2021
9
UK Term Assurance Market Report 2021
2021-08-13T04:09:19+01:00
OX1049471
2195
141493
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Report
en_GB
“The pandemic has been an eye-opener in terms of acknowledging risks to health and financial stability, and the longer it has gone on, the higher its impact on likelihood to…

UK Term Assurance Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Term Assurance market, including the behaviours, preferences and habits of the consumer.

31% of uninsured people are likely to consider life insurance in 2021, compared to 22% in 2019. Of which, 57% said that the COVID-19 outbreak has made them more likely to take out cover in June 2021, up from 54% in April 2020. These results show that the longer the pandemic has gone on, the more impact it has had on people’s attitudes towards life insurance.

Sales of term assurance, particularly mortgage-related, were significantly impacted as the property market was shut down during the first lockdown. The coronavirus outbreak has demonstrated how reliant much of the sector is on traditional, face-to-face channels. Looking forward, D2C sales and digital channels will become more relevant in terms of sales and also customer support and engagement.

Although average premiums had been falling for a number of years, as the market recovers, prices will likely rise to reflect higher risks emerging from the pandemic and a tougher, competitive market environment with low margins and higher claims. This could continue to limit access to cover to those considered high-risk, despite insurers lifting most COVID-related underwriting restrictions in 2021.

Access to affordable cover will be key in order to drive growth in the future, particularly as providers strive to reach consumers that have typically been off the radar of traditional sales channels, including renters, the self-employed and those with low levels of savings. There are opportunities for disruptors and specialists to fill gaps in terms of access to cover for these demographics.

Read on to discover more details or take a look at all of our UK Finances market research.

Quickly understand

  • The impact of COVID-19 on the term assurance market.
  • Market size, segmentation and market forecast, including a COVID-19 scenario forecast.
  • Consumer ownership, interest in term assurance and likelihood to purchase, including the impact of the pandemic.
  • The main factors driving trust in life insurance providers.
  • Attitudes towards life insurance, including confidence when researching and purchasing the product and perceptions of accessibility for renters and the self-employed.
  • Willingness to share personal and financial data with life insurance providers, and the type of incentives that would encourage people to do so.

Covered in this report

Brands: Legal & General, Royal London, Aviva, AIG Life, Zurich, Vitality, Promis Life, Neilson Financial Services, Beagle Street, DeadHappy, Direct Line Insurance, LeadStream, LifeSearch, Tom.

Expert analysis from a specialist in the field

This report, written by Irene Salazar, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The pandemic has been an eye-opener in terms of acknowledging risks to health and financial stability, and the longer it has gone on, the higher its impact on likelihood to consider life insurance. With life stages more fluid, future growth will be increasingly dependent on consumers that have typically been off the radar of traditional advisers and brokers, such as renters, the self-employed and those with low levels of savings. Reaching out to these groups will require further development in digital channels and partnerships with third parties such as employers.
Irene Salazar - Financial Research AnalystIrene Salazar
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on term assurance
      • Figure 1: Short, medium and long-term impact of COVID-19 on term assurance, 2021
    • The market
    • Market contracts in 2020
      • Figure 2: New individual term assurance sales and average annual premiums, 2017-21
    • Term assurance sales expected to return to modest growth over next five years
      • Figure 3: COVID-19 scenario forecasts of new individual term assurance volume sales, 2016-26
    • Average premiums were declining pre-pandemic
      • Figure 4: Average new annual premium – Mortgage term vs other term, 2014-20
    • Resilience of Other term highlights opportunities for growth
    • Value of claims paid increases by 11%, but percentage of claims paid falls
      • Figure 5: Volume and value of claims paid for term assurance policies, 2015-20
    • Companies and brands
    • COVID-19 reminds insurers of the importance of flexibility and adaptability
      • Figure 6: Top five providers of individual term assurance, by sales volume, 2018-20
    • Insurers bolster offerings with mental health initiatives
    • Advertising expenditure declines 11% in 2020/21
      • Figure 7: Total above-the-line, online display and direct mail advertising expenditure on life insurance and over 50’s guaranteed acceptance plans, 2019/20-2020/21
    • The consumer
    • Extended COVID-disruption leads to higher likelihood to consider life insurance
      • Figure 8: Impact of COVID-19 on likelihood to take out life insurance, 2020-21
    • Higher awareness of death-in-service benefits…
      • Figure 9: Ownership of life insurance and other protection products, 2019-21
    • …but ownership of term assurance remains broadly stable
      • Figure 10: Type of life insurance policy held, 2019-21
    • Likelihood to consider cover increases in 2021
      • Figure 11: Likelihood of taking out life insurance, 2019-21
    • Word-of-mouth and reputation are key drivers of trust
      • Figure 12: Drivers of trust in life insurance providers, 2021
    • High levels of confidence hint at potential of D2C
      • Figure 13: Attitudes towards life insurance, 2021
    • Majority are willing to share their data in exchange for the right incentive
      • Figure 14: Incentives to share data with life insurance providers, 2021
  3. Issues and Insights

    • Translate increased awareness into increased sales
    • Learn from InsurTech and disruptors
    • Adopt a proactive approach to improve trust
  4. The Market – Key Takeaways

    • Market contracts in 2020, but recovery is on the way
    • Mortgage-related term most affected, highlighting D2C opportunities
    • Trends in sales channels could change post-pandemic
    • Anticipate and respond to the threat of unemployment to recovery
  5. Market Size and Performance

    • Impact of COVID-19 on term assurance
      • Figure 15: Short, medium and long-term impact of COVID-19 on term assurance, 2021
    • Market contracts in 2020, but recovery expected in 2021
      • Figure 16: New individual term assurance sales and average annual premiums, 2017-21
  6. Market Forecast

    • Market expected to return to pre-pandemic growth
      • Figure 17: Market forecast of new individual term assurance volume sales, 2016-26
      • Figure 18: Market forecast of new individual term assurance premiums, 2016-26
    • Market drivers and assumptions
      • Figure 19: Key drivers affecting Mintel’s market forecast, 2015-25
    • Forecast methodology
  7. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • Under all three scenarios, market set for moderate recovery as prices likely to increase
      • Figure 20: COVID-19 scenario forecasts of new individual term assurance volume sales, 2016-26
      • Figure 21: COVID-19 scenario forecasts of new individual term assurance premiums, 2016-26
    • COVID-19 market disruption: risks and outcomes
      • Figure 22: Summary of Mintel scenario expectations and the impact on the term assurance market, 2021
  8. Market Segmentation

    • Mortgage-related term most affected by COVID-19…
    • …while resilience of “Other” term highlights opportunities for growth
      • Figure 23: Volume and value of new individual regular-premium term assurance policy sales, by policy type, 2017-21
    • Average premiums were declining pre-pandemic
      • Figure 24: Average new annual premium – Mortgage term vs other term, 2014-20
    • Cross-selling opportunities remain key
      • Figure 25: Critical illness rider cross-sell rate – Mortgage term vs other term, 2016-20
  9. Channels to Market

    • Sales via independent advice continue to increase share of the total
      • Figure 26: Distribution of new term assurance business, by channel, 2016-20
    • Advised sales account for 89% of mortgage term market…
      • Figure 27: Distribution of new mortgage term assurance business, by channel, 2016-20
    • …and 80% of the Other term sector
      • Figure 28: Distribution of new other term assurance business, by channel, 2016-20
    • Bancassurance sales could see recovery as banks return to normal
      • Figure 29: Volume of new term assurance sales via bancassurance, 2016-20
    • Intermediary market definitions
  10. Market Drivers

    • Value of claims paid increases by 11%
      • Figure 30: Volume and value of claims paid for term assurance policies, 2015-20
    • Housing market sees great volatility
      • Figure 31: UK residential property transactions over £40,000, 2017-21
    • Unemployment can threaten recovery
      • Figure 32: Annual unemployment rate, 2016-25
    • 19% of adults live in privately rented accommodation
      • Figure 33: England housing stock, by tenure, 2008/09-2019/20
    • FCA looks into new ESG disclosure rules for life insurers
  11. Companies and Brands – Key Takeaways

    • COVID-19 reminds insurers of the importance of flexibility and adaptability
    • Prices expected to rise as COVID underwriting restrictions are lifted
    • Focus on extras and perks, and life over death
    • Don’t penalise but acknowledge and support mental health
    • Providers are taking a practical, more tangible approach to advertising
  12. Market Share

    • Legal & General remains the market leader
      • Figure 34: Top five providers of individual term assurance, by sales volume, 2018-20
    • Royal London sees strong performance in 2020
    • Aviva to focus on long-term growth following busy year
  13. Competitive Strategies and Launch Activity

    • Insurers lift most COVID-related underwriting restrictions…
    • …but full impact on accessibility and prices still to be seen…
    • …and there are opportunities for differentiation over COVID-19 response
    • Extras and perks can build relationships and prevent claims…
    • Royal London enhances Helping Hand
    • …and increase the appeal of life insurance
    • Vitality simplifies proposition and builds on its digital offering
    • InsurTech continues to grow and innovate
    • Bequest enters the market to focus on 30-40 year olds
    • YuLife set for further expansion
    • Anorak partners with PK Group to launch employee benefit marketplace
  14. Advertising and Marketing Activity

    • Advertising expenditure falls 11% in 2020/21…
    • …but there are opportunities to change the approach
      • Figure 35: Total above-the-line, online display and direct mail advertising expenditure on life insurance and over 50’s guaranteed acceptance plans, 2019/20-2020/21
    • Vitality tops advertising in 2020/21
      • Figure 36: Top 10 advertisers of above-the-line, online display and direct mail advertising expenditure on life insurance, 2019/20 and 2020/21
    • Crowdfunding and equity deals allow DeadHappy to hike up adspend…
    • …while maintaining a fresh and different approach to advertising
    • Direct Line uses humour to underline the perils of ‘real life’
    • Legal & General highlights low starting prices
    • Nielsen Ad Intel coverage
  15. The Consumer – Key Takeaways

    • Capitalise on COVID-related boost to engagement
    • Target people with low levels of savings with affordable and flexible cover
    • Take every connection to improve trust, with workplaces being key
    • High levels of confidence hint at potential of D2C
    • Offer the right incentive to promote data sharing
  16. Impact of COVID-19 on Consumer Behaviour

    • Extended COVID-disruption leads to higher likelihood to consider life insurance
      • Figure 37: Impact of COVID-19 on likelihood to take out life insurance, 2020-21
    • Over-55s more nudged by the pandemic
      • Figure 38: Impact of COVID-19 on likelihood to take out life insurance, 2021
    • But risk of false sense of security as financial confidence hits record highs
      • Figure 39: The financial confidence index, 2015-21
  17. Life Insurance and Protection Product Ownership

    • Half of adults hold at least one type of protection product
    • Self-employed and renters are key groups to target
      • Figure 40: Ownership of life insurance and other protection products, 2021
    • An increase in awareness…
      • Figure 41: Ownership of life insurance and other protection products, 2019-21
    • …but ownership remains broadly stable
      • Figure 42: Type of life insurance policy held, 2019-21
  18. Likelihood of Taking out Life Insurance

    • Likelihood to consider cover increases in 2021
      • Figure 43: Likelihood of taking out life insurance, 2019-21
    • People with low levels of savings are key
      • Figure 44: Likelihood of taking out life insurance, by level of savings, 2021
  19. Drivers of Trust in Life Insurers

    • Word-of-mouth and reputation are key…
      • Figure 45: Drivers of trust in life insurance providers, 2021
    • …but expert advice remains highly trusted
    • Room to improve perceptions through many channels…
      • Figure 46: Repertoire of factors that can increase trust in a life insurance provider, 2021
    • …and corporate benefits could become an important touchpoint
    • COVID-19 increases risk of reputational damage to insurance industry
  20. Attitudes towards Life Insurance

    • High levels of confidence hint at potential of D2C…
    • …but access to support, guidance and advice is crucial
      • Figure 47: Attitudes towards life insurance, 2021
    • Young, urban parents more open to finding out more
      • Figure 48: Attitudes towards term assurance – CHAID – Tree output, 2021
  21. Incentives to Share Data with Life Insurance Providers

    • Majority are willing to share their data…
    • …in exchange for the right incentive
      • Figure 49: Incentives to share data with life insurance providers, 2021
  22. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID analysis methodology
      • Figure 50: Attitudes towards term assurance – CHAID – Table output, 2021
      • Figure 51: Likelihood to consider term assurance  – CHAID – Table output, 2021
  23. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 52: Market forecast of new individual term assurance volume sales, 2021-26
      • Figure 53: Market forecast of new individual term assurance premiums, 2021-26
    • Market drivers and assumptions
      • Figure 54: Key drivers affecting Mintel’s market forecast, 2021-26
    • Forecast methodology
  24. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
      • Figure 55: Market forecast of new individual term assurance volume sales, scenario table, 2021-26
      • Figure 56: Market forecast of new individual term assurance premiums, scenario table, 2021-26
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario 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.

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Data

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*databooks not available with UK B2B Industry reports.

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