United Kingdom (UK) Protection Insurance - Term Assurance Market
Summary
This report provides an in-depth assessment of the term assurance market, looking at current and historical market size with regards to changes in contracts and premiums. It examines how term assurance products are distributed and highlights key changes in the competitive landscape, as well as the propositions of the key market players. The value of claims is also assessed. It provides five-year forecasts of market size in contracts and premiums to 2027. In addition, the report discusses how the market, distribution, and products offered are likely to change in the future, as well as the reasons for these changes.
The term assurance market declined in 2022, with premiums falling by 1.7% to GBP542.7 million and contracts falling 4% to 1.6 million. This was driven by mortgage-related term assurance contracts and premiums falling by 5.8% and 5.1% respectively due to a weak property market, as house prices continued rising in 2022. This made such purchases unaffordable for many individuals - especially with the cost-of-living crisis and inflation putting pressure on budgets. Innovations focus on simplifying and speeding up underwriting, as well as creating products that cater to individuals who are often not able to take out protection policies. One example is Bluezone targeting clients with Type 2 diabetes.
Scope
- Legal and General (L&G) remains the largest player in the term assurance market, with a market share of 29.6% in 2022.
- We forecast a decline in contracts for mortgage-related term in 2023. This will be due to high interest rates and the cost-of-living crisis, which have deterred individuals from taking out mortgages, thus impacting mortgage-related term take-up.
- By analyzing data and spotting trends, AI can increase the accuracy and effectiveness of term assurance underwriting. If incorporated with wearable devices, the real-time data generated can offer insights for customized policies and flexible pricing.
- Examine the size of the term assurance market.
- Learn about the implications of regulation in the market.
- Understand the influence of a range of factors on growth.
- Executive Summary
- Background: The Protection Market
- The protection market declined in 2022
- Term assurance dominates the protection market
- Table Non-mortgage-related term assurance accounts for over half of protection contracts
- IFAs make up the lion's share of the protection market
- Table Restricted channel premiums rose by 52% in 2022
- The Term Assurance Market
- The term assurance market shrunk in 2022
- Over two thirds of contracts in the term market are non-mortgage-related
- Term assurance grew over the review period
- Table All types of term assurance experienced a decline in contracts in 2022
- All channels saw both contracts and premiums fall in 2022
- Table The independent advice channel was the most impacted
- Professional advice is favored in the non-mortgage space
- Table IFAs dominate in terms of both contracts and premiums for non-mortgage-related term
- Term assurance saw the number of claims paid increase in 2022
- Term assurance dominates COVID-19 claims value
- Market Drivers
- Mortgage lending has remained consistent despite economic struggles
- The UK may adopt DORA or similar measures, creating opportunities for bancassurance
- The cost-of-living crisis will put pressure on the number of policies sold
- The proportion of smokers in the UK is falling, while vapers are on the rise
- Wearables can be used to offer lower premiums and reduce claims frequency
- Solvency II insurance capital rules were reformed in July 2022
- AI can be leveraged to enhance and streamline the value chain
- The Consumer Duty rules are designed to provide better customer outcomes
- Product Launches and Innovation
- Bluezone introduces Type 2 diabetes term policy
- All of MetLife's individual protection customers receive access to GP24
- Other partnerships and innovations
- Competitive Landscape
- L&G remains the largest provider of term assurance
- Table Number of new term assurance contracts by insurer and market share, 2019–22
- Company Profile: Legal & General
- Company Profile: Aviva
- Company Profile: AIG
- L&G remains the largest provider of term assurance
- Forecasts
- The term assurance market is set to grow continuously until 2027
- The term market is set to continue growing over the forecast period
- Digitalization is crucial to keep up with changing consumer dynamics
- Embedded insurance could boost the number of contracts in the market
- Appendix
- Definitions
- Methodology and further reading
- Methodology
- Secondary sources
- About GlobalData
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