EXECUTIVE SUMMARY
Protection has reached a new normal and needs to be reinvigorated
Key findings
Critical success factors
MARKET DYNAMICS
Introduction
The protection market has seen major changes
Protection is sold not bought, making advisors gatekeepers to the market
Contract levels have reduced due to the RDR
Banks have retrenched to core business and reduced their advisory capabilities
Protection products are exhibiting varying performance levels
IP and CII account for a mere 7.2% of the total protection market
Prices rises have sustained the market
The IP sector has struggled to recover its 2012 market position
The product offers significant benefits, but awareness and engagement is low
Confusion exists about the types of cover
The application process is long
Little is done to spread the word on policy benefits
CII penetration is very low, and has been declining
Issues affecting IP also impact CII take-up
The impact of ill health is well publicized
CII is more likely to be added to another protection product
The product has received negative press regarding claims
Like IP, the CII sales process is long
With-rider products significantly expand the CII market
Half of mortgage-related term assurance has CII added
The group life market can detract from individual protection
Pressure from new regulation is currently minimal
The protection market is out of the spotlight for now
All quiet on the regulation front
RDR has effectively excluded less-affluent consumers from the market
Subtle social change is taking place, while a lack of proactive customer engagement means the market is stalled
Industry disruption has been catching its breath
Insurers are focused on operational pressures
PRODUCT DISTRIBUTION TRENDS
RDR has changed the distribution landscape for protection products
The total protection market picture reveals the collapse of restricted advice
However, the premiums story shows the value of advice
Frustrations are creeping in among advisors
IP is still a product that needs advisors
The restricted advice channel has shrunk
The independent channel provides more value per contract
The independent advice channel has shrunk back from CII
The restricted advice channel has held firm
Pure direct channels are gaining ground
More changes are afoot in the advice market
Is it an advice gap or a guidance gap?
THE MARKET GOING FORWARD
The national climate of uncertainty will hold the protection market back
It will be a long road back for customers shut out by RDR
Post-Brexit Britain's future is unknown
The domestic political picture is also in turmoil and could change everything
The IP market is set to grow by £10m in five years
Sales growth will be driven by price inflation and a healthy housing market
Sales will be inhibited by Brexit and industry inertia
The whole of life market forecast predicts growth at the expense of term
The CII market will add 31% to new premium value by 2020
Sales growth will be driven by premium increases and product innovation
Sales will be inhibited by Brexit
IP and CII on the verge of an existential crisis
Both the IP and CII markets are in something of a rut
Yet so much could be done to boost growth
What is the meaning, the purpose, the value of this industry?
Firms must realize the customer game has changed
Time to move on from life-stage journeys and consider the end-to-end customer experience
Insurers have work to do to deliver on hygiene factors
An inability to step away from complexity creates the right conditions for disruption
The distribution challenge centers on digital
A top-down and bottom-up approach are both needed to solve the digital distribution dilemma
Automated advice offers opportunities to all stakeholders, but fair costs will be key in closing the advice gap
Slow progress on the digital agenda will continue to hold back operations and processes
APPENDIX
Abbreviations and acronyms
Bibliography
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