Protection Premiership 2000-2025

1. Term 2020. The market in 2020.
2. Term 2000, 2010, 2020. The top 5.
3. Critical Illness. The top 5.
4. Term 2025. Who will be top 5 in 2025?
5. Income Protection. Not yet written.
6. Whole Life. Not yet written.

The CIC top 5: 2000-2020

This article examines volumes and market shares for the critical illness cover (CIC) term market, including stand alone and accelerated covers. We name the top 5 CIC companies for 2000, 2010 and 2020, compare the term and CIC markets in 2020 and look at patterns across the years.

I would like to acknowledge and thank Ron Wheatcroft of Swiss Re for fielding a number of data queries. Any errors and views expressed here are my own.

Sales and market share of the top 5

Let’s start by looking at market volumes and the share of the top 5 across all years:

Source: TermWatch 2001-2021

Key features:

• The CIC market peaked in 2002.
• Reinsurance rate increases reduced sales dramatically.
• Policy sales have been largely static since c2008.
• The top 5 market share rose sharply over 2009-2011…
• … but has declined a little since.

The increase in top 5 market share over 2009-2011 reflects that for term, although the subsequent fall back has been less.

Splitting the top 5

We now include 5 new lines, showing the market share for each of positions 1-5:

Source: TermWatch 2001-2021

The numbers behind the 2020 part of the graph above – sneaking in the term numbers – are:

Source: TermWatch 2021

Comparing the term (life term and CIC combined) and CIC markets:

• The top 5 share is about the same.
• The same market leader dominates more for term than CIC
• Positions 2-4 exhibit “bunching” for term but not CIC.
• L&G and AIG are relatively more dominant for term…
• … and Aviva, Royal London, Vitality and Zurich for CIC.

Despite the “relatively” comment above, L&G clearly dominates both markets. This is part of an old story and recurring pattern:

Top 5: 2000, 2010, 2020

The raw CIC numbers are:

As we saw from the first graph, CIC sales boomed further over the next few years, before dropping following reinsurance and retail rate increases (see also TermWatch 2005, figure 4.1).

A reminder of the term (including CIC) numbers is below. The top 5 market share has moved broadly consistently for both term and CIC. For a given year the term/CIC top 5 share is quite similar. Later posts will show some difference for Income Protection and Whole Life.

Aside: TermWatch 2000 included life term, while critical illness appeared in HealthWatch. For consistency with 2010 and 2020 I have added in critical illness sales to term in 2000.

The 2020 top 5: market shares 2017-2020

As for term, for 2017-2020, inclusive, the top 5 insurers were unchanged.

Over 2017-2020 the top 5’s share reduced from 77.4% to 74.5%. In that context:

• L&G was always top, but its share has declined a little.
• Aviva’s share has declined more significantly, as with term.
• Royal London jumped to 3rd in 2020.
• Vitality moved from 3rd to 5th.
• Zurich has seen a little growth.

Drilling down: 2000-2020

The table below shows all insurers who have occupied a top position for any of the 21 years 2000-2020. As a check the sum of the Top5entries column is 105 = 21 * 5.

The YearExit column is set to 2020 if the company is still a top 5 player based on 2020 sales.

I do not (yet?) have individual company results for 2001 (HealthWatch 2002 anyone?) hence the "unknown" company. It also means that Aviva and L&G are shown as present for only 20 of the 21 years. I am confident that they are ever-presents and assume this below.

Over the time period only two companies have been ever-presents.

Aviva (originally Norwich Union) was placed anywhere from 1st to 5th between 2000 and 2011. After then Aviva has always placed 2nd or 3rd. In 2017 it doubled its market share, but has since fallen back somewhat. Its current (2020 sales) market share is almost 18%.

L&G has been almost as consistent for CIC as has been for term; ignoring 2001 (see box above) L&G placed 2nd four times (2002, 2002, 2010 and 2011) but was 1st in the other 16 years: L&G has held top position 9 years in a row. Its market share peaked at c31% in 2015 and is now c23%.

Turning to other companies:

Scottish Widows has 14 top 5 CIC placings, based mainly (and between 2007 and 2016 entirely) on bank-related sales. Over 2007-2013 it placed 1st (2010 and 2011) or 2nd. It dropped back to 4th in 2014 and has not been in the top 5 since. It re-entered the IFA protection market in 2016.

Friends Provident has 11 top 5 CIC placings. With Scottish Widows it is the only player to achieve a 10% market share in its last appearance. Friend (Life) was taken over by Aviva in late 2014.

Scottish Provident has 9 top 5 CIC placings between 2000 and 2009 – no doubt they were also top 5 in 2001. It was acquired by Abbey National in 2000, with the announcement that:

The deal will make Abbey the market leader in the fast-growing protection insurance market, including critical illness and permanent health cover.

This was probably a comment on the IFA protection, where “ScotProv” was indeed a powerhouse. Things went downhill and (eventually) Scottish Provident was acquired by Royal London in 2008. As this later acquisition was from the Pearl Group it is clear that much was happening.

Sad that Scot Prov are no longer here? You can still see this:

Source: https://www.scotprov.co.uk/why.aspx

Royal London had set up its own protection insurer, Bright Grey, in 2003. Bright Grey and Scottish Provident continued as separate brands, finally disappearing at the end of 2015. Combined sales from 2010, made Royal London a top 5 CIC player from 2010 to 2020, excepting 2013 and 2014 (the rebrands were announced in 2013). The same comments apply to term, with Royal London 5th in 2012 and 2015. They have since come back strongly, particularly in 2020.

Two companies very much still with us:

Vitality Life has been a top 5 CIC player since its first appearance in 2014, having acquired PruProtect. While critical illness is its flagship product – and Vitality can genuinely claim to have changed the market – it has fallen back from 3rd in 2016-2018 to 5th in 2020. Vitality has not yet mounted a real challenge in the life term market, meaning no top 5 term appearances to date.

Zurich has been 3rd or 4th in the CIC market since 2017 and 4th or 5th in the term market since 2015. It’s a company unique in the protection market – excepting Friendly Societies – as it uses little external reinsurance. It’s big enough to take the risk, but reinsurance has many other uses.

Finally Axa, HBOS and HSBC made few appearances, with the banks gaining market shares of between 7% and 10%. Will banks ever again be big in protection?

Where next?

My aspiration is to extend this series, giving:

1. Separate coverage of income protection.
2. Separate coverage of whole of life.
3. Views on previously influential protection insurers e.g. Scottish Provident and Bright Grey.
4. Speculation for the period 2021-2030.
5. The drivers of protection success.

I’m confident on 1 and 2 at least.