Abstract
The income protection (IP) market has been in decline for several years now, and is vastly outsold by similar protection products such as critical illness cover (CIC) and mortgage payment protection insurance (MPPI). This report explores the reasons behind this shift, and the steps that the industry and regulatory bodies are taking to address the problem.
Product complexity and underwriting issues are said to be one of the key reasons that IP has experienced such weak sales. This has lead to consumer (and advisor) confusion over the product itself. In addition to this is the perception that IP is an expensive product, coupled with a media-provoked image that protection insurance policies do not pay out. In spite of its many problems, encouraging signs of a market revival have started to emerge, and a number of providers are starting to turn their attention towards IP. As a result, some new and innovative products that address a number of these problem areas are starting to come through. There is still a long way to go, but the signs are pointing in the right direction, and 2008 is starting to look like it may be ' the year for income protection' .
This report comprehensively covers the IP market in the UK (which was historically known as long-term disability insurance or permanent health insurance). In writing this report, Mintel has questioned several key IP providers to verify market trends and to gather detailed information relating to the protection insurance industry. The current issues affecting the IP market are looked at in detail, as well as data relating to the size and growth of the market. Some of the key players in the market are also reviewed in terms of their structure, market share, and recent developments within the industry. In the final section of the report, exclusive consumer research is examined in detail, in light of specific demographic and attitudinal trends, and the insights this points towards.
IMPORTANT: A number of mainstream, general insurance companies, offer what they call ' income protection' , but which is actually short-term, non-mortgage related, accident, sickness and unemployment insurance (ASU), also referred to as payment protection insurance (PPI). The scope of this report does not extend to these products. The principal difference between ASU and long-term IP as covered in this report, is that firstly, ASU covers unemployment, and secondly, ASU will only pay benefits for a period of 1-2 years. Furthermore, unlike ASU, the domain of IP tends to be more associated with specialist protection providers as well as the large life and pension companies.
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