Table of Contents
- Issues in the Market
- Key issues
- Abbreviations
- Market in Brief
- The market has contracted sharply since 2005...
- Figure 1: Estimated GWP in the creditor insurance market, 2003-09
- ...with MPPI and PLPPI faring particularly badly in 2008
- Figure 2: Estimated GWP in the creditor insurance market, by sector,
2003-08
- The new CC rules are set to reshape the industry
- Consumer lending has fallen in the credit crunch
- IP and CIC may be considered alternatives to PPI
- The big banks dominate both distribution and underwriting
- Figure 3: Estimated market share of the top 12 distributors of creditor
insurance, by GWP, 2008
- Providers spend little on advertising PPI
- Policies are sold direct at the same time as a credit product
- Figure 4: Sales of new PPI policies, by distribution channel (based on
number of policies sold), 2007
- Two thirds of consumers do not have any PPI
- Figure 5: PPI ownership, April 2009
- Penetration is highest for MPPI
- Figure 6: Penetration of PPI products into the target market, April 2009
- Internal Market Environment
- Key points
- A market heavily under fire
- The conclusion of the Competition Commission' s PPI investigation
- Key implications of the review
- The end of single-premium PPI
- Likely outcomes following the report
- The FSA scrutinises variation clauses in MPPI and short-term IP...
- ...which will have a big impact on the market if it goes through
- Fines levied against providers have increased...
- Figure 7: Breakdown of fines levied against PPI providers in 2008
- ... as has the number of complaints made to the FOS
- Consumer confusion over PPI
- FSA includes PPI on its comparative tables
- PPI unemployment claims are on the rise
- Figure 8: Number of PPI unemployment claims, Sep 2007-Feb 2008 and Sep
2008-Feb 2009
- Enforcement Restriction Orders may impact the market
- Broader Market Environment
- Key points
- Lending to consumers has slowed significantly
- Figure 9: Total lending to individuals, amounts outstanding (seasonally
adjusted), 2000 Q1-2008 Q1
- Total household debt has risen alarmingly
- Figure 10: Amounts outstanding of personal sector debt (not seasonally
adjusted), and as a proportion of total PDI, 2000-08
- Gross lending fell substantially in 2008
- Figure 11: Total gross lending to individuals (not seasonally adjusted),
2000-08
- Consumer confidence stabilises
- Figure 12: Monthly UK Consumer Confidence Index, Jan 2000-Apr 2009
- Unemployment is a major cause for concern
- Figure 13: UK unemployment levels, 1994-2008
- Health concerns are also an issue
- Competitive Context
- Key points
- Income protection is the main alternative
- Figure 14: Sales of new individual IP policies, by volume and value,
2004-08
- So too is critical illness cover
- Figure 15: Sales of new individual stand-alone CIC, by volume and value,
2004-08
- SWOT Analysis
- Figure 16: Creditor insurance market SWOT analysis, 2009
- Market Size and Forecast
- Key points
- The PPI market has been in decline since 2006
- Figure 17: Estimated GWP in the creditor insurance market, 2003-09
- PLPPI accounts for about half of the overall market
- Figure 18: Estimated GWP in the creditor insurance market, by sector,
2003-08
- MPPI and PLPPI were badly hit in 2008
- Figure 19: Estimated annual GWP growth in the creditor insurance market,
by sector, 2003-08
- The point-of-sale ban posses a big threat
- Market forecast
- Ban on single-premium to cause the market to shrink by 26% in 2009
- Figure 20: Estimated size of the creditor insurance market, by GWP,
2004-14
- The post-CC era of creditor insurance
- Factors used in the forecast
- Market Segmentation
- Key points
- The size of MPPI market has declined since 2007
- Figure 21: Estimated size of the MPPI market*, by GWP, 2003-08
- Sales of new MPPI policies have fallen...
- Figure 22: Total number of new MPPI policies sold or provided free, and
as a proportion of gross new mortgage advances, 2003 H1-2008 H1
- ...as have the total number of MPPI policies in force
- Figure 23: Total number of MPPI policies in force, and as a proportion
of all outstanding mortgages, 2003 H1-2008 H1
- ASU is the most popular type of policy
- Figure 24: Breakdown of cover provided on new MPPI policies, 2004
H1-2008 H1
- PLPPI will be badly hit by the ban on single-premium policies
- Figure 25: Estimated size of the PLPPI market, by GWP, 2003-08
- CCPPI has held up relatively well in 2008
- Figure 26: Estimated size of the CCPPI market, by GWP, 2003-08
- Other PPI
- Figure 27: Breakdown of "Other PPI", by GWP and % of total market, 2006
and 2007
- Market Share
- Key points
- The big high street banks are the main distributors of PPI...
- Figure 28: Estimated market share of the top 12 distributors of creditor
insurance, by GWP, 2008
- ... and are also key players in terms of underwriting polices
- Figure 29: Estimated market share of the main creditor insurance
underwritters, by GWP, 2008
- PPI underwriting and commission structures
- Companies and Products
- The PPI market has contracted
- Banks are key players in both underwriting and distribution
- Overview of key distributors and underwriters
- Barclays
- Lloyds TSB
- HBOS
- RBS
- Cattles (Welcome Finance)
- Aviva (formerly Norwich Union)
- Different types of credit-related PPI
- PLPPI
- CCPPI
- MPPI
- Secured loan/second-charge mortgage PPI
- Retail credit PPI
- Motor loan PPI
- Overdraft PPI
- Standalone PPI does exist but is a very small part of the market
- Standalone credit-related PPI is mainly for mortgages
- Standalone non-credit-related PPI is another alternative...
- ... but this is an even smaller market
- Brand Communication and Promotion
- Key points
- PPI is a very small area of general insurance adspend
- Figure 30: Topline PPI adspend, 2004-08
- Advertising has traditionally focussed on credit card PPI
- Figure 31: PPI adspend, by sub-category, 2006-08
- Co-operative Bank was the biggest advertiser in 2008
- Figure 32: Top 10 companies advertising PPI (by total adspend), 2006-08
- Direct mail is the preferred media type
- Figure 33: PPI adspend, by media type, 2006-08
- Channels to Market
- Key points
- Changes in the way PPI is sold from 2010
- The majority of PPI sales are completed in-branch
- Figure 34: Sales of new PPI policies, by distribution channel (based on
number of policies sold), 2007
- MPPI is more likely to be sold via an intermediary
- Figure 35: Distribution channels of MPPI policies in force, H1 2004-H1
2008
- Advised PPI sales seem to result in a higher conversion rate
- The Consumer -- Product Ownership
- Key points
- Almost half of consumers have no outstanding debts
- Figure 36: Credit product ownership, April 2009
- Families are more likely to have outstanding debts
- Figure 37: Credit product ownership (popular types), by gender, age,
socio-economic group, lifestage, marital status, age of own children in
household, working status, gross annual household income, and household
tenure, April 2009
- People with multiple outstanding debts are more likely to own PPI
- Figure 38: Repertoire of oustanding credit product ownership, April 2009
- More debts -- more insurance
- Figure 39: Ownership of PPI, by repertoire of outstanding credit product
ownership, April 2009
- MPPI is the most commonly-held type of creditor insurance
- Figure 40: PPI ownership, April 2009
- Evidence of consumer confusion over PPI
- PPI ownership is low amongst young adults and older people
- Figure 41: PPI ownership, by gender, age, socio-economic group, working
status, gross annual household income, household tenure, car usage,
newspaper readership and household size, April 2009
- Car ownership and household size are also key factors
- PPI ownership has fallen since 2006
- Figure 42: PPI ownership, 2006-09
- Consumer confusion is rife when it comes to PPI
- Figure 43: Credit-product ownership, by PPI products held, April 2009
- The Consumer -- Penetration Rates
- Key points
- MPPI has the highest level of penetration
- Figure 44: Penetration of PPI products into the target market, April 2009
- Around a third of credit card and loan holders have PPI
- C2s are the best target for creditor insurance providers
- Figure 45: PPI penetration amongst active credit users, by gender, age,
socio-economic group, household income and ACORN group, April 2009
- Aim high -- but not too high
- Cross-holdings of different types of PPI
- Figure 46: Ownership of PPI products, by ownership of PPI products,
April 2009
- Appendix -- Internal Market Environment
- Creditor insurance
- CAB, Office of Fair Trading and Competition Commission investigations
- Severe restrictions placed on the sale of policies
- Treating Customers Fairly
- Consumer Credit Act 2006
- Consumer Credit Directive
- Appendix -- The Consumer -- Product Ownership
- Figure 55: Credit product ownership (popular types), by various
demographics, April 2009
- Figure 56: Repertoire of credit product ownership, by various
demographics, April 2009
- Appendix -- The Consumer -- Penetration Rates
- Figure 57: PPI ownership, by various demographics, April 2009
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