2023
9
UK Income Protection Market Report 2023
2023-04-21T04:07:27+01:00
OX1156383
2195
162629
[{"name":"Insurance","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/insurance"}]
Report
en_GB
“The income protection market has generally benefitted from the pandemic-induced focus on health and financial resilience, with new premiums and contracts growing substantially in 2022. However, longstanding challenges in the…

UK Income Protection Market Report 2023

£ 2,195 (Excl.Tax)

Description

Looking for the latest expert analysis of the UK Income Protection Market, check out Mintel’s new Income Protection Focus Reports here for a detailed look at all aspects of the industry.

 

UK Income Protection Market Report 2023 looks at the following areas:

  • Market size and forecast for the individual income protection market
  • Key market developments, including the impact of the cost of living crisis and Consumer Duty
  • Share of the largest insurers in the market and their competitive strategies
  • Ownership and consideration of income protection insurance
  • Barriers to policy ownership
  • Additional income protection policy features and consumers’ willingness to pay extra
  • Attitudes towards protection insurance

Income Protection Insurance Market – Overview

Interest in income protection remains relatively high, as 31% of working adults without income protection would consider taking out cover in the future, including 7% within the next six months. The high level of interest can be attributed to the spotlight that the COVID-19 pandemic has placed on health and financial wellbeing.

The cost of living crisis has had an ongoing impact on household finances, reducing people’s ability to plan for the future and ensure their financial resilience. While the income protection market will remain relatively resilient to these pressures, it will be more difficult to translate interest in the product into sales. 28% of workers or those who have a partner in work and do not have income protection say it is because they are concerned about the cost.

Income Protection Market Opportunities and Future Trends

Reaching renters has been a long-term challenge for the market; however, there is strong interest from this demographic for more affordable cover. 70% of working renters would be interested in purchasing income protection that provides a lower level of cover at a lower price. Information and distribution channels are key for bringing this group to market, and offering free advice or impartial guidance can be instrumental in raising awareness of the product.

Purchase Mintel’s full UK Income Protection Insurance Market Report for a complete analysis of the market.

Expert Analysis from an Industry Specialist

This report, written by Natasha Hayes, a leading Financial Services analyst, delivers in-depth commentary and analysis to highlight current trends in the UK income protection insurance market and add expert context to the numbers.

The income protection market has generally benefitted from the pandemic-induced focus on health and financial resilience, with new premiums and contracts growing substantially in 2022. However, longstanding challenges in the market remain, in particular targeting traditionally underserved groups. Product development should continue to focus on health and wellbeing incentives as consumers show increasing interest in hybrid health-protection policies.

Natasha HayesNatasha Hayes
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
    • Income protection
    • Accident, sickness and unemployment insurance
    • Personal accident and sickness insurance
    • Unemployment cover
    • Mortgage payment protection insurance
    • Critical illness cover
    • Life insurance
  2. Executive Summary

    • The five-year outlook for income protection
      • Figure 1: Category outlook for income protection, 2023-27
    • The market
    • Market size and forecast
      • Figure 2: Market size and forecast for the value of new individual income protection policies, 2017-27
    • Non-advised channels show small growth
      • Figure 3: Distribution of new individual income protection policies, 2021-22
    • Volume of income protection claims falls in 2021
      • Figure 4: Volume and value of claims for individual income protection policies, 2017-21
    • Companies and brands
    • Legal & General increases market share
      • Figure 5: Top five product providers measured by number of new income protection sales, 2021
    • The consumer
    • Income protection ownership remains resilient through cost of living crisis
      • Figure 6: Protection insurance ownership, 2023
    • Lack of relevance is the biggest barrier to ownership
      • Figure 7: Barriers to income protection ownership, 2023
    • Significant opportunity to boost uptake of income protection…
      • Figure 8: Future consideration of income protection, 2023
    • …with price comparison sites well-placed to help serve this demand
      • Figure 9: Information channels when purchasing income protection, 2023
    • Further evidence of the benefits of hybrid health-protection propositions
      • Figure 10: Income protection policy features worth paying extra for, 2023
    • Financial resilience stronger among income protection policyholders
      • Figure 11: Financial confidence if the main earner were unable to work for six months, 2023
    • The cost of living crisis raises concerns over saving for emergencies
      • Figure 12: Attitudes towards protection insurance, 2023
  3. Issues and Insights

    • Despite pressure on household finances, growth in the market continues
    • Consumer Duty affects income protection insurers and distributors
    • There are opportunities to foster longer-term market sustainability
    • Impartial guidance could boost uptake of cover among non-homeowners
    • Hybrid health-protection popular among working adults
  4. Market Size and Performance

    • New premiums topped £80 million for the first time in 2022…
      • Figure 13: Market size for individual income protection, new gross written premiums, 2014-22
    • …and volume sales increased by 12%
      • Figure 14: Volume, value and average premium for new individual income protection sales, 2018-22
    • Strong market performance does not extend to group sales
      • Figure 15: Volume, value and average premium for new group income protection sales, 2018-22
  5. Market Forecast

    • Strong growth expected over next five years
      • Figure 16: Category outlook for income protection, 2023-27
    • Annual new premiums forecast to succeed £100 million by 2025…
      • Figure 17: Market forecast for the value of new individual income protection policies, 2022-27
      • Figure 18: Market forecast for the value of new individual income protection policies, 2022-27
    • …with new sales volumes set to reach 267,000 by 2027
      • Figure 19: Market forecast for the volume of new individual income protection policies, 2022-27
      • Figure 20: Market forecast for the volume of new individual income protection policies, 2022-27
    • Learnings from the last income squeeze
      • Figure 21: New sales for individual income protection, 2007-14
    • Forecast methodology
  6. Channels to Market

    • Non-advised channel shows small growth
      • Figure 22: Distribution of new individual income protection policies, 2021-22
    • Bancassurance sales near pre-pandemic level
      • Figure 23: Value of bancassurance premiums for new individual income protection policies, 2018-22
  7. Claims Experience

    • Number of claims falls from 2020 high
      • Figure 24: Volume and value of claims for individual income protection policies, 2017-21
    • Claims acceptance rates continue to increase
      • Figure 25: Proportion of new claims paid for individual income protection policies, 2017-21
    • Insurers pay out £2.1 million in COVID-related claims
      • Figure 26: Proportion of individual income protection claims, by reason for claim, 2021
  8. Market Drivers

    • Inflation will continue to eat into consumer spending power over the course of 2023
      • Figure 27: Key economic indicators: CPI, CPIH and changes in average weekly earnings, 2019-22
    • Further interest rate increases will hit mortgage-holders
      • Figure 28: Number of residential property transactions completed in the UK with value of £40,000 or above, not seasonally adjusted, 2007-22
    • Consumers’ financial wellbeing has fallen from the highs of 2021…
      • Figure 29: Household financial wellbeing index, 2016-23
    • Unemployment nears a 50-year low
    • Proportion of renters remains stable
      • Figure 30: English housing stock, by tenure (proportions), 2017/18-2021/22
  9. Regulatory and Legislative Changes

    • Consumer duty rules come into force from 31 July 2023
    • Firms must ensure products and services meet customer needs
    • Prices must be reasonable compared to overall benefits
    • The new rules build on existing consumer understanding legislation
    • Firms must also enhance consumer support services
  10. Market Share

    • Legal & General increases market share
      • Figure 31: Top five product providers measured by number of new income protection sales, 2021
    • LV= moves up to third place in the rankings
    • Providers enhance tools for advisers to sell their products…
    • …and focus on health and wellbeing support for policyholders
  11. Competitive Strategies

    • Health and wellbeing offerings continue to evolve
    • Vitality utilises its operation in both markets
    • British Friendly launches fracture cover
    • Index-linked policies could help policyholders with changing cost of living
    • Efforts to reach renters continue
  12. Protection Insurance Ownership

    • Income protection ownership remains resilient through cost of living crisis
      • Figure 32: Protection insurance ownership, 2023
    • Parents recognise the value of cover
      • Figure 33: Income protection ownership, by family situation, 2023
    • Part-time workers and self-employed remain underserved
      • Figure 34: Income protection ownership, by working situation, 2023
  13. Barriers to Income Protection Ownership

    • Lack of relevance is the top barrier to income protection ownership
      • Figure 35: Barriers to income protection ownership, 2023
    • Savings are one alternative to buying income protection…
      • Figure 36: Falling back on savings as a barrier to income protection ownership, by value of savings and investments, 2023
    • …however, gender imbalance may impair ability to do so
      • Figure 37: Barriers to income protection ownership, by gender, 2023
    • Consumer Duty will help working adults understand their options
  14. Consideration of Income Protection

    • Significant opportunity to boost uptake of income protection
      • Figure 38: Future consideration of income protection, 2023
    • However, for most, it’s a long-term objective
      • Figure 39: Future consideration of income protection, by age, 2023
    • Price comparison sites could help consumers find more information about cover
      • Figure 40: Information channels when purchasing income protection, 2023
  15. Interest in Policy Features

    • Further evidence of the benefits of hybrid health-protection propositions
      • Figure 41: Income protection policy features worth paying extra for, 2023
    • Upsell opportunities in the immediate term
      • Figure 42: Benefits consumers would pay a higher premium for as part of an income protection policy, by when consumers intend to take out a policy, 2023
  16. Household Financial Resilience

    • Financial resilience stronger among income protection policyholders…
      • Figure 43: Financial confidence if the main earner were unable to work for six months, 2023
    • …but most will still struggle within six months
      • Figure 44: household financial resilience, 2023
  17. Attitudes towards Protection Insurance

    • The cost of living crisis raises concerns over saving for emergencies
      • Figure 45: Attitudes towards financial resilience, 2023
    • Lower-cost alternative could be attractive to renters
      • Figure 46: Attitudes towards protection insurance, 2023
    • Families most likely to have sought advice in last five years
    • Make financial advice more accessible to reach new customers
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  19. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
    • Value forecast – new premiums for individual income protection
      • Figure 47: Market forecast for individual income protection – New gross written premiums, with prediction intervals, 2022-27
    • Volume forecast – new policies for individual income protection
      • Figure 48: Market forecast for individual income protection – New policies, with prediction intervals, 2022-27
    • Market drivers and assumptions
    • Forecast methodology

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