United Kingdom (UK) Protection Insurance – Income Protection Market

United Kingdom (UK) Protection Insurance – Income Protection Market Report Overview

The number of contracts in the income protection market reached 247,200 in 2023. The IP contracts market will grow at a CAGR of more than 4% from 2023 to 2028. Product innovation has contributed to this market growth. Companies like Vitality experienced an increase in IP sales after introducing private healthcare coverage to its IP plans.

The number of contracts from the individual protection market in the UK witnessed a decline of more than 3% in 2023 due to prolonged periods of high inflation and interest rates, leading to a cost-of-living crisis. This has placed strains on consumers, making insurance affordability a challenge. As individuals seek adequate coverage amid rising costs, many are interested in products such as IP (Income Protection) insurance as a viable solution.

UK Income Protection Market Outlook, 2023-2028 (Number of Contracts)

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The “United Kingdom (UK) Protection Insurance – Income Protection Market” report provides an in-depth assessment of the income protection insurance market, looking at current and historical market size changes in contracts and premiums. It also examines how income protection products are distributed and highlights notable changes in the competitive landscape, as well as the propositions of key market players. The report also includes five-year forecasts of contracts and premiums to 2028 and discusses how the market, distribution, and products offered are likely to change in the future (as well as the reasons for these changes).

UK Income Protection Insurance Market Drivers

Financial wellbeing and mental health are intrinsically linked, serving as key drivers for income protection sales. Particularly worried groups are millennials and Generation X, which face challenges such as high interest rates on mortgages, making financial management challenging. This financial stress can significantly impact mental health, underscoring the need to address financial wellbeing among consumers. IP is an ideal product for individuals who are worried about the potential loss of income due to an accident or illness.

When considering what consumers want their IP policy to offer, the largest proportion prioritizes mortgage protection, which is unsurprising given that UK mortgage rates have risen. This underscores the importance of safeguarding one’s home in the case of income loss. Additionally, salary protection is paramount, amidst the ongoing cost-of-living crisis.

UK Income Protection Market Segmentation by Channel

The key channels in the UK protection insurance–income protection market are advised, non-advised, and direct. In 2023, the advised channel dominated the market, both in terms of premiums and contracts. As advised channels continue to dominate the distribution landscape, focusing on advisor education and simplifying product information could be key strategies for insurers looking to boost IP sales.

UK Income Protection Market Analysis by Channel, 2023 (%)

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UK Income Protection Market – Competitive Landscape

A few leading companies in the UK income protection market are:

• Aviva
• L&G
• LV=
• Royal London
• Vitality

In 2023, Aviva accounted for the largest share in the income protection market. This can be attributed to its acquisition of AIG Life.

UK Income Protection Market Analysis by Companies, 2023 (%)

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Recent Developments

• In March 2023, Aviva launched a new support program to lessen the impact of the cost-of-living crisis on its individual protection customers. It was created in conjunction with Aviva’s current payment deferral program, which was implemented during the COVID-19 pandemic to provide clients with protection against financial problems brought on by the crisis.
• In June 2023, HSBC UK added L&G to its wealth panel. This partnership expanded its distribution network.

Key Segments Covered in the Report

UK Income Protection Market Outlook by Channel (%, 2019-2028)

• Advised
• Non-Advised
• Direct

Scope

Aviva took the lead in the income protection market, overtaking Legal & General.

36.1% of respondents indicated that mortgage protection was the most important feature of income protection products.

18% of fully employed individuals have income protection in place, whereas only 11.8% of self-employed individuals have the same coverage.

Key Highlights

• The IP market experienced strong growth in 2022. Contracts increased by 11.7% to 213,100 while premiums rose by 20% to GBP81 million.
• The independent advice channel dominates the IP market, with a 70.1% and 70.3% share of contracts and premiums. Consumers continue to seek out advice to better understand their coverage needs as well as find the best value option.
• Legal & General was the top provider of IP insurance in 2022 with a share of 27.4%. The top five accounted for 80.1% of the market.

Reasons to Buy

• Examine the size of the standalone income protection insurance market.
• Identify the leading providers of income protection.
• Learn about the implications of the cost-of-living crisis on the market.
• Understand the influence of a variety of factors on market growth.