Reviewing the protection landscape
- Review. A basic review of the protection landscape.
- Plan. Build in the factors that advisers say drive protection success.
- Do. Two-stage delivery - robust business case and execution.
Reviewing your world might include assessing the market (covered in this article) and your own capability (not covered here).
You are an insurer who wants to improve its protection products, volumes or profits.
A good first step is to review the landscape. Who are your competitors and what advantages do they enjoy over you? Can you secure the improvement you want?
This article segments the market and gives predictions.
Market segmentation and predictions
The segments are broadly based on total new business premiums (not restricted to the IFA market) and activity as measured by specialist press coverage.
Companies in segments 1-3 distribute (at least) via the IFA market. The focus in segments 4-5 moves beyond IFA distribution, although some segment 4 insurers also use the IFA channel.
Differences between insurers as we move from segment 2 to segment 3 include:
- size (premium income)
- product range
- resources (number of protection staff)
- operational and technical expertise
- underwriting automation
- use of reinsurance
Segment 1: top six companies with full product ranges. For 15+ years L&G has been top, followed by Aviva. Then, in alphabetical order, there's AIG, Royal London, Vitality and Zurich.
Prediction 1: L&G will remain top and Aviva second. This is due to their resources, deep technical and operational expertise and diversified distribution. They will be hard to shift.
Prediction 2: occupancy of positions 3-6 in segment 1 will permute. This has been going on for a few years now. I am not quite so confident of this, as companies have different strengths.
Segment 2: others with full product ranges. Long-term incumbents Aegon and LV= have been joined by four entrants and re-entrants: Canada Life, Guardian, HSBC and Scottish Widows.
Prediction 3: there will be no breakthroughs into segment 1. Long-standing players have not given protection enough focus and the success of more recent entrants – or re-entrants – is unclear.
Prediction 4: there will be more exits from segment 2. Old Mutual Wealth has already closed to new business and I think we’re likely to see two more.
Segment 3: Friendly Societies with more limited product ranges. These include British, Cirencester, Holloway, and Shepherds Friendly Societies. OneFamily and The Exeter are different.
Read more in Friendly focus.
Prediction 5: two Friendly Societies will develop enhanced protection offerings. This means menu-based plans including life and critical illness products.
Segment 4: Aggregator insurers. This includes an array of very different insurers beyond (but including some of) the insurers in segments 1-2. Segment 4 is not considered further here.
Segment 5: Direct to Consumer and non-participants. Reviti and Dead Happy are examples of D2C companies. There are many non-participants.
Where next? Defaqto’s 2020 Protection Service Review gives advisers’ views.