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Description

Description

“The PPI market is facing very trying times as consumers have been bombarded with negative press regarding the mis-selling scandal. This has been a contributing factor in many feeling that the product is inherently flawed. However, PPI has a role to play in protecting credit and loan arrangements and with some careful management and creative thinking there is a chance that the product could see its reputation and use somewhat restored.”

– Stephanie Seenan, Financial Services Analyst

Some questions answered in this report include:

  • Will people still buy PPI despite the publicity surrounding the mis-selling it?
  • Can the creditor insurance market conquer the challenges it currently faces?
  • How does the macro environment impact on the PPI industry?
  • Will the point-of-sale ban signal the death knell for the PPI industry?
  • What are providers doing to address the challenges that they are facing

What's included

What's included

Table of contents

Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • The market will continue to reduce in size before bottoming out
              • Figure 1: Market size forecast based on gross written premium value, 2006-16
            • Lloyds Banking Group has the largest share of the legacy PPI market
              • Market factors
                • Lending to individuals not showing signs of increasing
                  • Figure 2: Total lending to individuals, amounts outstanding (seasonally adjusted), Q1 2000-Q2 2011
                • Point-of-sale ban will impact on sales
                  • The consumer
                    • Credit ownership
                      • Figure 3: Credit ownership, August 2011
                    • Creditor insurance ownership
                      • Figure 4: Creditor insurance ownership, by credit type, August 2011
                    • Mis-selling awareness and claims
                      • Figure 5: Ratio that have heard about PPI compensation, August 2011
                    • Claiming for PPI Compensation
                      • Figure 6: Ratio that have claimed for mis-sold PPI, August 2011
                    • Purchasing intentions
                      • Figure 7: ratio who would consider PPI on future loans, August 2011
                    • Attitudes towards creditor insurance
                      • Figure 8: Attitudes towards PPI, August 2011
                    • What we think
                    • Issues in the Market

                        • Will people still buy PPI despite the publicity surrounding the mis-selling it?
                          • Can the creditor insurance market conquer the challenges it currently faces?
                            • How does the macro environment impact on the PPI industry?
                              • Will the point-of-sale ban signal the death knell for the PPI industry?
                                • What are providers doing to address the challenges that they are facing?
                                • Future Opportunities

                                  • PPI providers need to show their worth to customers
                                    • Creditor insurance can provide the peace of mind that many people crave
                                    • Internal Market Environment

                                      • Key points
                                        • Point-of-sale ban for PPI
                                          • High Court ruling in favour of consumers despite BBA challenge
                                            • Four topics dominated the mis-selling case brought against PPI providers
                                              • PPI compensation costs set to amount to £4.5 billion
                                                • Complaint numbers set to total 2.75 million over the next five years
                                                  • Figure 9: Number of PPI complaints, 2006-11
                                                • High street banks have all accepted their fate
                                                  • FSA grants extension to some
                                                    • PPI no longer being sold by many leading players
                                                      • MPPI will continue to be a success
                                                      • Broader Market Environment

                                                        • Key points
                                                          • Banks are facing a challenging operating environment
                                                            • Creditors challenged by turbulent international debt crisis
                                                              • Lending environment
                                                                • Figure 10: Monthly amounts of total secured and unsecured gross lending to individuals, 2001-11
                                                              • Lending to consumers remains stagnant
                                                                • Figure 11: Total lending to individuals, amounts outstanding (seasonally adjusted), Q1 2000-Q2 2011
                                                              • Total household debt
                                                                • Figure 12: Amounts outstanding of personal sector debt (not seasonally adjusted), and as a proportion of total PDI, 2000-10
                                                              • Total gross lending
                                                                • Figure 13: Total gross lending to individuals (not seasonally adjusted), 2000-10
                                                              • Unemployment starts to climb again
                                                                • Figure 14: UK unemployment levels, 1994-2010
                                                              • Disposable income is under pressure
                                                                • Government cutbacks increase the emphasis on self-reliance
                                                                  • Insurance industry in general faces challenges
                                                                  • Competitive Context

                                                                    • Key points
                                                                      • Income protection
                                                                        • Figure 15: Sales of new individual IP policies, by volume and value, 2004-10
                                                                      • Short-term income protection will be the most likely ‘replacement’ product for PPI
                                                                        • Critical illness cover (CIC)
                                                                          • Figure 16: Sales of new individual standalone CIC, by volume and value, 2004-10
                                                                        • Mortgage PPI
                                                                        • Strengths and Weaknesses in the Market

                                                                            • Figure 17: SWOT Analysis
                                                                        • Who’s Innovating?

                                                                          • Key points
                                                                            • Nationwide launches PPI alternative
                                                                              • MBNA offers Lifestyle Protect
                                                                                • Targeting different consumer groups
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • Market value
                                                                                      • The PPI market is in decline
                                                                                        • Figure 18: Creditor insurance market size, 2003-11
                                                                                      • Value of the PPI market
                                                                                        • Point-of-sale ban is a threat to the market
                                                                                          • Consumer ownership and market segmentation
                                                                                            • Just under a million adults still have personal loan PPI
                                                                                              • Figure 19: Number of outstanding loan protection policies, by policy type, August 2011
                                                                                            • Market forecast
                                                                                              • Figure 20: Market size forecast based on gross written premium value, 2006-16
                                                                                          • Market Share

                                                                                            • Key points
                                                                                              • Lloyds Banking Group has largest market share of existing PPI premiums
                                                                                                • Figure 21: Overall distributor PPI market share, by policy value, 2011
                                                                                              • Market share for policy underwriters
                                                                                                • Figure 22: Estimated market share for key creditor insurance underwriters, October 2011
                                                                                            • Companies and Products

                                                                                              • Many companies are moving away from PPI
                                                                                                • Barclays
                                                                                                  • Lloyds Banking Group
                                                                                                    • Santander
                                                                                                      • RBS
                                                                                                        • Aviva
                                                                                                          • Cardif Pinnacle
                                                                                                            • Different types of credit-related PPI
                                                                                                            • Channels to Market

                                                                                                              • Key points
                                                                                                                • Major reforms to the way PPI is sold
                                                                                                                  • Advised vs non-advised sales
                                                                                                                    • MPPI and intermediaries – the future of the industry?
                                                                                                                      • Figure 23: Mortgage arrangements, 2006-10
                                                                                                                  • Brand Communication and Promotion

                                                                                                                    • Key points
                                                                                                                      • PPI adspend is falling as fallout from the mis-selling scandal continues
                                                                                                                        • Figure 24: Topline PPI adspend, 2007-11
                                                                                                                      • MPPI adspend not hit as hard as other categories
                                                                                                                        • Figure 25: PPI adspend, by sub-category, 2007-11
                                                                                                                      • Yorkshire Building Society tops creditor spend
                                                                                                                        • Figure 26: Top ten companies advertising PPI (by total adspend), 2007-11
                                                                                                                      • Domination of direct mail advertising for PPI at an end
                                                                                                                        • Figure 27: PPI adspend, by media type, 2007-11
                                                                                                                    • Credit Ownership

                                                                                                                      • Key points
                                                                                                                        • Seven in ten adults owe money on at least one type of credit
                                                                                                                          • Figure 28: Credit ownership, August 2011
                                                                                                                        • Credit ownership higher for 25-54-year-olds
                                                                                                                          • Figure 29: Credit ownership, by gender and age, August 2011
                                                                                                                        • Higher earners and ABC1s have above-average credit ownership
                                                                                                                          • Figure 30: Credit ownership, by socio-economic group and household income, August 2011
                                                                                                                        • People are likely to keep their debts to one or two products only
                                                                                                                          • Figure 31: Number of products that money owed on, August 2011
                                                                                                                      • Creditor Insurance Ownership

                                                                                                                        • Key points
                                                                                                                          • Consumers most likely to protect their mortgage repayments
                                                                                                                            • Figure 32: Creditor insurance ownership, by credit types on which people owe money, August 2011
                                                                                                                          • A large amount of PPI policies are held on mortgages
                                                                                                                            • Figure 33: Overall ownership of loan protection policies, August 2011
                                                                                                                        • Mis-Selling Awareness and Claims

                                                                                                                          • Key points
                                                                                                                            • PPI mis-selling scandal hard to miss
                                                                                                                              • Figure 34: Proportion of people who have heard about PPI compensation, August 2011
                                                                                                                            • Despite wide knowledge of the mis-selling scandal only a small number have tried to claim
                                                                                                                              • Figure 35: Proportion of people who have claimed for mis-sold PPI, August 2011
                                                                                                                            • Awareness of mis-selling highest amongst those with an unsecured personal loan…
                                                                                                                              • Figure 36: Awareness of mis-selling claims, by credit ownership, August 2011
                                                                                                                            • …and personal loan holders have above-average claim rates
                                                                                                                              • Figure 37: PPI claims, by credit ownership, August 2011
                                                                                                                            • Those with the most credit products are most likely to have heard about PPI compensation…
                                                                                                                              • Figure 38: Awareness of PPI mis-selling, by number of credit products owned, August 2011
                                                                                                                            • …and are more likely to have claimed for compensation
                                                                                                                              • Figure 39: PPI claims, by number of credit products owned, August 2011
                                                                                                                            • MPPI owners have above-average compensation awareness
                                                                                                                              • Figure 40: Awareness of PPI mis-selling among PPI owners, August 2011
                                                                                                                            • Some 25% of people with MPPI have claimed for mis-sold PPI
                                                                                                                              • Figure 41: Mis-selling claims among PPI owners, August 2011
                                                                                                                          • Purchasing Intentions

                                                                                                                            • Key points
                                                                                                                              • Only a very small number of people would be keen to purchase PPI on future credit arrangements
                                                                                                                                • Figure 42: Ratio that would consider PPI on future loans, August 2011
                                                                                                                              • Mortgage and unsecured personal loan owners most likely to rule out PPI
                                                                                                                                • Figure 43: Ratio that would consider PPI on future loans, by outstanding credit, August 2011
                                                                                                                              • Those with a knowledge of the PPI compensation claims are less likely to consider PPI in the future
                                                                                                                                • Figure 44: Ratio that would consider PPI on future loans, by compensation awareness, August 2011
                                                                                                                              • PPI owners more likely to consider future PPI purchase
                                                                                                                                • Figure 45: Ratio that would consider PPI on future loans, by ownership of PPI, August 2011
                                                                                                                              • Desire for security outweighs past experience of the industry
                                                                                                                                • Figure 46: Ratio that have claimed for mis-sold PPI, by purchasing intentions, August 2011
                                                                                                                            • Attitudes towards Creditor Insurance

                                                                                                                              • Key points
                                                                                                                                • Consumers feel that PPI still has a role to play
                                                                                                                                  • Figure 47: Agreement with PPI statements, August 2011
                                                                                                                                • Unsecured personal loan owners have negative PPI attitudes
                                                                                                                                  • Figure 48: Agreement with PPI statements, by outstanding credit, August 2011
                                                                                                                                • Attitudes towards PPI vary with number of credit products owned
                                                                                                                                  • Figure 49: Agreement with PPI statements, by credit ownership, August 2011
                                                                                                                                • PPI owners show signs that they still see some value in the product
                                                                                                                                  • Figure 50: Agreement with PPI statements, by PPI ownership, August 2011
                                                                                                                                • Mis-selling awareness and provider distrust linked
                                                                                                                                  • Figure 51: Agreement with PPI statements, by compensation awareness, August 2011
                                                                                                                                • There is a paradoxical mistrust of PPI coupled with a view that credit repayments should be protected
                                                                                                                                  • Figure 52: Attitudes towards PPI, by compensation claims, August 2011
                                                                                                                                • People believe that cover for loan repayments is important
                                                                                                                                  • Figure 53: Agreement with PPI statements, by future purchasing intentions, August 2011
                                                                                                                              • Targeting Opportunities

                                                                                                                                • Key points
                                                                                                                                  • Three in ten are Advocates
                                                                                                                                    • Figure 54: Creditor insurance target groups, October 2011
                                                                                                                                    • Figure 55: Attitudes towards PPI, by target groups, August 2011
                                                                                                                                  • The Advocates
                                                                                                                                    • The Unengaged
                                                                                                                                      • Ready to be Convinced
                                                                                                                                        • Out of the Market
                                                                                                                                          • Credit/store card and mortgage ownership high with the Out of the Market
                                                                                                                                            • Figure 56: Products on which money owed, by target groups, August 2011
                                                                                                                                          • ‘Advocates’ are PPI fans and the Ready to be Convinced show interest
                                                                                                                                            • Figure 57: Ratio that have PPI on products they own, by target groups, August 2011
                                                                                                                                            • Figure 58: Ratio that have heard about PPI compensation, by target groups, August 2011
                                                                                                                                          • Mis-selling responsible for loss of market segments
                                                                                                                                            • Figure 59: Ratio that have claimed for mis-sold PPI, by target groups, August 2011
                                                                                                                                          • Work to be done to convince the Unengaged
                                                                                                                                            • Figure 60: Ratio that would consider PPI on future loans, by target groups, August 2011
                                                                                                                                        • Appendix: Credit Ownership

                                                                                                                                            • Figure 61: Most popular products money owed on, by demographics, August 2011
                                                                                                                                            • Figure 62: Next most popular products money owed on, by demographics, August 2011
                                                                                                                                            • Figure 63: Repertoire on number of products that money owed on, by demographics, August 2011
                                                                                                                                            • Figure 64: Proportion of mortgage holders who have purchased mortgage-related cover, by demographics, August 2011
                                                                                                                                            • Figure 65: Proportion of credit/store card holders who have purchased CCPPI, by demographics, August 2011
                                                                                                                                            • Figure 66: Proportion of overdraft holders who have bought PPI to cover their overdraft, by demographics, August 2011
                                                                                                                                            • Figure 67: Proportion of personal loan holders who have bought PPI cover for their personal loan, by demographics, August 2011
                                                                                                                                            • Figure 68: Overall ownership of creditor insurance among borrowers, by demographics, August 2011
                                                                                                                                        • Appendix – Mis-Selling Awareness and Claims

                                                                                                                                            • Figure 69: Ratio that have heard about PPI compensation, by demographics, August 2011
                                                                                                                                        • Appendix – Claiming for PPI Compensation

                                                                                                                                            • Figure 70: Ratio that have claimed for mis-sold PPI, by demographics, August 2011
                                                                                                                                        • Appendix – Purchasing Intentions

                                                                                                                                            • Figure 71: Ratio that would consider PPI on future loans, by demographics, August 2011
                                                                                                                                        • Appendix – Attitudes Towards Creditor Insurance

                                                                                                                                            • Figure 72: Agreement with PPI statements, by demographics, August 2011
                                                                                                                                            • Figure 73: Agreement with further PPI statements, by demographics, August 2011
                                                                                                                                        • Appendix – Targeting Opportunities

                                                                                                                                            • Figure 74: Target groups, by demographics, August 2011
                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                          • Creditor insurance value
                                                                                                                                            • Figure 75: Forecast of sales of PPI, best- and worst-case, 2011-16

                                                                                                                                        About the report

                                                                                                                                        This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                        • The Consumer

                                                                                                                                          What They Want. Why They Want It.

                                                                                                                                        • The Competitors

                                                                                                                                          Who’s Winning. How To Stay Ahead.

                                                                                                                                        • The Market

                                                                                                                                          Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                        • The Innovations

                                                                                                                                          New Ideas. New Products. New Potential.

                                                                                                                                        • The Opportunities

                                                                                                                                          Where The White Space Is. How To Make It Yours.

                                                                                                                                        • The Trends

                                                                                                                                          What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                        Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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