Insurers need to address issues of
trust in the critical illness market, but perhaps more importantly they need to
convince people of the value of the product. At the moment far too many see
critical illness as a nice-to-have product. This is despite dwindling state
support and statistics that suggest people are underestimating the chances of
suffering from a critical illness.
Introduction
Abbreviations
Definitions
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Executive Summary
The market
Value of critical illness premiums
expected to grow
Figure 1: Forecast of total new
individual critical illness premiums, at current prices, 2007-17
The invaluable role of the
intermediary in CI distribution
Market factors
Standardisation in claims reporting
could help to increase consumer confidence
Income remains squeezed which is bad
news for critical illness cover providers
Figure 2: Percentage change in RPI
and average weekly earnings (regular pay only), January 2008-March 2013
Cancer is the main reason for a
critical illness claim
Encouraging signs in the mortgage
market should boost CI sales
Average CI sum insured rises with
average FTB advance
Welfare reforms will pique interest
in protection products
Impact of the RDR not yet clear
Impact of gender equalisation could
result in premium increases
Consumer Insurance Act aims to build
consumer confidence
Companies, products and innovations
Top five providers accounted for 78%
of the market in 2012
Figure 3: Market share of the top
five providers of new individual critical illness cover, based on volume sales,
2012
Bright Grey announced £200 million
critical illness cover giveaway
Skandia re-enters critical illness
market with an RDR world-ready product
L&G extends children’s CI cover
LV= extends its critical illness
cover
The consumer
Some 11% of people have critical
illness cover in place
Figure 4: Protection product
ownership, March 2013
Financial peace of mind at a
difficult time drives product ownership
Figure 5: Reasons for purchasing,
March 2013
Consumers want to do their own
research, but still value independent advice
Figure 6: Purchasing considerations,
March 2013
Costly premiums are the main barrier
to critical illness ownership
Figure 7: Reasons for not owning
critical illness cover, March 2013
Financial incentives would motivate
consumers to purchase CI cover
Figure 8: Factors which would
encourage purchase, March 2013
Critical illness cover suffers from
negative consumer attitudes
Figure 9: Views about critical
illness cover, March 2013
What we think
Issues in the Market
What can the protection industry
learn from other financial markets?
How can insurers gain consumer
trust?
Do people understand the value of CI
cover?
To what extent do people expect to
rely on state support?
How will expanding the RDR to
include protection products impact the CI market?
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Trend Application
Insurers could help consumers to
improve their health
Consumers aren’t opposed to an open
dialogue about sensitive subjects
The human touch is needed in the
protection industry
Market Drivers
Key points
Claims data tell a positive story
but can they be trusted?
Squeeze on income sees non-essential
products fall down priority list
Figure 10: Percentage change in RPI
and average weekly earnings (regular pay only), January 2008-March 2013
Cancer is the main reason for a
critical illness claim
An improvement in the mortgage
market is good news for CI cover
Figure 11: Number of loans for house
purchase, by type of borrower, 2008-12
Average sums insured tied to
first-time buyer advances
Figure 12: Average sum insured for
new critical illness cover policies versus average first-time buyer advance,
2005-12
Welfare reforms set to shake up the
protection industry
Still early days to understand the
impact of the RDR
Impact of gender equalisation could
result in premium increases
Consumer Insurance Act aims to build
consumer confidence
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