rental of a home."
Product provider

24. Meeting the needs of the vulnerable customer
"The main highlight for me has been the emergence of new solutions for customers who typically find it difficult to buy insurance.”
Product provider
“Growth in business volumes, especially around mortgages and multi benefit. Openwork’s Mortgage Protection Risk Report showed how right distributor, right technology and right products can have material impact.”
Independent consultant
“The biggest for me was the realization that just offering an insurance policy is not enough. providers want to engage with their customers more during the lifetime of the policy. Annual benefit statements are a start but servicers that customers can use such as remote GP and second opinion support.”
Product provider
“Equally, consider how customers engage with us, through IFA models that need to flex for gender, race, background and understanding.” Product provider
“We tend to focus our advertising on "family" units. However, we have to recognise that we are in a more diverse society and develop products and advertise that appeal to a wider audience. That will include single people of either gender“
Product provider

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