UK Critical Illness and Income Protection 2007

Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
Market Focus 2
Sector Issues 2
Competitor Issues 3
Distribution Dynamics 3
Market Focus 8
This report examines the UK individual Income Protection and Critical Illness Insurance market 8
Income Protection continues to play a niche role in the UK protection market 10
Both CII and IP continue to see declining sales in terms of policy numbers 12
Business in force is an important measurement of lapse rates in the market 15
The total UK protection market is forecast to grow by a compound annual rate of 2.6% between 2007 and 2011 18
Sector Issues 20
The ABI introduced a new and improved Statement of Best Practice for Critical Illness Cover 20
The Income Protection Task Force seeks to raise awareness about Income Protection Insurance 22
Income protection has huge potential but is still a relatively complicated product 25
Competitor Issues 28
In CII, the top 5 players share more than 50% of the UK market among them 28
In IP, the top 5 players share almost two-thirds of the UK market among them 29
Providers try to adapt and enhance their products to meet regulator and customer needs 31
Distribution Dynamics 36
IFAs continue to dominate the income protection market 36
After an initial surge, new business of critical illness through tied channels has declined since 2004 38
Multi-tied financial advisors are forecast to seize a reasonable proportion of the income protection market over the next 5 years. 39
IFAs will retain their dominance of the stand alone critical illness market 41
Appendix 44
Definitions 44
Further reading 45
Ask the analyst 45
Datamonitor consulting 45
Disclaimer 45


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Table 1: New business premiums in individual protection, 2002-2006, £m APE 12
Table 2: Total number of premium sales for individual IP and individual CI policies, 2002-2005 14
Table 3: Income protection new business vs business in force 2001-2005 16
Table 4: Critical Illness new business vs business in force, 2001-2005 £m 17
Table 5: Forecast individual protection products 2007-2011, £m 19
Table 6: Top 5 players in the CII market in terms of numbers of policies sold in 2005 and previous ranking 29
Table 7: Top 5 players in the IP market in terms of numbers of policies sold in 2005 and previous ranking 30
Table 8: Income protection distribution 2002-2006, £m APE 37
Table 9: Stand alone Critical illness distribution 2002-2006, £m APE 39
Table 10: Forecast income protection distribution 2007-2011, £m APE 41
Table 11: Forecast stand alone critical illness distribution 2007-2011, £m APE 43



Figure 1: Income Protection continues to play a niche role in the UK protection market 11
Figure 2: Accelerated and standalone CII policies have both been experiencing poor sales performances 13
Figure 3: Individual IP sales saw further declines in 2005 but not as strong as a year earlier 14
Figure 4: Income protection new business vs business in force 15
Figure 5: Critical Illness new business vs business in force 16
Figure 6: New business in stand-alone critical illness products is forecast to increase by a compound annual rate of 5.7%. 18
Figure 7: In CII, the top 5 players share more than 50% of the UK market among them 28
Figure 8: In IP, the top 5 players share almost two-thirds of the UK market among them 30
Figure 9: Bancassurers have lost a significant proportion of market share in the income protection market 36
Figure 10: Single ties sales of Critical illness have declined since 2004 38
Figure 11: Multi-tie financial advisors are forecast to make inroads into the income protection market between 2007 and 2011 40
Figure 12: Independent advisors will retain their majority share of the critical illness market 42




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