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Table of Content EXECUTIVE SUMMARY Protection has reached a new normal and needs to be reinvigorated Key findings Critical success factors
MARKET DYNAMICS Introduction The protection market has seen major changes Protection is sold not bought, making advisors gatekeepers to the market Contract levels have reduced due to the RDR Banks have retrenched to core business and reduced their advisory capabilities Protection products are exhibiting varying performance levels IP and CII account for a mere 7.2 % of the total protection market Prices rises have sustained the market The IP sector has struggled to recover its 2012 market position The product offers significant benefits, but awareness and engagement is low Confusion exists about the types of cover The application process is long Little is done to spread the word on policy benefits CII penetration is very low, and has been declining Issues affecting IP also impact CII take-up The impact of ill health is well publicized CII is more likely to be added to another protection product The product has received negative press regarding claims Like IP, the CII sales process is long With-rider products significantly expand the CII market Half of mortgage-related term assurance has CII added The group life market can detract from individual protection Pressure from new regulation is currently minimal The protection market is out of the spotlight for now All quiet on the regulation front RDR has effectively excluded less-affluent consumers from the market Subtle social change is taking place, while a lack of proactive customer engagement means the market is stalled Industry disruption has been catching its breath Insurers are focused on operational pressures
PRODUCT DISTRIBUTION TRENDS RDR has changed the distribution landscape for protection products The total protection market picture reveals the collapse of restricted advice However, the premiums story shows the value of advice Frustrations are creeping in among advisors IP is still a product that needs advisors The restricted advice channel has shrunk The independent channel provides more value per contract The independent advice channel has shrunk back from CII The restricted advice channel has held firm Pure direct channels are gaining ground More changes are afoot in the advice market Is it an advice gap or a guidance gap?