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UK Creditor Insurance 2011
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Reports 97 seiten | |||||||||||
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Introduction
This report is an in-depth analysis of the UK creditor insurance market in 2010, showing estimates for market size and growth by product line. The report also explores new regulations .....
Introduction This report is an in-depth analysis of the UK creditor insurance market in 2010, showing estimates for market size and growth by product line. The report also explores new regulations are set to change the market and forecasts GWP growth up to 2015. The report also includes key competitor data for 2009/10 and examines the latest product innovations. Features and benefits * Gain a broad and deep knowledge of the creditor insurance market, its competitive landscape and the key drivers of change. * Plan your future strategy using Datamonitor’s forecast of the future growth of the creditor insurance market. * Keep up to date with the latest regulatory developments taking place in the market and how they will affect your company. Highlights The POS ban recommended by the CC will continue to depress penetration rates and claims for mis-sold PPI will grow throughout 2011–12. This report also looks at the estimated costs per company of implementing these reforms and the effect they will have on each PPI product. The remaining PPI distributors have suffered the perfect storm from regulation, redress costs, and the recession and the next few years will be challenging. However once stability returns a steady growth is possible. 2009-10 has seen huge upheaval in the PPI market; many larger companies like Barclays, Lloyds banking group and Nationwide have stopped selling most or all PPI products. Many of the leading insurers are now looking to alternatives such as income protection products as their growth drivers in this area. Your key questions answered * What is the size of the creditor insurance market? * Who is pulling out of the PPI market? * How are new regulations affecting the market? [Studien Infos ausblenden] |
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Executive Summary The creditor insurance market has declined due to lower lending and restrictions on sales The PPI market is estimated to have reduced from £766m to £551m during 2009–10 and is likely to fall further The Financial Services Authority and the Competition Commission are working to tighten the regulation of PPI sales and procedures A mixture of higher claims frequency and reduced uptake have hit profitability Lending remains low but will slowly increase during 2011 Although still below pre-recession levels, gross advances in personal credit have started to grow The PPI sector has been heavily reliant on PLPPI for profits Consumers are claiming more and for longer, but personal finance worries could increase PPI sales Claims frequency has risen in recent years High unemployment is hitting profits While outstanding debts may have reduced, consumers are struggling to repay loans Gross lending is expected to increase, supporting creditor GWP growth over the long term Regulation has been a key driver of change Regulation has caused a wholesale reshaping of the PPI landscape Current regulation means challenging times for PPI sellers Claims management companies will increase the volume of claims Claims will need to be dealt with quickly to minimize costs 2011 will be difficult for market players New regulations will shape the next two years 2012–13 will be decision-making time OVERVIEW Catalyst Summary MARKET CONTEXT Introduction Creditor insurance is provided through PPI PPI allows consumers to reduce the risk of debt non-payment The FSA and the CC are working to tighten the regulation of PPI sales procedures The PPI market is estimated to have fallen from £766m in 2009 to £551m in 2010, and is likely to fall further The PPI sector has been heavily reliant on PLPPI for profits Alongside a decline in GWP, PPI volumes have been falling Consumer lending has started a recovery, but the market has changed Although still below pre-recession levels, gross advances in personal credit have started to grow The total amount owed by consumers has only slightly reduced from recession levels The creditor insurance market is striving to maintain profitability A mixture of higher claims frequency and reduced uptake have hit profitability Claims frequency has risen in recent years The macroeconomic environment is becoming benign but regulatory pressures are increasing The UK is emerging from one of its longest recessions in 60 years Unsteady growth means that consumers are wary of new debt The Bank of England's base rate is a mixed blessing for the creditor insurance market High unemployment is hitting profits The unemployment rate will increase claims frequency and duration The recession has increased personal insolvencies Penetration rates THE PPI MARKET BY PRODUCT Introduction Credit card PPI has declined and may fall further Credit card PPI GWP declined to £429m in 2010 Credit card PPI has been a profitable product over the last few years Credit card numbers and total balances remain low Credit card penetration has fared better than other products In 2010 the mortgage PPI market fell to £234m in GWP First and second charge mortgage PPI have been affected very differently The mortgage market is recovering unsteadily Flat mortgage approvals offer little respite for MPPI providers House repossessions remain high Government schemes are competing with MPPI Claims frequency is rising slowly for MPPI Motor finance PPI Car sales are still declining, albeit very slowly Car finance will remain steady Personal contract purchase agreements and hire purchase deals declined up to 2010 Used car financing has a higher reliance on hire purchase, although PCPs are gaining ground Retail finance PPI has fallen but should stabilize soon GWP for retail finance protection was £34m in 2010 Gross advances are diminishing as consumer appetite for credit shrinks Retail balances remain high Overdraft PPI remains a small market Overdraft creditor insurance is estimated to have held up throughout the recession CUSTOMER FOCUS Introduction Advertising spend has decreased Low marketing spend emphasizes the importance of direct channels Advertising methods indicate the sales-driven nature of creditor insurance The need for PPI is still strong Outstanding balances may have shrunk but many consumers still have debts Outstanding debts may have reduced, but consumers are struggling to repay loans Worries about unemployment and personal financial troubles prevail The economy appears to be recovering but consumer confidence is still very low REGULATION Introduction Current regulation means an ongoing challenging environment The FSA has launched new regulation which will take effect in April 2010 has seen a wholesale reshaping of the PPI landscape Distributors are suffering under the new guidelines High street banks are setting aside billions to cope with PPI claims Redress figures are already high Fines will add to costs Redress payments will cause the greatest losses for firms, but fines will also play a part in depressing profits New complaints procedures will add to costs New FSA complaints procedures will continue to increase firms' expenses Face-to-face, single premium sales will represent a large portion of the redress Claims management companies will increase the volume of claims Speed of settlement will minimize costs Claims will need to be dealt with quickly to minimize costs Insurers will be challenged in 2011 2011 will be very difficult for market players COMPETITIVE DYNAMICS Introduction Market turmoil has affected all participants Many firms have withdrawn from the PPI market The personal loan PPI market has seen large losses Larger banks are still wary of selling PPI Short-term income protection will play a part in replacing PPI Barclays is looking to reshape its protection lines Aviva has launched an income protection product to provide premium growth Assurant Solutions provides PPI alternatives that are underwritten at the point of sale Providers of credit still advertise PPI alongside loan products Independent distributors still provide many types of PPI Aviva is the largest PPI provider with a 28% market share Aviva brought £354m in GWP in 2009 PPI products are increasingly commoditized Aggregators are the main method of purchasing PPI following the POS prohibition THE FUTURE DECODED Introduction The next two years will be key for the PPI market 2012–13 will be decision-making time Regulation will have the greatest impact in 2011 and 2012 Gross lending is expected to increase, supporting creditor GWP growth in the long term Regulation will have its biggest impact on the market in the next two years The three regulatory bodies will each have a different effect The CC's remedies package will have the greatest impact on the PPI market The ruling that customers can be compensated for past mis-selling will cause losses in many firms Stable scenario forecasts a positive outlook in the long term Once regulatory changes come to an end, credit-based growth will be possible Datamonitor expects that the UK consumer credit market to grow slowly in 2011–12 Credit card PPI growth will be dependent on supplier relationships Personal loan PPI will suffer from bad press but growth is possible in 2013 The overdraft PPI market will see little change Motor finance PPI is unlikely to grow Retail finance has the potential to grow significantly Most product lines will begin to improve in 2013 The economic environment will improve but growth will continue to be unsteady Stable scenario forecasts The market will continue to shrink under the "decline" scenario Regulatory changes will deter firms from investing and reduce penetration Personal loan PPI will suffer badly under the new restrictions Retail finance will continue to record low sales volumes Motor finance PPI will cease to exist as a market The overdraft PPI market will see little change Credit card PPI may give way to short-term income protection The reputation of PPI will be damaged irreparably Decline scenario forecasts APPENDIX Definitions Bank of England base rate Balances outstanding Compound annual growth rate Consumer credit Gross advances Second charge mortgages Motor finance products available at the point of sale Overdraft Personal loans arranged at the point of sale Redress claims Remortgaging Retail finance products available at the point of sale Premium income measures Methodology Market size Competitive dynamics Consumer Credit Forecasting Model Further reading Ask the analyst Datamonitor consulting Disclaimer [Inhaltsverzeichnis ausblenden] |
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