United Kingdom (UK) Term Assurance Distribution Dynamics by Channels and Future Market, 2023 Update

United Kingdom (UK) Term Assurance Market Report Overview

The UK term assurance market will be mainly driven by technological innovations and regulatory developments.

The UK term assurance market research report explores consumer purchasing behaviors for term assurance in the country.  The report provides valuable insights into the trends and innovations that will shape the UK assurance market in the coming years.

UK Term Assurance Market Trends

The integration of AI in life insurance will transform the claims process, underwriting process, and value chain via automated claims, resulting in reduced manual reviews and improved accuracy. Algorithms can detect fraudulent claims by analyzing data patterns and anomalies. Furthermore, virtual assistants and chatbots powered by AI can improve customer service and engagement during the claims process.

Innovation in product development is an ongoing market trend in the British term assurance market. For instance, Bluezone introduced its first life insurance product designed for individuals with type 2 diabetes. The policy aims to offer protection to clients who previously had trouble taking out life insurance because of their condition. By doing away with time-consuming form filling and the medical appointments necessary for similar policies, the company aims to streamline the application process.

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UK Term Assurance Market Segmentation by Purchase Channels

The key purchase channels in the UK term assurance market are insurers, broker/advisor, PCW, banks, and others. In 2023, insurers and brokers remained the top two channels for non-mortgage-related term insurance. The least popular purchasing channel for non-mortgage-related term insurance was the bank channel in 2023.

UK Non-Mortgage-Related Term Assurance Market Analysis by Purchase Channels, 2023 (%)

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UK Term Assurance Market Segmentation by Purchase Method

The key purchase methods in the UK term assurance market are on the phone, online via a PC/laptop, online via a smartphone/tablet, through the provider’s app, face-to-face, and by post among others. In 2023, online via a PC/laptop was the leading term assurance purchase method for both non-mortgage-related and mortgage-related term assurances.

UK Term Assurance Market Analysis by Purchase Method, 2023 (%)

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UK Term Assurance Market – Competitive Landscape

The key UK term assurance market providers include Legal & General, Aviva, LV=, Zurich, and Scottish Widows. In 2023, Legal & General led the term assurance market for mortgage-related term assurance and Aviva led the term assurance market for non-mortgage-related term assurance. Vitality Health was a new entrant among the top five providers in the non-mortgage-related term assurance segment, replacing Zurich. Vitality’s approach to life insurance—including encouraging healthy living via rewards is likely to have been a key factor in the growth of its market share in 2023.

UK Non-Mortgage-Related Term Assurance Market Analysis by Companies, 2023 (%)

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Scope

• The proportion of consumers visiting a price comparison website (PCW) before purchasing mortgage-related and non-mortgage-related term assurance policies increased by 0.2pp and 3.6pp, respectively, from 2022 to 2023. The dependence on PCWs as a research method highlights how important price is in this line amid the UK’s cost-of-living crisis.

• 25% of mortgage-related term assurance policyholders chose to speak to an IFA or broker prior to purchasing a policy in 2023. IFAs remain fundamental to the distribution of protection products, given that they provide informed decisions based on consumers’ unique circumstances.

• Purchasing mortgage-related term insurance policies online via a PC/laptop fell by 0.6pp in 2023 compared to 2022.

• This shift highlights the growing preference for purchasing via more portable devices. Policies purchased via the provider’s app recorded a 0.9pp increase in 2023. Digitalization also helped providers to expand their direct business, particularly through their websites.

Key Highlights

• Insurers and brokers were the leading channels for term assurance policy purchases in 2022, accounting for more than 50% each for all non-mortgage-related and mortgage-related policies.
• For mortgage-related term assurance, the percentage of customers who purchased directly from the insurer decreased by 8.5pp in 2022, while non-mortgage-related term assurance increased by 4.0pp.
• In 2022, online purchasing was widely preferred, accounting for 59.1% and 59.9% of total purchases for mortgage-related and non-mortgage-related term assurance policies. Digital methods are likely to remain the most popular method for purchasing term insurance policies.

Reasons to Buy

• Understand consumer purchasing decisions and how these will influence the market over the next few years.
• Improve customer engagement by recognizing what is most important to consumers and how insurers can adapt products and services to meet their needs.
• Compare the Net Promoter Scores of key insurance providers.
• Discover which providers lead the way in the market.
• Adapt your distribution strategy to ensure it still meets customer purchasing behaviors.