United Kingdom (UK) Protection Insurance - Income Protection
Summary
The income protection market rebounded in 2021 - new business premiums increased by 12.3% while the number of contracts rose by 10.5%. This was partly due to the recovery period following the 2020 pandemic, with many insurers relaxing COVID-19 underwriting restrictions in 2021, as well as an increased awareness of the importance of income protection following the economic uncertainty experienced by many in 2020. The market is projected to grow to 2026, driven by the high demand for such products amid consumers’ increasing awareness of their financial vulnerability.
The report provides an in-depth assessment of the income protection insurance market, looking at current and historical market size with regards to changes in contracts and premiums. It examines how income protection products are distributed and highlights key changes in the competitive landscape, as well as the proposition of the key market players. The value of claims is also assessed. It provides five-year forecasts of contracts and premiums to 2026 and discusses how the market, distribution, and products offered are likely to change in the future, as well as the reasons for these changes.
Scope
- There were over 190,700 income protection (IP) contracts sold in 2021, and new business premiums totaled GBP67.5 million.
- Legal & General is the largest provider of income protection policies, having displaced Aviva in 2020.
- Musculoskeletal-related claims make up the largest proportion of claims and rose sharply (+29.6%) in 2021. This is linked to some of the ongoing restrictions on travel, lockdowns, and remote working.
- Mental illness-related claims continue to be higher than in the years preceding the pandemic due to increasing mental health awareness and a more open dialogue surrounding the topic.
- Examine the size of the income protection market.
- Discover the leading providers of income protection.
- Learn about the impact of the cost-of-living crisis on the market and the longer-term implications of the COVID-19 aftermath.
- Understand how the claims landscape is evolving.
- Executive summary
- Critical success factors
- Background: The Protection Market
- The protection market experienced growth in 2021 following the COVID-19-driven contraction
- IP registered double-digit growth in 2021 Insurers withdrew unemployment cover
- Table Protection market: number of contracts (000s)
- Table Protection market: new business premiums (GBP million)
- The independent advice channel remains the largest as customers favor being fully advised Independent financial advisors (IFAs)
- Table Protection market: number of contracts (000s)
- Table Protection market: new business premiums (GBP million)
- The Income Protection Market
- The IP market recovered in 2021 from its contraction a year previously
- IFAs now account for 70.5% of IP contracts sold In 2021, as in previous years, the
- Table IP: number of contracts (000s)
- Table IP: new business premiums (GBP million)
- New IP claims accounted for 4.9% of the protection market
- IP accounted for 23.7% of COVID-19 claims
- Rising musculoskeletal claims is linked to increased remote working
- Table Number of COVID-19 claims paid
- Table Total value of claims paid (GBP000s)
- Table Aveage no of claim paid(GBD)
- Market Drivers
- Insurance companies put greater effort into catering for individuals with mental health illnesses, while the ABI sets up new standards
- Transformation of IP market after underwriting changes in 2021
- Over half of IP purchases were influenced by the pandemic
- The proportion of people purchasing with a mortgage is decreasing
- Universal Credit (UC) continues to count IP payouts as unearned income, favoring people with mortgages over renters
- More IP policies were sold in 202 despite the success of the CJRS
- Many insurers removed or relaxed COVID-19 underwriting restrictions
- Product Launches and Innovation
- The move towards digitalization has motivated insurers to streamline their application processes
- COVID-19 has resulted in round-the-clock access to remote medical services
- Other product launches and innovations
- Competitive Landscape
- L&G increases its market lead over Aviva
- Table Number of new ip contract by insurer & market shares ,2017- 2021
- Company profile: Legal & General
- Company profile: Aviva
- Company profile: LV
- L&G increases its market lead over Aviva
- Forecasts
- The IP market is forecasted to grow steadily to 2026
- The IP market is expected to grow steadily after the recovery in 2021
- The cost-of-living crisis will slow down growth in the IP market
- COVID-19's market impact continues to evolve
- Appendix
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