A presentation to the Protect Association on 26/9/12

1. Bridging the Protection
Gaps - a simple
solution?
Ron Wheatcroft, Protect 26 September 2012

2. Agenda
 The Protection Gaps - ten years on
 Market performance - individual business
 Market performance – group risk business
 The future?
 Consumer expectations
Ron Wheatcroft | Protect 26 September 2012 2

3. The Protection Gaps –
ten years on
Ron Wheatcroft | Protect 26 September 2012 3

4. The Protection Gaps – ten years on
Ron Wheatcroft | Protect 26 September 2012 4

5. Individual protection
business
Ron Wheatcroft | Protect 26 September 2012 5

6. Total new individual term policy sales – split
by stand alone term and term with CI rider, 2007 - 2011
1,800,000
1,600,000
482,103
503,352
476,060
523,881
1,400,000
462,751
1,200,000
1,000,000
1,059,827
1,037,446
1,031,625
985,144
964,225
800,000
600,000
400,000
200,000
0
2007 2008 2009 2010 2011
Stand alone term Term with ACCI Year
Ron Wheatcroft | Protect 26 September 2012 6

7. Total new individual whole life policy
sales, unit-linked, non-linked and guaranteed
acceptance plans, 2007 - 2011
450,000
400,682
400,000
371,467
350,000
318,078
300,000 282,438
250,000
219,362
200,000
150,000
100,000
50,000
0
2007 2008 2009 2010 2011
Year
WL sales
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8. Total new individual income protection
policy sales, 2007 – 2011
140,000
126,815
120,000 117,288
111,780 110,743 110,472
100,000
80,000
60,000
40,000
20,000
0
2007 2008 2009 2010 2011
IP sales Year
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9. The individual protection market
 2011 sales figures flat with the exception of new whole life sales (largely
guaranteed acceptance)
 Individual term sales impacted by sluggish mortgage market
 Retail IP - a lost cause?
Ron Wheatcroft | Protect 26 September 2012 9

10. Group risk business
Ron Wheatcroft | Protect 26 September 2012 10

11. Group risk in force premium income (premiums
rounded to the nearest £1,000)
Product 2007 2008 2009 2010 2011
Group life 910,775,162 945,210,629 897,285,619 918,635,231 956,074,087
Group CI 37,230,015 45,403,103 48,393,386 50,252,281 55,005,102
Group IP 640,931,111 648,902,366 567,971,284 517,385,394 517,995,843
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12. The group risk market
 Has consistently provided around 40% of all insured death benefits in the
UK
 Now provides 75% of all insured income protection benefits (has risen
from 70% in 2002)
 In addition, a number of employers choose to retain some or all of the
cover promised to their workforce
 Group CI is a small, but growing, market – is this the simplicity of the
message?
 Around 10% of all premiums are now flex or voluntary
Ron Wheatcroft | Protect 26 September 2012 12

13. The future
 RDR good for protection sales?
 Gender-neutral pricing - buy now while stocks last – but what next?
 I-E
 Mortgage Market Review
 The Dilnot Review into social care funding
 Auto-enrolment - impact on employers and employees
 The EU agenda – IMD2, extending the gender ban to age and disability?
 Financial exclusion - simple products? How to turn on consumers
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14. Consumer expectations
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15. Whose responsibility is it today?
Nursing care for the very old 80% 2% 10% 8%
Income during long-term illness 63% 12% 16% 9%
Rehabilitation and convalescence 63% 4% 22% 11%
Income after redundancy 55% 16% 21% 9%
Income in retirement 47% 12% 32% 9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ron Wheatcroft | Protect 26 September 2012
Government Employer Individual Don't know

16. Whose responsibility in 10 years’ time?
Nursing care for the very old 35% 2% 45% 18%
Income during long-term illness 31% 7% 44% 17%
Rehabilitation and convalescence 27% 3% 52% 19%
Income after redundancy 27% 8% 47% 17%
Income in retirement 23% 6% 55% 16%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ron Wheatcroft | Protect 26 September 2012
Government Employer Individual Don't know

17. Which insurance products or benefits
do you have?
60%
50%
40%
30%
20%
10%
0%
Life insurance Critical illness Death-in-service Income protection Mortgage-payment Full pay from None of the above
benefit protection employer if
ill/ disabled
2009 2011
Ron Wheatcroft | Protect 26 September 2012

18. What’s your main reason for not
buying life insurance, critical illness
60%
cover or income protection?
50%
40%
30%
20%
10%
0%
Can't afford it Don't need it Haven't thought Haven't got Don't trust Difficult to Have enough My employer
about it around to it yet insurance calculate how insurance pays for it
companies much cover you already
-10% need
Ron Wheatcroft | Protect 26 September Life insurance
2012 Critical illness Income protection

19. Assuming you need life insurance cover of £100,000 how much
would you be willing to pay for this a month?
60%
50%
40%
30%
20%
10%
0%
£0 - £5 £6 - £10 £11 - £15 £16 - £20 £21 - £25 £26 - £50 £51+ Don't know
Ron Wheatcroft | Protect 26 September 2012

20. "Insurance needs to be
honest, clear and jargon free."
"Providers need to be seen to
be working with you, providing
a product where both of you
would get some value."
"If anyone’s telling you
anything, you’ve got to
Ron Wheatcroft | Protect 26 September 2012
understand the benefits of
having it."

21. Bridging the Protection
Gaps - a simple
solution?
Ron Wheatcroft, Protect 26 September 2012

22. Thank you