Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017

Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Market Intelligence Report Reference code: IS0362MR Published: August 2013 www.timetric.com Timetric John Carpenter House 7 Carmelite Street London EC4Y 0BS United Kingdom Tel: +44 (0)20 7936 6400 Fax: +44 (0)20 7336 6813 www.timetric.com

EXECUTIVE SUMMARY 1 Executive Summary Life insurance was the largest segment in the UK insurance industry in 2012, accounting for 70.4% of total industry premiums. It is also one of the largest life insurance segments in Europe in gross written premium terms. The impact of the financial crisis, and subsequent European debt crisis, during the review period (2008 2012) resulted in a decline in consumer confidence. This decline adversely affected the demand for long-term insurance products, resulting in an overall decline in the UK life segment. However, the segment is expected to record growth over the forecast period following various initiatives taken by the government and life insurers. Life insurance products are predominantly distributed through brokers, with this channel accounting for 66.2% of the segment s new business written premiums in 2012. The segment s value declined at a review-period CAGR of 3.9% to reach GBP131.3 billion (US$208.2 billion in 2012). However, the segment is expected to record a forecast-period CAGR of 1.5% to reach a projected value of GBP141.2 billion (US$223.8 billion) in 2017. Growth will be driven by improvements in the UK s economy, with IMF estimates expecting GDP to grow at a forecast-period CAGR of 2.2%. In addition, the expected implementation of Solvency II in January 2015 will result in stricter solvency and capital requirements, better risk management and higher profits. Implementation of Retail Distribution Review (RDR) to ensure growth The introduction of the Retail Distribution Review (RDR), a government initiative designed to increase consumer trust and confidence in insurance products and services, in December 2012 is expected to drive future growth in the life segment. The RDR was implemented by the Financial Conduct Authority (FCA) and includes measures designed to implement professional standards for insurance advisers, as well as regulate both commissions earned, and fees paid by, financial professionals. In the short-term, RDR will possibly affect the growth of life insurance segment on account of expected reduction in the number of Independent Financial Advisors (IFAs) which forms the major chunk of distribution channel in the UK s life insurance segment. However, in the long run on account of improvement in the quality of advice provided to consumers and reduction in mis -selling of financial product; the consumer will gain confidence in the industry. Rebuilding consumer confidence in life insurance is vital for segment growth over the forecast period, as this confidence declined significantly during the review period as a result of the global financial crisis. Gender-neutral insurance pricing The Court of Justice of the European Union (CJEU) passed the Test-Achats ruling in December 2012 to implement gender-neutral pricing policies in the insurance industry. The ruling banned the use of gender as a risk factor when calculating insurance premiums. The cost of life insurance products, particular those relating to income protection and retirement such as annuities, increased as a result. Life segment is expected to consolidate over the forecast period The life segment is highly concentrated, with the 10-leading insurance companies accounting for 80.2% of the written premium value of the life insurance segment in 2011. The segment is expected to consolidate over the forecast period following the impact of the financial crisis, European debt crisis and the forthcoming implementation of the EU s Solvency II directives. Solvency II is expected to force many smaller companies to exit the industry or be acquired by larger firms in order to achieve the required solvency level. Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 2

TABLE OF CONTENTS 1 Executive Summary...2 2 Introduction... 15 2.1 What is this Report About?... 15 2.2 Definitions... 15 2.3 Methodology... 17 3 Regional Market Dynamics... 19 3.1 Overview... 19 3.1.1 Market trends... 20 3.1.2 Market size... 23 4 Life Insurance Segment... 24 4.1 Scale and Penetration... 24 4.1.1 Total gross written premium... 24 4.1.2 Premium per capita... 26 4.1.3 Life insurance penetration (as a percentage of GDP)... 27 4.2 Growth... 28 4.2.1 Gross written premium... 28 4.2.2 Gross written premium per capita... 29 4.3 Efficiency and Risk... 30 4.3.1 Loss ratio... 30 4.3.2 Combined ratio... 31 4.3.3 Incurred losses per capita... 32 4.3.4 Incurred losses as a percentage of GDP... 33 4.4 Distribution Channels... 34 4.4.1 Direct marketing... 34 4.4.2 Bancassurance... 35 4.4.3 Agencies... 36 5 The UK Insurance Industry Attractiveness... 37 5.1 Insurance Industry Size, 2008 2017... 38 5.2 Key Industry Trends and Drivers... 42 6 Life Insurance Outlook... 44 6.1 Life Insurance Growth Prospects by Category... 45 6.1.1 Individual life... 77 6.1.2 Individual general annuity... 81 6.1.3 Individual pension... 85 6.1.4 Individual marriage and birth insurance... 89 6.1.5 Individual unit-linked insurance... 93 6.1.6 Individual others... 97 6.1.7 Group life insurance... 101 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 3

6.1.8 Group superannuation... 105 6.2 Life Insurance Growth Prospects by Product Type... 109 6.2.1 Individual single-premium policies... 109 6.2.2 Individual non-single-premium policies... 113 6.2.3 Group single-premium policies... 117 6.2.4 Group non-single-premium policies... 121 7 Analysis by Distribution Channel... 125 7.1 Direct Marketing... 127 7.2 Bancassurance... 135 7.3 Agencies... 143 7.4 E-commerce... 151 7.5 Brokers... 159 8 Porter s Five Forces Analysis UK Life Insurance... 167 8.1 Bargaining Power of Supplier: Low to Medium... 167 8.2 Bargaining Power of Buyer: Medium to High... 168 8.3 Barriers to Entry: Medium... 168 8.4 Intensity of Rivalry: High... 168 8.5 Threat of Substitutes: Medium... 168 9 Reinsurance Growth Dynamics and Challenges... 169 9.1 Reinsurance Segment Size, 2008 2017... 170 9.2 Reinsurance Segment Size by Insurance Segment, 2008 2017... 174 10 Governance, Risk and Compliance... 179 10.1 Legislation Overview and Historical Evolution... 180 10.2 Legislation Trends by Type of Insurance... 185 10.2.1 Life insurance regulatory trends... 185 10.2.2 Property insurance regulatory trends... 187 10.2.3 Motor insurance regulatory trends... 189 10.2.4 Marine, aviation and transit insurance regulatory trends... 192 10.2.5 Personal accident and health insurance regulatory trends... 193 10.3 Compulsory Insurance... 195 10.3.1 Employer s liability insurance... 195 10.3.2 Motor third-party liability insurance... 196 10.3.3 Merchant shipping compulsory insurance... 198 10.3.4 National Insurance Scheme... 199 10.4 Supervision and Control... 200 10.4.1 International Association of Insurance Supervisors... 200 10.4.2 European Insurance and Occupational Pensions Authority... 201 10.4.3 Prudential Regulation Authority... 201 10.4.4 Financial Conduct Authority... 201 10.5 Non-Admitted Insurance Regulatory Trends... 203 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 4

10.5.1 Overview... 203 10.5.2 Intermediaries... 204 10.5.3 Market practices... 204 10.5.4 Fines and penalties... 204 10.6 Company Registration and Operations... 205 10.6.1 Types of insurance organization... 206 10.6.2 Establishing a local company... 206 10.6.3 Foreign ownership... 207 10.6.4 Types of license... 208 10.6.5 Capital requirements... 208 10.6.6 Solvency margins... 210 10.6.7 Reserve requirements... 213 10.6.8 Investment regulations... 213 10.6.9 Statutory return requirements... 214 10.6.10 Fee structure... 214 10.7 Taxation... 215 10.7.1 Insurance premium or policy taxation... 215 10.7.2 Withholding taxes on premium paid overseas... 216 10.7.3 Corporate tax... 216 10.7.4 VAT... 217 10.7.5 Captives... 217 10.8 Legal System... 218 10.8.1 Introduction... 218 10.8.2 Access to court... 219 10.8.3 Alternative dispute resolution (ADR)... 219 11 Competitive Landscape and Strategic Insights... 221 11.1 Overview... 221 11.2 Leading Companies in the Segment... 222 11.3 Comparison of Four Leading Life Insurers... 223 11.3.1 Gross written premium... 223 11.3.2 Net earned premium... 224 11.3.3 Paid claims... 225 11.4 Aviva Life Plc Company Overview... 226 11.4.1 Aviva Life Plc key facts... 226 11.4.2 Aviva Life Plc key financials... 226 11.5 Standard Life Plc Company Overview... 227 11.5.1 Standard Life Plc key facts... 227 11.5.2 Standard Life Plc key financials... 227 11.6 Lloyds Banking Group Plc Company Overview... 228 11.6.1 Lloyds Banking Group Plc key facts... 228 11.6.2 Lloyds Banking Group Plc key financials... 228 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 5

11.7 Legal & General Group Plc Company Overview... 229 11.7.1 Legal & General Group Plc key facts... 229 11.7.2 Legal & General Group Plc key financials... 229 11.8 Aegon UK Plc Company Overview... 230 11.8.1 Aegon UK Plc key facts... 230 11.8.2 Aegon UK Plc key financials... 230 11.9 Prudential Plc Company Overview... 231 11.9.1 Prudential Plc key facts... 231 11.9.2 Prudential Plc key financials... 231 11.10Friends Life Group Plc Company Overview... 232 11.10.1 Friends Life Group Plc key facts... 232 11.11Zurich Insurance Co. (UK) Ltd Company Overview... 233 11.11.1 Zurich Insurance Co. (UK) Ltd key facts... 233 11.11.2 Zurich Insurance Co. (UK) Ltd key financials... 233 11.12The Royal London Mutual Insurance Society Limited Company Overview... 234 11.12.1 The Royal London Mutual Insurance Society Limited key facts... 234 11.12.2 The Royal London Mutual Insurance Society Limited key financials... 234 11.13Old Mutual Plc Company Overview... 235 11.13.1 Old Mutual Plc key facts... 235 11.13.2 Old Mutual Plc key financials... 235 12 Business Environment and Country Risk... 236 12.1 Business Confidence... 236 12.1.1 Market capitalization trend London Stock Exchange, The UK... 236 12.2 Economic Performance... 237 12.2.1 GDP at constant prices (US$)... 237 12.2.2 GDP per capita at constant prices (US dollar)... 238 12.2.3 GDP at current prices (US dollar)... 239 12.2.4 GDP per capita at current prices (US dollar)... 240 12.2.5 GDP by key segments... 241 12.2.6 Agriculture, hunting, forestry and fishing net output at current prices (EUR)... 242 12.2.7 Agriculture, hunting, forestry and fishing net output at current prices (US dollar)... 243 12.2.8 Agriculture, hunting, forestry and fishing net output as a percentage of GDP... 244 12.2.9 Manufacturing net output at current prices (EUR)... 245 12.2.10 Manufacturing net output at current prices (US$)... 246 12.2.11 Manufacturing net output at current prices as a percentage of GDP... 247 12.2.12 Mining, manufacturing and utilities net output at current prices (EUR)... 248 12.2.13 Mining, manufacturing and utilities net output at current prices (US$)... 249 12.2.14 Mining, manufacturing and utilities at current prices, as percentage of GDP... 250 12.2.15 Construction net output at current prices (EUR)... 251 12.2.16 Construction net output at current prices (US$)... 252 12.2.17 Construction net output at current prices as a percentage of GDP... 253 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 6

12.2.18 Inflation rate... 254 12.2.19 Exports as a percentage of GDP... 255 12.2.20 Imports as a percentage of GDP... 256 12.2.21 Exports growth... 257 12.2.22 Imports growth... 258 12.2.23 Annual average exchange rate GBP US$... 259 12.3 Infrastructure Quality and Availability... 260 12.3.1 Commercial vehicles exports total value... 260 12.3.2 Commercial vehicles imports total value... 261 12.3.3 Automotive exports total value... 262 12.3.4 Automotive imports total value... 263 12.3.5 Total internet subscribers... 264 12.4 Labor Force... 265 12.4.1 Labor force... 265 12.4.2 Unemployment rate... 266 12.5 Demographics... 267 12.5.1 Gross national disposable income (US$)... 267 12.5.2 Total population... 268 12.5.3 Urban and rural population... 269 12.5.4 Median age of population... 270 12.5.5 Age distribution of the total population... 271 13 Appendix... 272 13.1 Methodology... 272 13.2 Contact Timetric... 272 13.3 About Timetric... 272 13.4 Timetric s Services... 273 13.5 Disclaimer... 274 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 7

LIST OF FIGURES Figure 1: Leading Global Insurance Markets Economies and Populations, 2011... 19 Figure 2: Leading Global Insurance Markets Growth Trends in the Insurance Industry (%), 2007 2016... 20 Figure 3: Leading Global Insurance Markets Total Industry Values by Segment (US$ Billion), 2011... 23 Figure 4: Leading Global Insurance Markets Life Insurance Gross Written Premiums (US$ Billion), 2007 2016... 25 Figure 5: Leading Global Insurance Markets Life Insurance Premium Per Capita (US$), 2011... 26 Figure 6: Leading Global Insurance Markets Life Insurance Penetration as a Percentage of GDP (%), 2011 and 2016... 27 Figure 7: Leading Global Insurance Markets Life Insurance Gross Written Premium Grow th (%), 2007 2016... 28 Figure 8: Leading Global Insurance Markets Life Insurance Gross Written Premium Per Capita Grow th (%), 2007 2016... 29 Figure 9: Leading Global Insurance Markets Life Insurance Loss Ratio (%), 2011 and 2016... 30 Figure 10: Leading Global Insurance Markets Life Insurance Combined Ratios (%), 2011 and 2016... 31 Figure 11: Leading Global Insurance Markets Life Insurance Incurred Losses Per Capita (US$), 2011 and 2016... 32 Figure 12: Leading Global Insurance Markets Life Insurance Incurred Losses as a Percentage of GDP (%), 2011 and 2016... 33 Figure 13: Leading Global Insurance Markets Direct Marketing Share of Life Insurance New Business Gross Written Premium (%), 2007 2016... 34 Figure 14: Leading Global Insurance Markets Bancassurance Share of Life Insurance New Business Gross Written Premium (%), 2007 2016... 35 Figure 15: Leading Global Insurance Markets Agencies Share of Life Insurance New Business Gross Written Premium (%), 2007 2016... 36 Figure 16: UK Insurance Overall Written Premium by Segment (GBP Billion), 2008 2017... 40 Figure 17: UK Insurance Dynamics by Segment (%), 2008 2017... 41 Figure 18: UK Life Insurance Written Premium by Category (GBP Billion), 2008 2017... 47 Figure 19: UK Life Insurance Written Premium by Category (% Share), 2012 and 2017... 47 Figure 20: UK Life Insurance Dynamics by Category (%_, 2008 2017... 48 Figure 21: UK Life Insurance Earned Premium (GBP Billion), 2008 2012... 49 Figure 22: UK Life Insurance Earned Premium (GBP Billion), 2012 2017... 50 Figure 23: UK Life Insurance Sum Assured (GBP Billion), 2008 2012... 51 Figure 24: UK Life Insurance Sum Assured (GBP Billion), 2012 2017... 52 Figure 25: UK Life Insurance Paid Claims (GBP Billion), 2008 2012... 53 Figure 26: UK Life Insurance Paid Claims (GBP Billion), 2012 2017... 54 Figure 27: UK Life Insurance Incurred Loss (GBP Billion), 2008 2012... 55 Figure 28: UK Life Insurance Incurred Loss (GBP Billion), 2012 2017... 56 Figure 29: UK Life Insurance Loss Ratio (%), 2008 2012... 57 Figure 30: UK Life Insurance Loss Ratio (%), 2012 2017... 58 Figure 31: UK Life Insurance Commissions and Expenses (GBP Billion), 2008 2012... 59 Figure 32: UK Life Insurance Commissions and Expenses (GBP Billion), 2012 2017... 60 Figure 33: UK Life Insurance Combined Ratio (%), 2008 2012... 61 Figure 34: UK Life Insurance Combined Ratio (%), 2012 2017... 62 Figure 35: UK Life Insurance Frauds and Crimes (GBP Billion), 2008 2012... 63 Figure 36: UK Life Insurance Frauds and Crimes (GBP Billion), 2012 2017... 64 Figure 37: UK Life Insurance Total Assets (GBP Billion), 2008 2012... 65 Figure 38: UK Life Insurance Total Assets (GBP Billion), 2012 2017... 66 Figure 39: UK Life Insurance Total Investment Income (GBP Billion), 2008 2012... 67 Figure 40: UK Life Insurance Total Investment Income (GBP Billion), 2012 2017... 68 Figure 41: UK Life Insurance Retentions (GBP Billion), 2008 2012... 69 Figure 42: UK Life Insurance Retentions (GBP Billion), 2012 2017... 70 Figure 43: UK Life Insurance Investments Portfolio (GBP Billion), 2008 2012... 71 Figure 44: UK Life Insurance Investments Portfolio (%), 2008 and 2012... 71 Figure 45: UK Life Insurance Penetration (%), 2008 2012... 72 Figure 46: UK Life Insurance Density (Number of Policies per Capita), 2008 2012... 73 Figure 47: UK Life Insurance Number of Active Policies (Million), 2008 2012... 74 Figure 48: UK Life Insurance Number of Active Policies (Million), 2012 2017... 75 Figure 49: UK Life Insurance Premium per Capita (GBP), 2008 2012... 76 Figure 50: UK Individual Life Insurance Number of Active Policies (Million), 2008 2012... 77 Figure 51: UK Individual Life Insurance Number of Active Policies (Million), 2012 2017... 78 Figure 52: UK Individual Life Insurance Written Premium (GBP Billion), 2008 2012... 79 Figure 53: UK Individual Life Insurance Written Premium (GBP Billion), 2012 2017... 80 Figure 54: UK Individual General Annuity Number of Active Policies (Million), 2008 2012... 81 Figure 55: UK Individual General Annuity Number of Active Policies (Million), 2012 2017... 82 Figure 56: UK Individual General Annuity Written Premium (GBP Billion), 2008 2012... 83 Figure 57: UK Individual General Annuity Written Premium (GBP Billion), 2012 2017... 84 Figure 58: UK Individual Pension Number of Active Policies (Million), 2008 2012... 85 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 8

Figure 59: UK Individual Pension Number of Active Policies (Million), 2012 2017... 86 Figure 60: UK Individual Pension Written Premium (GBP Billion), 2008 2012... 87 Figure 61: UK Individual Pension Written Premium (GBP Billion), 2012 2017... 88 Figure 62: UK Individual Marriage and Birth Insurance Number of Active Policies (Thousand), 2008 2012... 89 Figure 63: UK Individual Marriage and Birth Insurance Number of Active Policies (Thousand), 2012 2017... 90 Figure 64: UK Individual Marriage and Birth Insurance Written Premium (GBP Billion), 2008 2012... 91 Figure 65: UK Individual Marriage and Birth Insurance Written Premium (GBP Billion), 2012 2017... 92 Figure 66: UK Individual Unit-Linked Insurance Number of Active Policies (Million), 2008 2012... 93 Figure 67: UK Individual Unit-Linked Insurance Number of Active Policies (Million), 2012 2017... 94 Figure 68: UK Individual Unit-Linked Insurance Written Premium (GBP Billion), 2008 2012... 95 Figure 69: UK Individual Unit-Linked Insurance Written Premium (GBP Billion), 2012 2017... 96 Figure 70: UK Individual Others Number of Active Policies (Thousand), 2008 2012... 97 Figure 71: UK Individual Others Number of Active Policies (Thousand), 2012 2017... 98 Figure 72: UK Individual Others Written Premium (GBP Billion), 2008 2012... 99 Figure 73: UK Individual Others Written Premium (GBP Billion), 2012 2017... 100 Figure 74: UK Group Life Insurance Number of Active Policies (Thousand), 2008 2012... 101 Figure 75: UK Group Life Insurance Number of Active Policies (Thousand), 2012 2017... 102 Figure 76: UK Group Life Insurance Written Premium (GBP Billion), 2008 2012... 103 Figure 77: UK Group Life Insurance Written Premium (GBP Billion), 2012 2017... 104 Figure 78: UK Group Superannuation Number of Active Policies (Million), 2008 2012... 105 Figure 79: UK Group Superannuation Number of Active Policies (Thousand), 2012 2017... 106 Figure 80: UK Group Superannuation Written Premium (GBP Billion), 2008 2012... 107 Figure 81: UK Group Superannuation Written Premium (GBP Billion), 2012 2017... 108 Figure 82: UK Individual Single-Premium Number of Active Policies (Million), 2008 2012... 109 Figure 83: UK Individual Single-Premium Number of Active Policies (Million), 2012 2017... 110 Figure 84: UK Individual Single-Premium Written Premium (GBP Billion), 2008 2012... 111 Figure 85: UK Individual Single-Premium Written Premium (GBP Billion), 2012 2017... 112 Figure 86: UK Individual Non-Single-Premium Number of Active Policies (Million), 2008 2012... 113 Figure 87: UK Individual Non-Single-Premium Number of Active Policies (Million), 2012 2017... 114 Figure 88: UK Individual Non-Single-Premium Written Premium (GBP Billion), 2008 2012... 115 Figure 89: UK Individual Non-Single-Premium Written Premium (GBP Billion), 2012 2017... 116 Figure 90: UK Group Single-Premium Number of Active Policies (Thousand), 2008 2012... 117 Figure 91: UK Group Single-Premium Number of Active Policies (Thousand), 2012 2017... 118 Figure 92: UK Group Single-Premium Written Premium (GBP Billion), 2008 2012... 119 Figure 93: UK Group Single-Premium Written Premium (GBP Billion), 2012 2017... 120 Figure 94: UK Group Non-Single- Premium Number of Active Policies (Thousand), 2008 2012... 121 Figure 95: UK Group Non-Single- Premium Number of Active Policies (Thousand), 2012 2017... 122 Figure 96: UK Group Non-Single- Premium Written Premium (GBP Billion), 2008 2012... 123 Figure 97: UK Group Non-Single- Premium Written Premium (GBP Billion), 2012 2017... 124 Figure 98: UK Life Insurance New Business Written Premium by Distribution Channel (% Share), 2012 and 2017... 126 Figure 99: UK Life Insurance Direct Marketing Commission Paid (GBP Billion), 2008 2012... 127 Figure 100: UK Life Insurance Direct Marketing Commission Paid (GBP Billion), 2012 2017... 128 Figure 101: UK Life Insurance New Business Written Premium Through Direct Marketing (GBP Billion), 2008 2012... 129 Figure 102: UK Life Insurance New Business Written Premium Through Direct Marketing (GBP Billion), 2012 2017... 130 Figure 103: UK Life Insurance New Policies Sold Through Direct Marketing (Thousand), 2008 2012... 131 Figure 104: UK Life Insurance New Policies Sold Through Direct Marketing (Thousand), 2012 2017... 132 Figure 105: UK Life Insurance Number of Direct Marketing Distributors, 2008 2012... 133 Figure 106: UK Life Insurance Number of Direct Marketing Distributors, 2012 2017... 134 Figure 107: UK Life Insurance Bancassurance Commission Paid (GBP Billion), 2008 2012... 135 Figure 108: UK Life Insurance Bancassurance Commission Paid (GBP Billion), 2012 2017... 136 Figure 109: UK Life Insurance New Business Written Premium Through Bancassurance (GBP Billion), 2008 2012... 137 Figure 110: UK Life Insurance New Business Written Premium Through Bancassurance (GBP Billion), 2012 2017... 138 Figure 111: UK Life Insurance New Policies Sold Through Bancassurance (Thousand), 2008 2012... 139 Figure 112: UK Life Insurance New Policies Sold Through Bancassurance (Thousand), 2012 2017... 140 Figure 113: UK Life Insurance Number of Bancassurance Distributors, 2008 2012... 141 Figure 114: UK Life Insurance Number of Bancassurance Distributors, 2012 2017... 142 Figure 115: UK Life Insurance Commission Paid to Agencies (GBP Billion), 2008 2012... 143 Figure 116: UK Life Insurance Commission Paid to Agencies (GBP Billion), 2012 2017... 144 Figure 117: UK Life Insurance New Business Written Premium Through Agencies (GBP Billion), 2008 2012... 145 Figure 118: UK Life Insurance New Business Written Premium Through Agencies (GBP Billion), 2012 2017... 146 Figure 119: UK Life Insurance New Policies Sold Through Agencies (Thousand), 2008 2012... 147 Figure 120: UK Life Insurance New Policies Sold Through Agencies (Thousand), 2012 2017... 148 Figure 121: UK Life Insurance Number of Agencies, 2008 2012... 149 Figure 122: UK Life Insurance Number of Agencies, 2012 2017... 150 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 9

Figure 123: UK Life Insurance E-Commerce Commission Paid (GBP Billion), 2008 2012... 151 Figure 124: UK Life Insurance E-Commerce Commission Paid (GBP Billion), 2012 2017... 152 Figure 125: UK Life Insurance New Business Written Premium Through E-Commerce (GBP Billion), 2008 2012... 153 Figure 126: UK Life Insurance New Business Written Premium Through E-Commerce (GBP Billion), 2012 2017... 154 Figure 127: UK Life Insurance New Policies Sold Through E-Commerce (Thousand), 2008 2012... 155 Figure 128: UK Life Insurance New Policies Sold Through E-Commerce (Thousand), 2012 2017... 156 Figure 129: UK Life Insurance Number of E-Commerce Distributors, 2008 2012... 157 Figure 130: UK Life Insurance Number of E-Commerce Distributors, 2012 2017... 158 Figure 131: UK Life Insurance Commission Paid to Brokers (GBP Billion), 2008 2012... 159 Figure 132: UK Life Insurance Commission Paid to Brokers (GBP Billion), 2012 2017... 160 Figure 133: UK Life Insurance New Business Written Premium Through Brokers (GBP Billion), 2008 2012... 161 Figure 134: UK Life Insurance New Business Written Premium Through Brokers (GBP Billion), 2012 2017... 162 Figure 135: UK Life Insurance New Policies Sold Through Brokers (Thousand), 2008 2012... 163 Figure 136: UK Life Insurance New Policies Sold Through Brokers (Thousand), 2012 2017... 164 Figure 137: UK Life Insurance Number of Brokers, 2008 2012... 165 Figure 138: UK Life Insurance Number of Brokers, 2012 2017... 166 Figure 139: The UK Life Insurance Segment Five Forces Analysis... 167 Figure 140: UK Premium Ceded to Reinsurance by Category (GBP Billion), 2008 2017... 172 Figure 141: UK Premium Ceded to Reinsurance by Category (Percentage Share), 2012 and 2017... 172 Figure 142: UK Reinsurance Dynamics by Category (%), 2008 2017... 173 Figure 143: UK Premium Ceded to Reinsurance by Insurance Segment (GBP Billion), 2008 2017... 176 Figure 144: UK Reinsurance Dynamics by Insurance Segment (%), 2008 2017... 176 Figure 145: UK Life Insurance Percentage of Reinsurance Ceded (%), 2008 2012... 177 Figure 146: UK Life Insurance Percentage of Reinsurance Ceded (%), 2012 2017... 178 Figure 147: UK Insurance Regulatory Framew ork... 179 Figure 148: UK The Three Pillars of Solvency II... 183 Figure 149: UK Insurance Supervision and Control at Various Levels... 200 Figure 150: UK Insurance Regulatory Framew orks for Company Registration and Operation... 205 Figure 151: UK Life Insurance Written Premiums by Leading Companies (% Share), 2010 and 2011... 222 Figure 152: Gross Written Premium of Four-Leading UK Life Insurers (GBP Billion), 2012... 223 Figure 153: Net Earned Premium of Four-Leading UK Life Insurers (GBP Billion), 2012... 224 Figure 154: Paid Claims of Four-Leading UK Life Insurers (GBP Billion), 2012... 225 Figure 155: UK Stock Exchange Market Capitalization (US$ Billion), 2007 2011... 236 Figure 156: UK GDP at Constant Prices (US$ Billion), 2007 2011... 237 Figure 157: UK GDP Per Capita at Constant Prices (US$), 2007 2011... 238 Figure 158: UK GDP at Current Prices (US$ Billion), 2007 2011... 239 Figure 159: UK GDP Per Capita at Current Prices (US$), 2007 2011... 240 Figure 160: UK GDP by Key Segments (%) 2009 and 2011... 241 Figure 161: UK Agriculture, Hunting, Forestry and Fishing Net Output at Current Prices (EUR Billion), 2007 2011... 242 Figure 162: UK Agriculture, Hunting, Forestry and Fishing Net Output at Current Prices (US$ Billion), 2007 2011... 243 Figure 163: UK Agriculture, Hunting, Forestry and Fishing Net Output as a Percentage of GDP (%), 2007 2011... 244 Figure 164: UK Manufacturing Net Output at Current Prices (EUR Billion), 2007 2011... 245 Figure 165: UK Manufacturing Net Output at Current Prices (US$ Billion), 2007 2011... 246 Figure 166: UK Manufacturing Net Output at Current Prices as a Percentage of GDP (%), 2007 2011... 247 Figure 167: UK Mining, Manufacturing and Utilities Net Output at Current Prices (EUR Billion), 2007 2011... 248 Figure 168: UK Mining, Manufacturing and Utilities Net Output at Current Prices (US$ Billion), 2007 2011... 249 Figure 169: UK Mining, Manufacturing and Utilities at Current Prices as a Percentage of GDP (%), 2007 2011... 250 Figure 170: UK Construction Net Output at Current Prices (EUR Billion), 2007 2011... 251 Figure 171: UK Construction Net Output at Current Prices (US$ Billion), 2007 2011... 252 Figure 172: UK Construction Output at Current Prices as a Percentage of GDP (%), 2007 2011... 253 Figure 173: UK Inflation Rate (%), 2007 2011... 254 Figure 174: UK Exports as a Percentage of GDP (%), 2007 2011... 255 Figure 175: UK Imports as a Percentage of GDP (%), 2007 2011... 256 Figure 176: UK Exports Growth (%), 2007 2011... 257 Figure 177: UK Imports Growth (%), 2007 2011... 258 Figure 178: UK Annual Average Exchange Rate US$ GBP, 2007 2011... 259 Figure 179: UK Commercial Vehicles Exports Total Value (US$ Billion), 2007 2011... 260 Figure 180: UK Commercial Vehicles Imports Total Value (US$ Billion), 2007 2011... 261 Figure 181: UK Automotive Exports Total Value (US$ Billion), 2007 2011... 262 Figure 182: UK Automotive Imports Total Value (US$ Billion), 2007 2011... 263 Figure 183: UK Internet Subscriptions (Million), 2007 2011... 264 Figure 184: UK Size of Labor Force in 15 59 Age Group (Million), 2007 2011... 265 Figure 185: UK Unemployment Rate (%), 2007 2011... 266 Figure 186: UK Gross National Disposable Income (US$ Billion), 2007 2011... 267 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 10

Figure 187: UK Total Population (Million), 2007 2011... 268 Figure 188: UK Urban and Rural Population (%), 2007 2011... 269 Figure 189: UK Median Age of Population (Year), 2007 2011... 270 Figure 190: UK Population Distribution by Age (%), 2007 2011... 271 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 11

LIST OF TABLES Table 1: Insurance Industry Definitions... 15 Table 2: UK Insurance Overall Written Premium by Segment (GBP Billion), 2008 2012... 38 Table 3: UK Insurance Overall Written Premium by Segment (US$ Billion), 2008 2012... 38 Table 4: UK Insurance Overall Written Premium by Segment (GBP Billion), 2012 2017... 39 Table 5: UK Insurance Overall Written Premium by Segment (US$ Billion), 2012 2017... 39 Table 6: UK Insurance Segmentation (Percentage Share), 2008 2017... 41 Table 7: UK Life Insurance Written Premium by Category (GBP Billion), 2008 2012... 45 Table 8: UK Life Insurance Written Premium by Category (US$ Billion), 2008 2012... 45 Table 9: UK Life Insurance Written Premium by Category (GBP Billion), 2012 2017... 46 Table 10: UK Life Insurance Written Premium by Category (US$ Billion), 2012 2017... 46 Table 11: UK Life Insurance Earned Premium (GBP Billion), 2008 2012... 49 Table 12: UK Life Insurance Earned Premium (GBP Billion), 2012 2017... 50 Table 13: UK Life Insurance Sum Assured (GBP Billion), 2008 2012... 51 Table 14: UK Life Insurance Sum Assured (GBP Billion), 2012 2017... 52 Table 15: UK Life Insurance Paid Claims (GBP Billion), 2008 2012... 53 Table 16: UK Life Insurance Paid Claims (GBP Billion), 2012 2017... 54 Table 17: UK Life Insurance Incurred Loss (GBP Billion), 2008 2012... 55 Table 18: UK Life Insurance Incurred Loss (GBP Billion), 2012 2017... 56 Table 19: UK Life Insurance Loss Ratio (%), 2008 2012... 57 Table 20: UK Life Insurance Loss Ratio (%), 2012 2017... 58 Table 21: UK Life Insurance Commissions and Expenses (GBP Billion), 2008 2012... 59 Table 22: UK Life Insurance Commissions and Expenses (GBP Billion), 2012 2017... 60 Table 23: UK Life Insurance Combined Ratio (%), 2008 2012... 61 Table 24: UK Life Insurance Combined Ratio (%), 2012 2017... 62 Table 25: UK Life Insurance Frauds and Crimes (GBP Billion), 2008 2012... 63 Table 26: UK Life Insurance Frauds and Crimes (GBP Billion), 2012 2017... 64 Table 27: UK Life Insurance Total Assets (GBP Billion), 2008 2012... 65 Table 28: UK Life Insurance Total Assets (GBP Billion), 2012 2017... 66 Table 29: UK Life Insurance Total Investment Income (GBP Billion), 2008 2012... 67 Table 30: UK Life Insurance Total Investment Income (GBP Billion), 2012 2017... 68 Table 31: UK Life Insurance Retentions (GBP Billion), 2008 2012... 69 Table 32: UK Life Insurance Retentions (GBP Billion), 2012 2017... 70 Table 33: UK Individual Life Insurance Number of Active Policies (Thousand), 2008 2012... 77 Table 34: UK Individual Life Insurance Number of Active Policies (Thousand), 2012 2017... 78 Table 35: UK Individual Life Insurance Written Premium (GBP Billion), 2008 2012... 79 Table 36: UK Individual Life Insurance Written Premium (GBP Billion), 2012 2017... 80 Table 37: UK Individual General Annuity Number of Active Policies (Thousand), 2008 2012... 81 Table 38: UK Individual General Annuity Number of Active Policies (Thousand), 2012 2017... 82 Table 39: UK Individual General Annuity Written Premium (GBP Billion), 2008 2012... 83 Table 40: UK Individual General Annuity Written Premium (GBP Billion), 2012 2017... 84 Table 41: UK Individual Pension Number of Active Policies (Thousand), 2008 2012... 85 Table 42: UK Individual Pension Number of Active Policies (Thousand), 2012 2017... 86 Table 43: UK Individual Pension Written Premium (GBP Billion), 2008 2012... 87 Table 44: UK Individual Pension Written Premium (GBP Billion), 2012 2017... 88 Table 45: UK Individual Marriage and Birth Insurance Number of Active Policies (Thousand), 2008 2012... 89 Table 46: UK Individual Marriage and Birth Insurance Number of Active Policies (Thousand), 2012 2017... 90 Table 47: UK Individual Marriage and Birth Insurance Written Premium (GBP Billion), 2008 2012... 91 Table 48: UK Individual Marriage and Birth Insurance Written Premium (GBP Billion), 2012 2017... 92 Table 49: UK Individual Unit-Linked Insurance Number of Active Policies (Thousand), 2008 2012... 93 Table 50: UK Individual Unit-Linked Insurance Number of Active Policies (Thousand), 2012 2017... 94 Table 51: UK Individual Unit-Linked Insurance Written Premium (GBP Billion), 2008 2012... 95 Table 52: UK Individual Unit-Linked Insurance Written Premium (GBP Billion), 2012 2017... 96 Table 53: UK Individual Others Number of Active Policies (Thousand), 2008 2012... 97 Table 54: UK Individual Others Number of Active Policies (Thousand), 2012 2017... 98 Table 55: UK Individual Others Written Premium (GBP Billion), 2008 2012... 99 Table 56: UK Individual Others Written Premium (GBP Billion), 2012 2017... 100 Table 57: UK Group Life Insurance Number of Active Policies (Thousand), 2008 2012... 101 Table 58: UK Group Life Insurance Number of Active Policies (Thousand), 2012 2017... 102 Table 59: UK Group Life Insurance Written Premium (GBP Billion), 2008 2012... 103 Table 60: UK Group Life Insurance Written Premium (GBP Billion), 2012 2017... 104 Table 61: UK Group Superannuation Number of Active Policies (Thousand), 2008 2012... 105 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 12

Table 62: UK Group Superannuation Number of Active Policies (Thousand), 2012 2017... 106 Table 63: UK Group Superannuation Written Premium (GBP Billion), 2008 2012... 107 Table 64: UK Group Superannuation Written Premium (GBP Billion), 2012 2017... 108 Table 65: UK Individual Single-Premium Number of Active Policies (Thousand), 2008 2012... 109 Table 66: UK Individual Single-Premium Number of Active Policies (Thousand), 2012 2017... 110 Table 67: UK Individual Single-Premium Written Premium (GBP Billion), 2008 2012... 111 Table 68: UK Individual Single-Premium Written Premium (GBP Billion), 2012 2017... 112 Table 69: UK Individual Non-Single-Premium Number of Active Policies (Thousand), 2008 2012... 113 Table 70: UK Individual Non-Single-Premium Number of Active Policies (Thousand), 2012 2017... 114 Table 71: UK Individual Non-Single-Premium Written Premium (GBP Billion), 2008 2012... 115 Table 72: UK Individual Non-Single-Premium Written Premium (GBP Billion), 2012 2017... 116 Table 73: UK Group Single-Premium Number of Active Policies (Thousand), 2008 2012... 117 Table 74: UK Group Single-Premium Number of Active Policies (Thousand), 2012 2017... 118 Table 75: UK Group Single-Premium Written Premium (GBP Billion), 2008 2012... 119 Table 76: UK Group Single-Premium Written Premium (GBP Billion), 2012 2017... 120 Table 77: UK Group Non-Single-Premium Number of Active Policies (Thousand), 2008 2012... 121 Table 78: UK Group Non-Single-Premium Number of Active Policies (Thousand), 2012 2017... 122 Table 79: UK Group Non-Single-Premium Written Premium (GBP Billion), 2008 2012... 123 Table 80: UK Group Non-Single-Premium Written Premium (GBP Billion), 2012 2017... 124 Table 81: UK Life Insurance Direct Marketing Commission Paid (GBP Billion), 2008 2012... 127 Table 82: UK Life Insurance Direct Marketing Commission Paid (GBP Billion), 2012 2017... 128 Table 83: UK Life Insurance New Business Written Premium Through Direct Marketing (GBP Billion), 2008 2012... 129 Table 84: UK Life Insurance New Business Written Premium Through Direct Marketing (GBP Billion), 2012 2017... 130 Table 85: UK Life Insurance New Policies Sold Through Direct Marketing (Thousand), 2008 2012... 131 Table 86: UK Life Insurance New Policies Sold Through Direct Marketing (Thousand), 2012 2017... 132 Table 87: UK Life Insurance Number of Direct Marketing Distributors, 2008 2012... 133 Table 88: UK Life Insurance Number of Direct Marketing Distributors, 2012 2017... 134 Table 89: UK Life Insurance Bancassurance Commission Paid (GBP Billion), 2008 2012... 135 Table 90: UK Life Insurance Bancassurance Commission Paid (GBP Billion), 2012 2017... 136 Table 91: UK Life Insurance New Business Written Premium Through Bancassurance (GBP Billion), 2008 2012... 137 Table 92: UK Life Insurance New Business Written Premium Through Bancassurance (GBP Billion), 2012 2017... 138 Table 93: UK Life Insurance New Policies Sold Through Bancassurance (Thousand), 2008 2012... 139 Table 94: UK Life Insurance New Policies Sold Through Bancassurance (Thousand), 2012 2017... 140 Table 95: UK Life Insurance Number of Bancassurance Distributors, 2008 2012... 141 Table 96: UK Life Insurance Number of Bancassurance Distributors, 2012 2017... 142 Table 97: UK Life Insurance Commission Paid to Agencies (GBP Billion), 2008 2012... 143 Table 98: UK Life Insurance Commission Paid to Agencies (GBP Billion), 2012 2017... 144 Table 99: UK Life Insurance New Business Written Premium Through Agencies (GBP Billion), 2008 2012... 145 Table 100: UK Life Insurance New Business Written Premium Through Agencies (GBP Billion), 2012 2017... 146 Table 101: UK Life Insurance New Policies Sold Through Agencies (Thousand), 2008 2012... 147 Table 102: UK Life Insurance New Policies Sold Through Agencies (Thousand), 2012 2017... 148 Table 103: UK Life Insurance Number of Agencies, 2008 2012... 149 Table 104: UK Life Insurance Number of Agencies, 2012 2017... 150 Table 105: UK Life Insurance E-Commerce Commission Paid (GBP Billion), 2008 2012... 151 Table 106: UK Life Insurance E-Commerce Commission Paid (GBP Billion), 2012 2017... 152 Table 107: UK Life Insurance New Business Written Premium Through E-Commerce (GBP Billion), 2008 2012... 153 Table 108: UK Life Insurance New Business Written Premium Through E-Commerce (GBP Billion), 2012 2017... 154 Table 109: UK Life Insurance New Policies Sold Through E-Commerce (Thousand), 2008 2012... 155 Table 110: UK Life Insurance New Policies Sold Through E-Commerce (Thousand), 2012 2017... 156 Table 111: UK Life Insurance Number of E-Commerce Distributors, 2008 2012... 157 Table 112: UK Life Insurance Number of E-Commerce Distributors, 2012 2017... 158 Table 113: UK Life Insurance Commission Paid to Brokers (GBP Billion), 2008 2012... 159 Table 114: UK Life Insurance Commission Paid to Brokers (GBP Billion), 2012 2017... 160 Table 115: UK Life Insurance New Business Written Premium Through Brokers (GBP Billion), 2008 2012... 161 Table 116: UK Life Insurance New Business Written Premium Through Brokers (GBP Billion), 2012 2017... 162 Table 117: UK Life Insurance New Policies Sold Through Brokers (Thousand), 2008 2012... 163 Table 118: UK Life Insurance New Policies Sold Through Brokers (Thousand), 2012 2017... 164 Table 119: UK Life Insurance Number of Brokers, 2008 2012... 165 Table 120: UK Life Insurance Number of Brokers, 2012 2017... 166 Table 121: UK Reinsurance by Category (GBP Billion), 2008 2012... 170 Table 122: UK Reinsurance by Category (US$ Billion), 2008 2012... 170 Table 123: UK Reinsurance by Category (GBP Billion), 2012 2017... 171 Table 124: UK Reinsurance by Category (US$ Billion), 2012 2017... 171 Table 125: UK Premium Ceded to Reinsurance by Insurance Segment (GBP Billion), 2008 2012... 174 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 13

Table 126: UK Premium Ceded to Reinsurance by Insurance Segment (US$ Billion), 2008 2012... 174 Table 127: UK Premium Ceded to Reinsurance by Insurance Segment (GBP Billion), 2012 2017... 175 Table 128: UK Premium Ceded to Reinsurance by Insurance Segment (US$ Billion), 2012 2017... 175 Table 129: UK Life Insurance Percentage of Reinsurance Ceded (%), 2008 2012... 177 Table 130: UK Life Insurance Percentage of Reinsurance Ceded (%), 2012 2017... 178 Table 131: UK Life Insurance Regulatory Framework... 185 Table 132: UK Property Insurance Regulatory Framework... 187 Table 133: UK Motor Insurance Regulatory Framework... 189 Table 134: UK Benefits Under National Insurance Scheme... 199 Table 135: UK Capital Requirements for Long-term Insurers... 209 Table 136: UK Capital Requirements for General Insurers... 209 Table 137: UK Corporate Tax Rates for the Financial Year 2013... 217 Table 138: UK VAT Rates in UK for Insurance Products... 217 Table 139: UK Life Insurance Written Premiums by Leading Companies (Percentage Share), 2010 and 2011... 222 Table 140: Aviva Life Plc, Key Facts... 226 Table 141: Aviva Life Plc, Key Financials (GBP Million), 2008 2012... 226 Table 142: Standard Life Plc, Key Facts... 227 Table 143: Standard Life Plc, Key Financials (GBP Million), 2008 2012... 227 Table 144: Lloyds Banking Group Plc, Key Facts... 228 Table 145: Lloyds Banking Group Plc, Key Financials (GBP Million), 2008 2012... 228 Table 146: Legal & General Group Plc, Key Facts... 229 Table 147: Legal & General Group Plc, Key Financials (GBP Million), 2008 2012... 229 Table 148: Aegon UK Plc, Key Facts... 230 Table 149: Aegon UK Plc, Key Financials (GBP Million), 2009 2012... 230 Table 150: Prudential Plc, Key Facts... 231 Table 151: Prudential Plc, Key Financials (GBP Million), 2008 2012... 231 Table 152: Friends Life Group Plc, Key Facts... 232 Table 153: Zurich Insurance Co. (UK ) Ltd, Key Facts... 233 Table 154: Zurich Insurance Co. (UK ) Ltd, Key Financials (GBP Million), 2008 2012... 233 Table 155: The Royal London Mutual Insurance Society Limited, Key Facts... 234 Table 156: The Royal London Mutual Insurance Society Limited, Key Financials (GBP Million), 2008 2012... 234 Table 157: Old Mutual Plc, Key Facts... 235 Table 158: Old Mutual Plc, Key Financials (GBP Million), 2008 2012... 235 Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 14

INTRODUCTION 2 Introduction 2.1 What is this Report About? This report is the result of extensive research into the life insurance segment in the UK, covering its dynamics and competitive landscape. It provides insights into the size and forecast for the overall life insurance segment, and categories such as individual and group insurance, and provides details of products in each category. This report also provides an overview of the leading companies in the life insurance segment, along with details of strategic initiatives undertaken. 2.2 Definitions All data is collected in local currency. All conversions into US dollars ( US$) of current and forecast data are made at the 2012 average annual conversion rate. All values in tables are displayed to one decimal place, and growth rates may therefore appear inconsistent with absolute values due to rounding. For the purposes of this report, the review period is 2008 2012 and the forecast period is 2012 2017. The key insurance industry terms covered in the report are defined below: Table 1: Insurance Industry Definitions Term Definition Ceding company Incurred loss Claim ratio Commission and expenses Comprehensive loss ratio Earned premium Endow ment policy Facultative reinsurance Gross claim Gross written premium Group annuity Insurance penetration Insurance fraud Lapsed policy A primary insurer which transfers some of its insurance risk by ceding a proportion of its total written premium through a reinsurance contract. The sum of claims paid by an insurance company, and the change in the provision for outstanding claims, irrespective of whether or not they have been reported. Claims payable as a percentage of premium income. The sum of acquisition cost and administrative cost. The acquisition cost is the percentage of a premium produced that is retained as compensation by insurance agents and brokers. The ratio of claims incurred to net premium earned. The amount of money considered to have been earned on a policy by an insurer. It is cagbplated by multiplying the original premium by the percentage of the policy s term which has expired w ithout a claim being made. A scheme in which the term of the policy is defined for a specified period, such as 15, 25 or 30 years. The insurer pays the claim to the family of the assured in the event of the assured s death within the policy's term, or in the event of the assured surviving the policy's term. An arrangement for separate reinsurance for each risk that the primary insurer underwrites. The reinsurer can accept or reject any risk presented by the primary insurer seeking reinsurance. The amount payable by an insurance company before allowances are made for credits that may be due in the form of reinsurance, subrogation or salvage. The total amount of premiums (before deduction of reinsurance costs) customers are required to pay for insurance policies written during the year. A life insurance scheme providing annuities at retirement to a group of people under a single contract. It is usually taken out by an employer for the benefit of its employees. The percentage of total written premium to the country s GDP. Any act committed w ith the intent to obtain payment from an insurer through fraudulent means. A policy which is terminated due to the non-payment of the premium Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 15

INTRODUCTION Table 1: Insurance Industry Definitions Term Definition Loss ratio Liability insurance Loss reserve Maturity claim Per capita premium Premium ceded Single-premium life insurance policy The ratio of total losses paid out, in the form of claims plus adjustment expenses divided by the total earned premium. A type of insurance that covers legal claims by third parties against the insured. The estimated amount of claims incurred but not yet settled. The payment made to a policyholder at the end of the stipulated term of a term life insurance policy. The ratio of the total written premium to the country s total population. The share of premiums transferred to a reinsurance company by a primary insurer. A life insurance scheme in w hich a lump sum is paid into the policy in return for an assured sum of money in the event of the policyholder s death. Term insurance A life insurance scheme that provides protection for a specified period, usually between five and 20 years. The policy expires without value if the insured survives the stated period. Treaty reinsurance Direct marketing E-commerce Agencies Insurance brokers Bancassurance Other distribution channels Source: Timetric analysis A reinsurance agreement applying to the reinsurance of a class or some classes of business, instead of an individual risk. Direct marketing channels for insurance policies include insurers sales forces, telemarketing, postal mail, e-mail, call centers and mobile phones. The distribution of insurance policies online through company or third-party websites. Individuals and corporate agencies which are licensed to sell insurance for one or more specific insurance companies Individuals or businesses which sell insurance policies. An insurance broker represents the insurance policyholder in insurance transactions, unlike an insurance agent, which represents the insurer. Insurance brokers also act as advisors to policyholders. The partnership between a bank and an insurer in which the insurer uses the bank s sales channel to sell insurance products. Other distribution channels in the insurance industry include post offices, convenience stores, multilevel marketing, and any channel other than those mentioned above. Timetric Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 16

INTRODUCTION 2.3 Methodology All Timetric insurance reports are created by following a comprehensive, four -stage methodology. This includes market study, research, analysis and quality control. 1) Market Study A. Standardization Definitions are specified using recognized industry classifications. The same definition is used for every country. Annual average currency exchange rates are used for the latest completed year. These are then applied across both the historical and forecast data to remove exchange rate fluctuations. B. Internal audit Review of in-house databases to gather existing data: Historic market databases and reports Company database C. Trend monitoring Review of the latest insurance companies and industry trends 2) Research A. Source s Collection of the latest market-specific data from a wide variety of industry sources: Government statistics Industry associations Company filings International organizations Insurance regulatory agencies B. Expert opinion Collation of opinion taken from leading insurance industry experts Analysis of third-party opinion and forecasts: Broker reports Media Official government sources C. Data consolidation and verification Consolidation of data and opinion to create historical datasets Creation of models to benchmark data across sectors and regions 3) Analysis A. Market forecasts Feeding forecast data into market models: Macroeconomic indicators Industry-specific drivers Analysis of insurance industry database to identify trends: Latest insurance trends Key drivers of the insurance industry Life Insurance in the United Kingdom, Key Trends and Opportunities to 2017 Page 17