Overview

Introduction

A comprehensive analysis of the UK bancassurance market in 2006, providing a definitive guide to current trends including size, growth, the competitive landscape, and the effects of key issues such as depolarization, recent regulation, and changes in distribution on the evolving segmentation and future development of the market.

Scope

• Historic data from the Association of British Insurers (ABI) is used to size the market and the main distribution channels in the UK
• Four product categories are examined in particular: single premium life, regular premium life, single premium pension and regular premium pensions
• Provides forecasts for distribution, focusing on the proportion of new business that will come through the new multi-tied channels
• Interviews with senior individuals within the bancassurance market underpin in-depth analysis

Report Highlights

IFAs still dominate the life and pensions distribution market in the UK but bancassurers have gained market share

HBOS Group, having responded to depolarization with a gap-filling approach, remains the dominant figure in the UK bancassurance market

Despite continuing growth in the last three years, the UK bancassurance sector will not pose a significant threat to IFAs in the next five years

Reasons to Purchase

• Access Datamonitor expertise, detailed analysis, and extensive primary research to gain an insight into the complexities of the current market
• Identify the current changes taking place in the distribution landscape, and the issues and developments facing the bancassurance channel
• Understand the future of the market, and the way in which the bancassurance channel is likely to develop over the next five years

• CHAPTER 1 EXECUTIVE SUMMARY
  • Distribution landscape
  • Competitors and market landscape
  • Distribution trends
  • The future decoded
• CHAPTER 2 DISTRIBUTION LANDSCAPE PRODUCT SUITE
  • UK Distribution Overview 2006
  • UK IFAs 2006
  • UK Bancassurance 2006
• CHAPTER 3 INTRODUCTION AND METHODOLOGY
  • Scope of the report
    • Data
  • Report structure
• CHAPTER 4 DISTRIBUTION LANDSCAPE
  • Introduction
  • Key findings
    • Channel definitions for the distribution of life and pensions products, 2006 onwards
      • IFA/whole-of market advisors
      • Multi-tie financial advisor
      • Single tie (other than bancassurance)
      • Single tie bancassurance
      • Multi-tie bancassurace
      • Non-intermediated
  • Sales of life and pensions products via bancassurance route
    • IFAs still dominate the life and pensions distribution market in the UK but bancassurers have gained market share
    • Sales of life products are on the increase while pensions business is stagnating
    • UK Bancassurers have seen more growth in single premium life than regular premium life sales in the last two years
    • Unit-linked bonds and ditribution bonds sales have risen in 2005
    • Contrary to market trends and expectations, bancassurers have significantly increased sales of mortgage related products in 2005
    • Bancassurers are selling more regular premium pensions than single premium pensions
    • Stakeholder pensions remain by far the most popular form of regular premium pension
  • Data Tables
• CHAPTER 5 COMPETITORS AND MARKET LANDSCAPE
  • Introduction
  • Key findings
  • Which are the largest banks and building societies?
  • Which banks do the most bancassurance business?
  • Key trends in the UK bancassurance market
    • HBOS continues following the gap-filling approach
      • HBOS's proposition focuses on simplicityof products
    • Barclays leads the way in multi-tie bancassurance
    • HSBC reaffirms its faith in the bancassurance concept
    • Lloyds TSB's bancassurance model proves successful
    • Abbey's polarization status changed from ownership to single-tie
    • Nationwide is committed to keeping the exisiting business model
    • Other competitors
  • Key trends in other European markets
    • There are lessons that can be learnt from Continental Europe
    • In mainland Europe the predominant bancassurance models are the ownership/captive-model and the joint venture model
      • Italy has seen strong growth in bancassurance in recent years
      • France is the largest European bancassurance market in terms of insurance premiums earned through bank branch networks
      • Spain's bancassurers satisfy the demand for simple products
  • Data Tables
• CHAPTER 6 DISTRIBUTION TRENDS
  • Introduction
  • Key findings
  • Bancassurers face increasing regulatory changes
    • A-day has had only limited impact on UK bancassurance market
      • The mass market may benefit from A-Day changes in the long-term
      • The distribution channel most affected by A-Day were IFAs
      • Bancassurers were also affected by A-Day, though to a lesser extent
    • Sandler Products failed to take off despite marketing campaign
    • Treating Customers Fairly (TCF) has added regulatory burdens
    • The outcomes of the Pensions Commission Recommendations are still unclear
    • Depolarization is not catching on as fast as originally anticipated
      • Depolarization may be of benefit to bancassurers on the long-term
    • MiFID is expected to have less impact on bancassurers
  • Main issues in technology are outsourcing and the Internet
    • Bancassurers are aware of the importance of the Internet
    • HSBC adds outsourcing deal to bancassurance repertoire
  • Providers seek to diversivy their distribution strategies
    • Barclays has entered a strategic partnership with Standard Life
    • Aviva is looking to expand business online and abroad
    • Legal & General keeps a strong position in UK bancassurance
    • The future provider landscape could be split into three categories
  • Customers are becoming more financially sophisticated
• CHAPTER 7 THE FUTURE DECODED
  • Introduction
  • Key findings
  • Datamonitor forecasts moderate bancassurance growth in the next five years
    • Sales of single premium life products via multi-tie bancassurance will grow significantly over the next five years
    • Regular premium life is the only segment to decline over the next five years
    • The single premium pension segment is dominated by other distribution channels, first and foremost IFAs
    • Sales through the single-tie bancassurance channel will decline marginally over the next five years
  • In terms of strategy, bancassurers should focus more on the customers
  • Data Tables
• APPENDIX
  • Definitions
    • Single premium policy
    • Regular premium
    • New business
      • Wrap accounts
    • Life based savings products
    • Life Product Definitions
      • Life Assurance
    • Single Premium Life
      • With-profit bond
      • Guaranteed Equity bonds
      • Distribution bonds
      • Purchased Life Annuities
      • Other bonds
    • Annual Premium Life
      • Endowment Policy
      • Term Assurance
      • Income Protection
      • Critical Illness
      • Collective Life
      • ISAs
    • Pension product definitions
      • Personal Pensions
      • Stakeholder Pensions
      • Group personal pensions
      • DSS Rebates
      • Employer Sponsored Stakeholder pension (ESS)
      • SIPPs (Self Invested Personal Pensions)
      • FSAVC (Free-Standing Additional Voluntary Contributions)
    • ABI definitions of distribution channels
      • Independent Financial Advisors (IFAs)
      • Direct sales forces
      • Tied agents
      • Multi-tied agents
      • Bancassurance
      • Direct marketing
      • Telesales
      • Other
  • Forecasting methodology
    • Regression analysis is unsuitable for Life and Pensions forecasting
    • Datamonitor uses a qualitative forecasting methodology for Life and Pensions
  • Further readings
    • Savings and Investments SPP
      • Interactive Databases
      • Reports
      • Briefs
    • Life and Pensions SPP
      • Interactive Databases
      • Reports and Briefs
    • Financial Advice Market SPP
  • SPP writing team
  • List of Tables
    • Table 1: Total life and pensions market segmented by distribution channel, 2001-2005
    • Table 2: Total life and total pensions business sold through the bancassurance channel 2001-2005
    • Table 3: Sales of life products through the bancassurance channel 2001-2005
    • Table 4: Single premium life product sales through the bancassurance channel segmented by product type 2004 - 2005
    • Table 5: Regular premium life product sales through the bancassurance channel segmented by product type 2004 - 2005
    • Table 6: Sales of pension products through the bancassurance channel 2001 - 2005
    • Table 7: Regular premium pensions product sales segmented by product type 2004 - 2005
    • Table 8: Single premium pensions product sales segmented by product type 2004-2005
    • Table 9: Distribution status of top banks and building societies, 2006
    • Table 10: Size of bancassurer by value of new business premiums gained through the bancassurance channel
    • Table 11: New business: total individual life insurance, 2004
    • Table 12: Total UK life and pensions sales forecasts, 2006f-2010f
    • Table 13: Single premium life forecasts, 2005f-2010f
    • Table 14: Regular premium life forecasts, 2005f-2010f
    • Table 15: Single premium pension forecasts, 2005f-2010f
    • Table 16: Regular premium pension forecasts, 2005f-2010f
    • Table 17: Share of total life and pensions market by sector, 2006f-2010f
  • List of Figures
    • Figure 1: Bundling structure of UK Distribution Landscape 2006
    • Figure 2: UK Bancassurance 2005 report structure
    • Figure 3: IFAs are still the most dominant players but banks catch up
    • Figure 4: Sales of life products show strong recovery while pensions business is stagnating
    • Figure 5: Bancassurance did not suffer as badly as other distribution channels between 2002 and 2003
    • Figure 6: Bancassurers saw more growth in single premium life than regular premium life business in recent years
    • Figure 7: Unit-linked bonds and distribution bonds sales increased in 2005, contrasted with the decline of guaranteed equity bonds
    • Figure 8: Contrary to market trends, bancassurers have significantly increased sales of mortgage related products in 2005
    • Figure 9: Bancassurers' sales of regular premium pensions have broken the downward trend in 2005
    • Figure 10: Stakeholder pensions remain by far the most popular form of regular premium pension
    • Figure 11: In 2005, stakeholder pensions emerged as most popular form of single premium pension
    • Figure 12: Barclays has the largest branch network of all banks and building societies in the UK
    • Figure 13: HBOS is the dominant player in the UK bancassurance market
    • Figure 14: Halifax's website offers customers the ability to purchase and administer several life and pensions products online
    • Figure 15: Barclays and Standard Life cooperated in launching an online pension term assurance product direct to customers
    • Figure 16: Distribution channels of total individual life insurance new business vary strongly across European countries
    • Figure 17: Important areas of change in the UK distribution market
    • Figure 18: The Treating Customers Fairly initiative is modeled around five key principles
    • Figure 19: Bancassurance will see moderate growth in the next five years
    • Figure 20: Sales of single premium life products via multi-tie bancassurance will grow significantly over the next five years
    • Figure 21: Regular premium life is the only segment to decline over the next five years
    • Figure 22: The single premium pension segment is dominated by other distribution channels, first and foremost IFAs
    • Figure 23: Sales via single-tie bancassurance will decline at a marginal rate of 1% compounded annually over the next five years
    • Figure 24: "Quasi-Delphi" forecasting technique