2023
9
UK Critical Illness Cover Market Report 2023
2023-04-12T04:05:31+01:00
OX1156381
2195
162355
[{"name":"Insurance","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/insurance"}]
Report
en_GB
“The mid-to-longer term prospects for the critical illness cover market are more favourable than the near-term ones. Over the next year, new sales are likely to remain flat, due to…

UK Critical Illness Cover Market Report 2023

£ 2,195 (Excl.Tax)

Description

“The mid-to-longer term prospects for the critical illness cover market are more favourable than the near-term ones. Over the next year, new sales are likely to remain flat, due to a weaker housing market and the ongoing effects of the rise in the cost of living on household budgets. However, conditions should start to improve going into 2024 as inflationary pressures wane, consumer confidence returns and the property market picks back up. The market is also likely to benefit from the FCA’s Consumer Duty initiative, which is expected to improve trust in protection product providers and contribute to the development of more flexible and affordable policy options.”
George Zaborowski, Consultant Analyst – Financial Services

This Report looks at the following areas:

  • The size of the critical illness cover market and a five-year forecast for new business.
  • Key drivers for the critical illness cover market, including the impact of cost of living, and record NHS wait times.
  • How the FCA’s Consumer Duty initiative is likely to impact the protection market.
  • Competitive strategies, launch activity and innovation among the market’s key players.
  • Ownership and consideration of critical illness cover among UK adults.
  • Main barriers to arranging critical illness cover.
  • Attitudes towards critical illness cover and other protection insurance products.

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for critical illness cover
      • Figure 1: Category outlook, 2023-27
    • The market
    • Market size and forecast
      • Figure 2: Market forecast for critical illness cover, value of new premiums 2022-27
      • Figure 3: Market forecast for critical illness cover, volume of new premiums, 2022-27
    • Vast majority of policies are arranged as a rider benefit
      • Figure 4: New critical illness cover contracts, by market segment, 2017-22
    • Three in five new policies are sold with independent advice
      • Figure 5: Total new protection contracts with critical illness cover, by advice channel, 2017-22
    • FCA’s Consumer Duty expected to improve trust and increase product innovation
    • Companies and brands
    • Legal & General and Aviva the market’s leading providers
    • Aviva expands and enhances its coverage
    • Consumer Duty influencing innovation of Protection Guru comparison tools
    • The consumer
    • 11% of UK adults hold critical illness cover
      • Figure 6: Protection insurance product ownership, 2023
    • One in four without critical illness cover would consider arranging it
      • Figure 7: Likelihood of consumers to consider critical illness cover in the future, 2019-23
    • Peace of mind a top perceived benefit of having cover
      • Figure 8: Perceived main benefits of having a critical illness cover policy, 2023
    • Lack of need or affordability the main reasons for not having cover
      • Figure 9: Barriers to taking out a critical illness cover policy, 2023
    • People are feeling less financially secure in 2023
      • Figure 10: Financial resilience, 2019, 2020, 2021 and 2023
    • Rising cost of living the predominant financial worry for most
      • Figure 11: Current concerns about financial security, 2023
    • Accessing healthcare and protecting finances are priorities for many…
    • …but only a minority are ready to take on new monthly insurance premiums
      • Figure 12: Impact of the Pandemic and Cost of Living on Attitudes and Behaviour, 2023
  3. Issues and Insights

    • Product flexibility will be key to overcoming near-term challenges
    • FCA’s Consumer Duty will lead to more trust and better products
  4. Market Size and Performance

    • New premium growth stagnates in 2022
      • Figure 13: Market size for critical illness cover sector – value of new premiums, 2017-22
    • New contracts decline by 6%
      • Figure 14: Number of new contracts for critical illness cover, 2017-22
  5. Market Forecast

    • Ongoing squeeze on incomes hindering near-term growth
      • Figure 15: Category outlook, 2023-27
    • Market forecast: value
      • Figure 16: Market forecast for critical illness cover, value of new premiums 2022-27
    • Market forecast: volume
      • Figure 17: Market forecast for critical illness cover, volume of new premiums, 2022-27
    • Learnings from the last income squeeze
      • Figure 18: Total new individual critical illness premiums, at current prices, 2007-12
    • Forecast methodology
  6. Market Segmentation

    • Large majority of policies are arranged as a rider benefit
      • Figure 19: New critical illness cover contracts, by market segment, 2017-22
    • Standalone policies now make up a larger share of sales…
    • …but are likely to remain a niche area of the market
  7. Channels to Market

    • Three fifths of policies are sold via independent advice
      • Figure 20: Total new protection contracts with critical illness cover, by advice channel, 2017-22
    • Non-advised sales have contracted for the third straight year
    • Standalone policies are the most likely to be arrange without advice
      • Figure 21: Channels to market, by market segmentation, 2022
  8. Claims Experience

    • Number of new claims paid up by 7% in 2021
    • Over 92% of claims received are paid out
      • Figure 22: Claims data for critical illness cover, 2017-21
    • Over three in five claims paid in 2021 were for cancer
      • Figure 23: Number of claims paid, by reason for claim, 2021
  9. Market Drivers

    • Over seven million waiting for NHS treatment at the end of 2022
      • Figure 24: Total number of people waiting for NHS services in England, December 2019-December 2022
    • Inflation remains a key concern for consumers and brands in 2023
    • Unemployment is at its lowest rate in nearly 50 years
    • Property transactions expected to slow further in 2023
      • Figure 25: UK residential property transactions over £40,000, 2017-22
    • Rising interest rates placing additional pressure mortgage holders
  10. Regulatory Environment

    • FCA’s Consumer Duty initiative will hold firms to a higher standard
    • Customer Duty includes three main elements:
    • Focus on customer outcomes can improve trust and product innovation
  11. Market Share

    • Legal & General and Aviva continue to lead the market
      • Figure 26: Volume sales and market shares of the top five providers of new individual critical illness cover, 2020 and 2021
    • Royal London maintains third place in the table amid stagnating sales
    • AIG breaks into the top five in 2021
  12. Competitive Strategies and Innovation

    • Competitive strategic activity
    • Aviva expands and upgrades its critical illness policy coverage
    • AIG returns children’s critical illness cover to its original design…
    • …and introduces a more affordable lower coverage children’s CI cover option
    • Royal London enhances its children’s critical illness cover offering
    • Innovation
    • Protection Guru comparison tools being shaped by FCA’s Consumer Duty initiative
    • AIG and Royal London launch new online protection adviser support services
  13. Protection Product Ownership

    • 11% of UK adults have critical illness cover
      • Figure 27: Protection insurance product ownership, 2023
    • Policy ownership is double among mortgage holders
      • Figure 28: Critical illness cover ownership, by housing tenure, 2023
    • Cost of living crisis will increase focus on affluent consumer target group
  14. Consideration of Critical Illness Cover

    • A quarter without critical illness cover would consider arranging it…
    • …but providers need to develop more agile products
      • Figure 29: Likelihood of consumers to consider critical illness cover in the future, 2019-23
    • Two in five with other types of protection cover would consider CI
      • Figure 30: Likelihood of consumers to consider critical illness cover in the future, by protection product ownership, 2023
    • Parents with stable finances most likely to consider critical illness cover
      • Figure 31: Critical Illness Cover – CHAID – Tree output, February 2023
  15. Key Benefits of Having Critical Illness Cover

    • Freedom from worry viewed as a key benefit of having cover
      • Figure 32: Perceived main benefits of having a critical illness cover policy, 2023
      • Figure 33: Repertoire of perceived main benefits of having a critical illness cover policy, 2023
    • There is a market among outright homeowners and renters…
    • …but reaching these segments remains challenging
      • Figure 34: Perceived main benefits of having a critical illness cover policy, by housing tenure, 2023
  16. Barriers to Critical Illness Cover Ownership

    • Lack of need or unaffordability the top reasons for not having cover
      • Figure 35: Barriers to taking out a critical illness cover policy, 2023
    • Critical illness cover is a hard sell when finances are tight
      • Figure 36: Barriers to taking out a critical illness cover policy, by financial situation, 2023
  17. Financial Resilience

    • Cost of living crisis has made people feel less financially secure
      • Figure 37: Financial resilience, 2019, 2020, 2021 and 2023
    • For most, financial struggles would begin within six months or less
      • Figure 38: Time period within which financial struggles would begin, 2023
    • Retirees the least likely to be feeling vulnerable
    • Self-employed likely overestimating their ability to cope
      • Figure 39: Financial resilience, by employment status, 2023
    • Renters among the most vulnerable
      • Figure 40: Financial resilience, by housing tenure, 2023
    • At least a third who feel vulnerable would consider critical illness cover
      • Figure 41: Financial resilience, by likelihood to consider taking out critical illness cover, 2023
  18. Current Concerns about Financial Security

    • Rising cost of living the predominant financial worry for most
    • Risk of serious health issues and loss of income secondary concerns
      • Figure 42: Current concerns about financial security, 2023
    • Women, under-45s, and those with young children most likely to be worried
    • Mortgage holders just as worried as renters, but renters are more exposed
  19. Impact of the COVID-19 Pandemic and Cost of Living on Attitudes and Behaviour

    • Accessing healthcare and protecting finances are top of mind for many…
    • …but few are prepared to take on new monthly insurance premiums
    • Recent events highlight the importance of being financially proactive
      • Figure 43: Impact of the Pandemic and Cost of Living on Attitudes and Behaviour, 2023
  20. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID analysis methodology
      • Figure 44: Critical Illness Cover – CHAID – Table output, February 2023
  21. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 45: Forecast value for new critical illness premiums, including lower and upper bounds, 2022-27
      • Figure 46: Forecast volume for new critical illness premiums, including lower and upper bounds , 2022-27
    • Market drivers and assumptions
    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

Below is a sample report, understand what you are buying.

Click to show report
2024 Sample Consumer Cover

Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted. Our reports are available to download in PDF and PPT formats.

Trusted by companies. Big and small.

Want to speak to us directly?

Contact us with your enquiry and our expert global team can help.

Get in touch