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The Evolving Picture of Life Assurance

The Evolving Picture of Life Assurance. Paul Cowman Category Manager- Protection Just Retirement Ltd 11 th July 2007. Agenda. Some of the issues facing the Life Assurance Market What for the future. PTA U-turn has damaged industry's reputation. Advisers wary on PTA suitability.

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The Evolving Picture of Life Assurance

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

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

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

  4. Some of the issues CONSUMERS Access • Confusion over which product they need • Don’t fully appreciate their shortfalls • Negative press • Reduced desire to buy • Think State will provide • 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 ADVISERS INSURERS/REINSURERS • 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

  5. Protection sales some green shoots • Following two years of reducing Term Assurance sales this year we have seen a marginal increase of 3.7% almost 1.643 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 2005. • 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 Datamonitor Forecast ABI Source: UK Term Assurance 2005 How much of the business written is replacement business Source: Swiss Re Term and Health Watch 2007

  6. Life Assurance Protection Gap £tr £2.3 £2.2 £2.0 2002 2003 2004-06 Income Protection Gap £bn Need for protection has never been greater • 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. Who is selling what

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

  9. The opening up of whole of life protection to ICOB advisers 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.

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

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

  12. Breakdown of Population by Age Source: Government Actuary’s Department/ Population Trends

  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. 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. Designing Customer Centric Propositions Customer

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