Abstract
Overview
Introduction
A comprehensive analysis of the UK bancassurance market in 2007, providing a
definitive guide to current trends including size, growth, the competitive
landscape, and the effects of key issues such as recent regulation, and
changes in distribution on the evolving segmentation and future development of
the market.
Scope
- Uses data from the ABI and Datamonitor' s proprietary distribution models
to size and segment the bancassurance market
- Examines the current shape of the bancassurance market and explores the
factors that are currently limiting banks' ability to sell investment products
- Assesses the key changes to the business model that are needed for future
success in the bancassurance market
Report Highlights
Although the commodity sale of protection products may be attractive to
bancassurers, the most profitable business is conducted in the investment side
of the market. However many banks lack the reputation on the life and pensions
side of the business and have not built up the confidence in their customer
base.
For banks there needs to be a two-pronged approach to selling bancassurance,
firstly teller staff need to be trained to identify potential targets and
secondly advisors need to be skilful in identifying needs and completing sales.
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
Table of Contents
- Overview
- Table of Contents
- Table of Figures
- Table of Tables
- Market Focus
- The bancassurance share of the life and pensions market has been
declining in 2006
- Bancassurers have grown their life business, but not as strongly as
other distribution channels
- Bancassurers have been lagging behind in the single premium life
business
- Unit linked and distribution bond products now dominate the total
single premium life market
- Bancassurers focus their sales efforts on unit-linked and guaranteed
equity bonds
- The endowment mortgage crisis has taken its toll on regular premiums
- Bancassurers have done much better than other distribution channels
for regular premium products
- The bancassurers' pensions business has seen substantial change
- Bancassurers have moved away from single premiums in the
distribution of pensions products
- Single premium income has been driven by SIPPs and personal pensions
- Bancassurers have focused on stakeholder pensions
- Group personal pensions are still the motor of growth in the regular
premiums segment
- Stakeholder pensions make up 86.5% of the bancassurers' regular
premium income in the pensions segment
- The UK bancassurance market is being driven by customers, product
changes, regulation and market conditions
- The urgent need for retirement planning is shifting the balance
between products
- Baby boomers will drive growth in the pensions and investment bonds
market
- The outlook on bancassurer' s sales of pensions is still rather
guarded
- Bancassurance sales have been limited both by market conditions and
their own conflicting objectives
- Market conditions - a shaky mortgage market is adding to the woes of
protection products
- External factors are forcing banks to re-examine their product
offerings
- Changes to the capital gains tax regime may force banks to switch
offerings away from life bonds
- Slowing of the mortgage market will limit mortgage related product
sales
- Credit and debt can be supported by general protection product sales
- Overall, products need to be simplified to appeal to the bancassurance
client base
- Banks must sell products that best appeal to their target customer
base
- Meet RDR requirements for both product design, distribution and
service
- Banks must simplify the selling and the buying process
- Successful sales processes rely on the teller staff
- Simplifying the buying process and improving the buying experience
- A longer tem goal is for advice to become separated from the product
- Competition in the bancassurance market is fought on two fronts - the
financial advice market and from within their own sector
- Correctly using the extensive customer information that banks hold
- Building trust and changing customer perceptions
- Bancassurers are lacking the focus required to challenge the IFA
channel
- Attaining the focus on bancassurance will be a challenge for banks
as they have conflicting objectives
- Competition from within the bancassurance sector is fierce
- Differentiation from the product side is difficult to achieve
therefore service and execution excellence must be the goal
- Successful application of technology is an ongoing challenge for
bancassurers
- The mass affluent sector of the baby boomer customer base should be
the focus for bancassurers
- "Thriving 40s and 50s" are currently the most important customer
group
- Customer apathy is a great challenge
- The Northern Rock affair has rocked consumer confidence
- The bancassurance market is forecast to grow with unit-linked bonds
continuing to dominate
- Bancassurance will continue to be dominated by unit-linked bonds and
mortgage-related and savings-related term assurance
- Multi-tie as a bancassurance business model is set to grow in importance
- Competitor Focus
- Introduction
- Strategies for success for UK bancassurance competitors
- Maximizing opportunities through the mortgage lending side of the
business
- Develop reputation in the investment arena
- Quality of teller staff and advisors must be boosted and maintained
- Revive branch network - it is not only the number of branches that is
important
- Successful customer segmentation is vital and is too often ignored by
bancassurers
- The business model chosen is largely irrelevant to customers
- The business model adopted does not affect customers but is important
from an operational strategy perspective
- Partnerships and multi-tie deals have failed to change the shape of
the bancassurance landscape
- Acquisitions of life companies by banks have not become a widespread
strategy
- Own product manufacture remains a sensible strategy for larger scale
businesses
- APPENDIX
- Product definitions
- Life based savings products
- Life Assurance
- Single Premium Life
- With-profit bond
- Unit-linked bond
- Income and growth bonds
- Guaranteed Equity bonds
- Distribution bonds
- Purchased Life Annuities
- Other bonds
- Annual Premium Life
- Endowment Policy
- Whole of Life Insurance
- Term Assurance
- Income Protection
- Critical Illness
- Collective Life
- ISAs
- 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
- Matrix-Data definitions
- IFA firm types
- Grossed Annual Aggregate Turnover
- IFA sales people
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Forecasted gross advances in the UK residential market under
the Datamonitor View, 2006-11f (£m)
- Table 2: Forecast single premium life sales through the bancassurance
channel, 2007-11, £m APE
- Table 3: Forecast regular premium life sales through the bancassurance
channel, 2007-11, £m APE
- Table 4: Forecast single premium pensions through the bancassurance
channel, 2007-11
- Table 5: Forecast regular premium pensions through the bancassurance
channel, 2007-11, £m APE
- Table 6: HBOS sales of investment and protection products 2005-06, £m
APE
- Table 7: Number of UK retail bank branches, 2004-06
- Table 8: Historic single premium life new business premiums through
bancassurance 2002-06
- Table 9: Historic regular premium life new business premiums through
bancassurance 2002-06
- Table 10: Historic single premium pensions new business premiums
through bancassurance 2002-06
- Table 11: Historic regular premium pensions new business premiums
through bancassurance 2002-06
- Table 12: Total life and pensions new business premiums through the
bancassurance channel split by single-tie and multi-tie
- Table 13: New business premiums through the multi-tie bancassurance
channel split by product group, £m APE
- List of Figures
- Figure 1: Bancassurers have been unable to match the growth rates in
the life and pensions markets over the past five years, 2002-06
- Figure 2: Single premiums have seen strong growth in the life segment,
2002-06
- Figure 3: Unit-linked bonds have gone through stunning growth in the
last 5 years, 2002-06
- Figure 4: Bancassurance is remarkably strong in Guaranteed Equity
bonds, 2002-06
- Figure 5: Bancassurers have done better than the total market in
mortgage related products, 2002-06
- Figure 6: Bancassurers have been able to increase their regular
premium business in the pensions segment, 2002-06
- Figure 7: SIPPs have become the second most important premium
generator, 2002-06
- Figure 8: Stakeholder pensions make up almost half of the
bancassurers' premium income from single premium pension products, 2006
- Figure 9: Group personal pensions continue to be the motor of growth
of regular premium pension products, 2002-06
- Figure 10: Stakeholder pensions dominate the bancassurers' regular
premium income, 2006
- Figure 11: Gross lending in the UK mortgage market is forecast to fall
to £335.7 billion in 2008
- Figure 12: Legal & General' s banking partnerships provides access
to over 40 million bank customers
- Figure 13: Unit-linked bonds are forecast to continue to dominate
single premium life sales by bancassurance
- Figure 14: Mortgage-related and savings-related term assurance is
forecast to continue to dominate regular premium life sales through the
bancassurance channel
- Figure 15: Stakeholder pensions are forecast to continue to dominate
the single premium pensions market through the bancassurance channel
- Figure 16: Forecast regular premium pensions through the bancassurance
channel, 2007-11
- Figure 17: Multi-tie business is due to grow to £328m APE by 2010
- Figure 18: Single premium life sales will dominate the multi-tie
bancassurance channel
- Figure 19: HBOS sales of investment and protection products 2006-07
- Figure 20: Overall the number of bank branches in the UK fell by 6%
between 2004 and 2006
- Figure 21: Lloyds TSB type of retail distribution by channel
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