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The Evolving Picture of Life Assurance Paul Cowman Category Manager- Protection Just Retirement Ltd 11 th July 2007.

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Presentation on theme: "The Evolving Picture of Life Assurance Paul Cowman Category Manager- Protection Just Retirement Ltd 11 th July 2007."— Presentation transcript:

1 The Evolving Picture of Life Assurance Paul Cowman Category Manager- Protection Just Retirement Ltd 11 th July 2007

2 2 Agenda Some of the issues facing the Life Assurance Market What for the future

3 3 Anger after Balls blames industry for PTA abolition ABI in PTA pipeline plea Haddrill urges Balls on PTA PTA set for Budget revival Hopes grow for Treasury rethink on PTA tax relief PTA U-turn has damaged industry's reputation Source: Money Marketing Advisers wary on PTA suitability BUDGET:Government kills PTA

4 4 Confusion over which product they need Don’t fully appreciate their shortfalls Negative press Reduced desire to buy Think State will provide CONSUMERS Growing market for direct Protection with or without advice If it is fully commoditised then is it any wonder cheap direct products are emerging Who has greater affinity with the customer Access ADVISERS Uncertain –Cheapest? –Should it include Critical Illness –Service Reduced consumer demand Rated/Loaded cases on increase Poor levels of Service Standards Life expectancy improving The inclusion of Critical Illness Cover causing poor image Wholesale rates Commoditised market INSURERS/REINSURERS Some of the issues

5 5 Following two years of reducing Term Assurance sales this year we have seen a marginal increase of 3.7% almost million cases Term assurance sales have fallen by 23% since reaching a peak in 2003 Housing market expected to stabilise or grow very slowly - over 50% of current protection sales are mortgage related Source: Money Marketing, 16/06/05 Rate cuts look to be stifling longer term growth Pricing activity is generally about short term volume According to LifeSearch there were 46 rate changes in 2006 and 50 in This is not out of line with Annuity and Equity Release market Average Premium down slightly to £403 (from £406) New stand alone Term assurance sales in 2006 rose by 9.7% whilse Term Assurance with Critical Illness fell in the same period by 7.2% Average Sumas Assured in 2006 increased to £188,572 from £102,668 Protection sales some green shoots ABI Datamonitor Forecast Source: UK Term Assurance 2005 How much of the business written is replacement business Source: Swiss Re Term and Health Watch 2007

6 6 Need for protection has never been greater Life Assurance Protection Gap £tr £2.0 £2.2 £ Income Protection Gap £bn There is a gap of £2.3 trillion in life insurance This has remained steady for the last 3 years This effect is due to improved persistency, particularly for higher sums assured Much to do about promoting the value of Life Assurance Source: Swiss Re Term and Health Watch 2007

7 7 Who is selling what Distribution channel Average Premium 2006 Tied Sales102,043110,725109,713£311 IFA/Independent128,235119,845151,466£385 Other102,390106,994108,162£248

8 8 Agenda Some of the issues facing the Life Assurance Market What for the future

9 9 ABI claims age 70 victory Nicola York - 27-Apr-2007 The Association of British Insurers is claiming victory for the FSA's decision to scrap the Age 70 rule which was announced today. The opening up of whole of life protection to ICOB advisers

10 10 Life expectancy of 65 year olds Source: CMIB and Just Retirement Fixed Term Assurance may not fit the bill

11 11 House Prices March 1983 £29,993 December 2006 £186,954 Average Annual Growth Rate: 8.0% Source: Halifax House Price Index

12 12 Age Under 1625%19%17% %65%60% 65+13%16%23% 85+1%2%4% Breakdown of Population by Age Source: Government Actuary’s Department/ Population Trends

13 13 Future needs of the customer in or at retirement Market not currently well catered for Products don’t meet the needs of the consumer One size fits all approach Service concerns Concern about passing on their estate Pension or Mortgage Term ending Need to replace the cover Worsening Health Caring for their health in old age Strains on the NHS Care Fees Increased accident risk

14 14 Future needs of the consumer Quick, simple, straight forward, user friendly process Minimum form filling Minimum delay Affordable protection When current cover expires Protection for Retirement Cover that goes beyond the mortgage and retirement Protecting the Estate Accessible cover Annuity Equity Release Older customers may be more vulnerable

15 15 Designing Customer Centric Propositions Product Design Promotion & Positioning Product use & Claim Customer


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