1. Part of the BGL Group Wednesday 15 th June 2011 Bridging the Gap: How can greater demand for protection be generated? “Grave Yard Slot”

2. Part of the BGL Group What role should the Government take? And providers? And distributors? Will innovation in products or distribution deliver greater customer engagement? Exploiting mobile and online media to connect with consumers in the protection space How Can Greater Demand For Protection Be Generated?

3. Part of the BGL Group One way of Approaching it….. Introductions The Consumer The market and business opportunity Me The Role of Government Simpler products = consumer engagement = more sales? Easier access – via mobile app = consumer engagement?

4. Part of the BGL Group Who Am I to talk to YOU about Anything? LifeSearch Protection Adviser of the year most every year! CPIEC Founder 800 policies ON RISK a week £14m Revenue at 10% EBITDA Margin Rolling 3 month revenue 26% up on 2010 85 specialist advisers Partnering ASDA, Swinton and The Meerkat

5. Part of the BGL Group Would you recommend LifeSearch to a friend or family member?

6. Part of the BGL Group The Protection Market – Latest ABI Stats

7. Part of the BGL Group New Protection Policies Sold 1500 1700 1900 2100 2300 2500 200620072008200920102011E '000s Year

8. Part of the BGL Group Premium Value of New Protection Policies Sold 1000 1050 1100 1150 1200 1250 200620072008200920102011E £ Millions Year

9. Part of the BGL Group Premium Value of Whole of Life Policies Sold Year 0 25 50 75 100 125 150 200620072008200920102011E £ Millions

10. Part of the BGL Group Premium Value of (Proper) Income Protection Year 40 42 44 46 48 50 52 54 56 58 60 200620072008200920102011E £ Millions

11. Part of the BGL Group Spend by Category Source: Life category in Nielsen Addynamix 2009 (Life Protection, Critical Illness, Term Assurance, Income Protection). * 2009 data Jan-May *

12. Part of the BGL Group The Consumer - What drives the protection gap? Are we dealing with a communications-led problem Or just another product people don’t need anymore?

13. Part of the BGL Group

14. Life Expectancy Trends

15. Part of the BGL Group Male Mortality Trend

16. Part of the BGL Group Female Mortality Trends

17. Part of the BGL Group But They Do Still Need Us! We sell personal catastrophe insurance. Death and Disability do happen and they do happen young too. £2.3 trillion protection gap = average family shortfall of £45,000 if basic living standards are to be maintained in the event main breadwinner dies. Shortfall is £55,000 in the event that the breadwinner becomes incapacitated. Employers cutting back benefits-in-kind and government cutting sickness benefits. Savings levels are microscopic and debt is rising.

18. Part of the BGL Group The Consumer - What drives the protection gap? Are we dealing with a communications-led problem? YES Or just another product people don’t need anymore? NO

19. Part of the BGL Group Why do they resist our communications? Is it Scandals - Endowments and PPI? The media or the FSA’s negative approach? Is it lack of Consumer Education? Is it complexity of products and language? Or is it that they don’t see the need? Is that because of the Welfare State ‘lie’? Or is it that no one explains that there is one? Do we need to get through by Mobile App?

20. Part of the BGL Group Why do they resist our communications? Is it Scandals - Endowments and PPI? NOT INSURMOUNTABLY SO AT ALL Is it the media or the FSA’s negative approach? LIVE WITH IT, IT’S A GIVEN UNTIL WE HAVE GOOD NEWS Is it lack of Consumer Education? OF COURSE, BUT ARE WE 60’S SOCIALISTS THAT WE THINK THAT’S THE GOVERNMENTS JOB?

21. Part of the BGL Group Why do they resist our communications? 2 Is it complexity of products and language? THEY ARE SIMPLER THAN AN IPHONE! Or is it that they don’t see the need? Is that because of the Welfare State ‘lie’? Or is it that no one explains that there is one? YES, BUT WHO IS TO TELL THEM? Will a Mobile App do the trick. NO, NOT ON ITS OWN, NOT AT ALL!

22. Part of the BGL Group Spend by Category Source: Life category in Nielsen Addynamix 2009 (Life Protection, Critical Illness, Term Assurance, Income Protection). * 2009 data Jan-May *

23. Part of the BGL Group Occam’s Razor! Year 0 25 50 75 100 125 150 200620072008200920102011E £ Millions

24. Part of the BGL Group Occam’s Razor! Year 0 25 50 75 100 125 150 200620072008200920102011E £ Millions ‘If two or more competing theories exist as to what causes a particular outcome, the simpler one is likely to be right”

25. Part of the BGL Group Old News: CPIEC Campaign challenges Create a disturbance campaign aimed at changing consumer behaviour and growing the market Central messages to be needs-based providing generic promotion of protection themes Independent of industry and provide ‘clear blue water’ between the consumer and financial promotions Provide the consumer with a fulfilment mechanism Delivery mechanism will be online with many other aspects of the ongoing campaign supported by other mechanisms

26. Part of the BGL Group Our hypothesis – the brief for research There is a sizeable target who will buy more protection -via products they already have, and products that they don’t but should have We need to understand the barriers preventing them from further engaging in the sector and Devise a communications strategy that will overcome them Specifically, we need to understand: 1. Who this target is 2. Role for communications

27. Part of the BGL Group Research objectives Claimed ownership of insurance & protection cover by product / provider Awareness of insurance and protection product types available Consumer Awareness Consumer Understanding Market Segmentation Four Key Objectives Media Consumption Identify consumers’ media consumption across a range of channels (online, TV, press, radio, magazines, cinema, etc) and show which would be effective for communicating a motivating insurance and protection message Consumer attitudes to insurance and protection to help derive a market segmentation for future targeting purposes What consumers understand by different product types Claimed versus ‘proven’ basic levels of consumer understanding

28. Part of the BGL Group Awareness of insurance products Ownership and Awareness 91% 90% 88% 87% 83% 78% 71% 69% 67% 62% 57% Own product Aware but don’t own Total Awareness 1.8 Disengaged Policy Holders 1.8 TARGET PRODUCTS OWNED Population Mean – 1.3 Confused Policy Holders Significantly higher for: 46% 25% Target Products

29. Part of the BGL Group Getting information about policies Claimed Sources of Information About Taking Out Insurance Disengaged Policy Holders Confused Policy Holders = significantly different vs. Total respondents (weighted)

30. Part of the BGL Group Attitudinal segmentation CONFUSED POLICY HOLDERS SELF SUFFICIENTS NO NEED FOR INSURANCE FINANCIALY STRAPPED DISENGAGED POLICY HOLDERS *Average policies owned based on 8 target products: Life Assurance, Critical Illness Cover, Credit Card Payment Protection, Income Protection, Funeral Plans, Family Income Benefit, ASU, Mortgage Payment Protection 1.8 1.3 0.6 Above Average Average Below Average Average number of policies owned* Five segments identified based on their attitudes towards insurance and protection Population: 7.32 million Population: 10.13 million Population: 9.01 million Population: 14.07 millionPopulation: 8.44 million

31. Part of the BGL Group Key findings 1.Confused Policy Holders Recognise the importance of insurance cover but find policies complex and confusing 2.Disengaged Policy Holders Recognise the importance of insurance cover but not actively engaged due to reliance on others for security 3.Financially Strapped Don’t have other sources to rely on for security and have financial constraints to getting insurance cover 4.Self Sufficients Have other sources to rely on: savings, spouse's income and therefore don’t feel the need of getting insurance 5.No Need for Insurance Feel they don’t have much at stake and have other priorities to think about than getting insurance

32. Part of the BGL Group * TGI Q2 2009 Secondary Younger Core Secondary Older Self Sufficient No Need Confused Financially Strapped Disengaged Self Sufficient Financially Strapped

33. Part of the BGL Group Communications objective “I’m not sure what I’ve got or what it’s for” “I’m clear about what I’ve got and feel good about it” Confusion Virtuous Indifference Clarity

34. Part of the BGL Group E.g. From ‘indifference’ to ‘virtuous’ - Fire Authority of Northern Ireland Failure to take very basic, practical, ‘boring’ precautions… Check smoke alarm batteries Never leave a chip pan alone Position candles with care Keep doors closed Can lead to horrific consequences

35. Part of the BGL Group Fire Authority of Northern Ireland

36. Part of the BGL Group Fire Authority of Northern Ireland - results 14% decrease in total number of household fires 12% decrease in fire injuries 60% of people influenced to do something practical to prevent fires

37. Part of the BGL Group Opportunity for the protection insurance category There is an opportunity to Break protection insurance down into manageable, practical, clear, simple to understand bite size chunks There is also an opportunity to Get people to understand that if they own a home, have a job or have a family, getting protection insurance is a ‘responsible’, ‘virtuous’, ‘positive’ behaviour

38. Part of the BGL Group Can we break the sector down into manageable information/customer journeys? Life Critical illness Income protection Payment protection Home-ownersKidsJobs OR

39. Part of the BGL Group CPIEC broad-based call-to-action Promote Critical behavioural changes through better understanding of: Your financial risks Your health risks Your lifestyle risks Build strategic partnerships with organisations e.g. Government, Money Advice Service; Health Charities

40. Part of the BGL Group OVER HALF OF UK ADULTS HAVE NO LIFE INSURANCE, LEAVING MANY FAMILIES VULNERABLE 56% of adults in the UK don’t have any life insurance in place to secure the financial wellbeing of their loved ones More UK adults insure their pets (15%) and mobile phones (13%) than they do their income in case of ill health (12%) One-fifth of the population would consider cutting back on critical illness cover (21%) and life insurance (20%) compared to just 15% prepared to cut back on broadband access Over half the population (54%) say they review their finances regularly, yet uptake of protection products remains low New research from Scottish Widows shows that an estimated 28 million¹ of the UK population do not have any life insurance in place, leaving their loved ones vulnerable to financial insecurity if something were to happen to them. The third Scottish Widows Consumer Protection Report, which details research carried out on 5,148 UK Adults², shows that many are continuing to shun protection products including life insurance, critical illness cover and income protection. Although over half of the UK population (54%) admit to reviewing their finances once or twice a year and awareness of protection is high, the reality is that the take up of these products remains exceptionally low. From those surveyed, 97% were aware of life insurance and the importance of having it, however only 44% had cover. Similarly, when it comes to critical illness cover the awareness remains high (86%). However the percent of respondents who have actually taken out a product is worryingly low at just 12%. The same goes for income protection insurance where the awareness is 83%, with take up at just 7%. The research also shows that almost a quarter of the UK population (23%) say they believe they cannot afford life insurance and when it comes to critical illness cover 26% state this as their primary barrier to not taking it out.

41. Part of the BGL Group

42. How can greater demand for protection be generated?

43. Part of the BGL Group Occam’s Razor! Year 0 25 50 75 100 125 150 200620072008200920102011E £ Millions ‘If two or more competing theories exist as to what causes a particular outcome, the simpler one is likely to be right”

44. Part of the BGL Group How to Generate Demand. Effectively Explain to our target markets: Why they need what we have to offer, What can happen it you don’t have it What happens when it works for those in need. Why it’s wise and virtuous to spend money on it Then Just Promote and Fulfil.