LIFE ASSURANCE PROTECTION MYIBA BLITZ December2016 7 December 2016 - PowerPoint PPT Presentation

LIFE ASSURANCE PROTECTION MYIBA BLITZ December2016 7 December 2016 Presentation info in footer 1

LIFE ASSURANCE PROTECTION Daragh Feely Head of Sales Royal London – MyIBA Blitz 2016 December 2016 2

ROYAL LONDON AGENDA • Market Overview • Irish economy • Protection market • Trends 1) Technology advancements 2) Product innovation 3) Market intelligence • New Market Opportunities Royal London – MyIBA Blitz 2016 December 2016 3

MARKET OVERVIEW Irish economy • European Commission’s Economic Forecast for Ireland • 2016 – 4.9% GDP growth • 2017 – 3.7% GDP growth • Overall EU GDP growth of 1.8% forecast for 2016 Central Bank cut it’s projected economic growth by 0.2% to 4.9% for this year and by • 0.6% to 3.6% for next year due to Brexit – despite this they still believe the economy will continue to grow steadily • Ireland’s macro position is being best represented by: • Economic recovery • Ageing population • Improving wealth in Ireland • 2012 – € 444 billion • 2015 - € 626 billion December 2016 4

MARKET OVERVIEW Irish Protection Market 2005 - 2015 180 160 140 APE € M 120 Total Protection 100 Market 80 December 2016 5

MARKET OVERVIEW • New and different competitors • VHI Life • Laya Healthcare • Irish Life Health Brokers very well positioned to take advantage of this • Ireland life assurance competitive landscape is fierce and this will continue • Life Assurance • SSI – will it/can it continue in the same vein as providers add more and more illnesses • Whole of Life cover – one to watch Royal London – MyIBA Blitz 2016 December 2016 6

TECHNOLOGY ADVANCEMENTS 1) Technological Developments a. Ongoing website improvements • Improved data • Access to online resources • Comparative portals • Total customer view • Consumer facing websites to back up recommendations b. Digital Signatures – huge increase in return rates • Adoption means no need for printers • Use for acceptance terms • Questionnaires c. Lifestyle Analysis – similar to that in the general insurance market, for example tracking devices in the car insurance market • Vitality December 2016 7

TECHNOLOGY ADVANCEMENTS 2) Reflexive Underwriting a) Information gathering has improved b) Acceptance rate at point of sale - 72% of SSI applications get a decision at point of sale c) Risk assessment d) Data capture with integrated questionnaires e) Diabetes – maintenance programme – trialling in the UK f) Non-disclosure rate? a) Ireland - 85% OR rate b) UK – 75% OR rate December 2016 8

TECHNOLOGY ADVANCEMENTS 3) Brokers are utilising online resources more than they ever have • Digital natives – 24/7 access • More demands on providers online platforms • Must be user-friendly • Intuitive • Consistently improved Eircode • • Digital Signatures • ‘No to all’ option Royal London – MyIBA Blitz 2016 December 2016 9

PRODUCT INNOVATION 1) Sales Opportunities • Triggers for sales • one month free; discounts • extra cover for a period • two months premium refund • commission, free will • Discount model moved towards a choice model • Higher commission for not taking the discount • commission choice flexibility • pick and choose to suit each case • faster payment weekly payment options • 2) More extra benefit options to choose from • Helping Hand • Best Doctors • Life Care December 2016 10

PRODUCT INNOVATION 3) Third party information providers – bringing greater transparency, such as • Clear Choice • Best Advice • Money Advice • Voyant … etc. 4) Broadening of cover • Improved definitions – SSI • Expansion and enhancements Royal London – MyIBA Blitz 2016 December 2016 11

PRODUCT INNOVATION 5) Use of research Broker and consumer research • Life Changes option • Moving expiry date out to age 70 – IP • Introduction of 2 deferred periods • Indexation • Broadening of free cover • Integration of questionnaires into data capture form • Early commission payment • Payment of commission more frequently Royal London – MyIBA Blitz 2016 Autumn 2016 12

HOW LONG WILL COVER LAST? Life Assurance Payout Example How long life cover payout may last based on monthly income requirements: € 200,000 € 400,000 € 600,000 € 800,000 € 1,000,000 Monthly Income Needed € 2,000 9yr 1mth 20yr 1mth 34yr 3mth Over 50yrs Over 50yrs € 4,000 4yr 4mth 9yr 1mth 14yr 3mth 20yr 1mth 26yr 8mth € 6,000 2yr 10mth 5yr 10mth 9yr 1mth 12yr 6mth 16yr 2mth € 8,000 2yr 1mth 4yr 4mth 6yr 8mth 9yr 1mth 11yr 7mth € 10,000 1yr 8mth 3yr 5mth 5yr 3mth 7yr 1mth 9yr 1mth December 2016 Assumptions: Net Investment Growth 4.0%/ Inflation 13 2.0% first monthly income is taken after 1 month

MARKET INTELLIGENCE Irish Protection Market 2005 - 2015 180 160 140 APE € M 120 Total Protection 100 Market 80 Royal London – MyIBA Blitz 2016 December 2016 14

MARKET INTELLIGENCE Irish Protection Market – Policy Numbers* 110 Thousands 90 70 Number of 50 policies 2012 2013 2014 2015 ( € 1,071) ( € 1,060) ( € 1,028) ( € 1,024) (Average premium ) December 2016 *Milliman 15

MARKET INTELLIGENCE Estimated Total Protection Market – Product Breakdown Life, including WOL (60%) SSI (33%) IP (7%) Royal London – MyIBA Blitz 2016 December 2016 16

MARKET INTELLIGENCE Total Protection Market – Sales Channel Breakdown Brokers (60%) Banks (25%) Direct Sales (15%) Royal London – MyIBA Blitz 2016 December 2016 17

MARKET INTELLIGENCE Average premium per product Term Serious Mortgage Income Whole Assurance Illness Protection Protection of Life 2016 € 745.36 € 892.93 € 493.27 € 1,139.61 € 1,983.04 Royal London – MyIBA Blitz 2016 December 2016 18

MARKET INTELLIGENCE Annual comparison of average premiums Mortgage Protection Term Assurance 2011 € 646.68 € 1141.76 2012 € 606.70 € 928.72 2013 € 592.97 € 855.65 2014 € 521.23 € 761.28 2015 € 515.14 € 793.18 2016 € 493.27 € 745.36 Royal London – MyIBA Blitz 2016 December 2016 19

MARKET INTELLIGENCE Change in Premiums Example What’s the difference between the premiums paid for a level term policy now and 5 years ago? A 40 year old male, non-smoker, taking out a level term policy with initial cover of € 250,000 for 20 years. • In 2011 monthly premium € 28.63 • In 2016 monthly premium € 25.47 11% reduction in premium over the period December 2016 * Figures based on price-matched position 20

NEW MARKET OPPORTUNITIES Irish labour force 2016 Tax saving 40% tax relief on Pension Term Assurance Working with • Pension Term Assurance - undervalued market Pension • It does not have to be linked to a pension Working without Pension • Size of market – • 2.01 million in the Irish labour force* • Of those 600,000 working in the private sector do not have a pension* • About 1,500 cases written in 2015 - massive opportunity • For example someone willing to spend € 100 a month on a PTA policy, will get tax relief of € 40 (at the higher rate of tax). So the premium actually only costs € 60. Should they increase the net cost back to € 100 in return for more cover? December 2016 *CSO 21

NEW MARKET OPPORTUNITIES Demographics – The Business Owner 2015 was a record breaking year for new company formations , up to 19,472* • First half of 2016 – 10,606 new companies formed • 22% increase on the same period last year • An average of 58 per day! • Over 194,000 companies trading everyday in Ireland • Pensions and business assurance opportunity December 2016 *Vision-net 22

NEW MARKET OPPORTUNITIES Demographics – The Cohabiting Couple • Cohabiting couples have been increasing – accounting for 12% of the population in 2011. • Inheritance Tax Liability • Growing market – requiring Financial Broker Advice • Importance of how the policy is set up – Life of Another basis December 2016 * iReach survey commissioned by Royal London 23

NEW MARKET OPPORTUNITIES Demographics – The Grey Pound • Ageing population • Grey pound becoming more important – savings, investments and bank deposits • Different needs • Legacy protection • Whole of Life • Increasing costs of funeral expenses • Long term care December 2016 24

NEW MARKET OPPORTUNITIES Demographics – The New Irish • In 2011 Irish residents who were born outside of Ireland made up 17% of the population* • Fastest growing groups: • Romanians (up 110%) • Indians (up 91%) • Polish (up 83%) • Lithuanian (up 40%) • Latvians (up 43%) • Niche markets • Teachers • Foreign national Doctors • Garda • Funeral cover • Brokers catering to the specific needs i.e. application translation December 2016 * CSO 25

NEW MARKET OPPORTUNITIES Rolling Conversion Broker Income Streams 700 Broker Income Levels € 000's 600 500 400 10 Year Rolling 300 Conversion 200 20 year term model 100 0 1 3 5 7 9 11 13 15 17 19 Year Notes: Example assumes no lapses or claims and 100% December 2016 26 conversion rate.