Much has already been written about the impact on the funeral plan market of meeting FCA regulation back in July 2022. We explored this fully in our 2023 Funeral Plan market report published in May 2023 and in the associated summary article.
Funeral Solution Expert (FSE) have revisited the market in 2024 to undertake a further comprehensive review, bringing together expert analysis of current trends shaping funeral plan sales and how traditional and direct cremation funeral plan propositions are evolving. Our report is fully informed by insight from independent funeral directors, and a nationally representative sample of 1,500 UK adults conducted in Feb 2024.
We draw a number of key conclusions, including:
- The sector is settling down from the shock-wave of regulation, but sales are yet to return close to pre regulation levels.
- Funeral plan providers have better evolved their propositions but we see key differences between the confidence of fully guaranteed direct cremation funeral plans, which are growing, and the lack of any fully guaranteed propositions in traditional plans, which conversely are in decline.
- We see more sizeable new entrants and an increase in the number of direct cremation plan offerings.
- Of particular interest is the battle that is taking shape in the gap between unattended direct cremation and basic traditional funeral services and plans. This ‘premium’ direct cremation market, with several firms now playing here (and more looking to enter), has some key consumer views that inform what needs to be true to be successful.
- FCA regulatory objectives have largely been met and as they move into a BAU monitoring mode but we expect further focus on several specific areas where Consumer Duty rules and fair value consumer outcomes are not being fully met.
- It is time the FCA levelled the regulatory playing field between funeral plans and Over 50s Life Insurance. Funeral plans better meet the core consumer need and are being unfairly dis-advantaged compared to some Over 50s market practice.
We explore a few of these conclusions in a little more depth below:
It has been a relatively tough year for the funeral plan market as a whole and as it settles down from the after-shocks of FCA regulation. Funeral plan sales have yet to recover to pre-regulation sales levels and we see funeral directors selling plans still expressing concerns and worryingly a proportion have stopped selling altogether.
If there is an erosion of smaller independent funeral directors participating in the plan market, sales distribution power will shift towards the largest firms and remote players and hence will distort the market in their favour. Trade bodies (NAFD/SAIF/NAFPP) need to work closely with the FCA to ensure that the issues driving funeral directors to take themselves out of the market are fully understood and properly addressed. It is not in the consumer interest to lose the experience and expertise that funeral directors have.
Direct cremation plan sales account for most funeral plan sales now and this will continue given high profile new entrants (including a direct cremation plan offering from Co-Op), a change of leadership at Pure, and hence highly likely increased sector competition and focus. The ongoing growth of direct cremation funeral plans (as a % of all sales) is even more likely given the extent to which many come with more confident, guaranteed propositions that better meet the key customer need of ensuring their loved ones have nothing to pay when the time comes for the funeral. As opposed to traditional funeral plans where currently no national provider is offering a plan that is fully guaranteed with no more costs to pay.
Our research of 1,500 UK adults has helped shed light on the opportunity and risks that exist in the gap between ‘premium’ direct cremation and a very basic traditional funeral, and what is needed to be true to be successful (whether selling ‘at-need’ or ‘pre-need’). While there is enough potential for direct providers to feel confident to expand out with ‘intimate’ attendance service options, FSE believe that funeral directors are equally well placed to grasp this opportunity.
Funeral directors are the more natural and trusted provider for any aspect of funeral that becomes ‘performative’ i.e. a service takes place with loved ones present. They can offer services that remote providers cannot, they can secure business now if they were to advertise and promote better and they have a future opportunity when performing a future pre-paid funeral to add on or up-sell to family members at that time.
So, the next 12 months will be fascinating in respect of how direct response players and funeral directors start to battle over this middle ground. We have already seen one high profile entry and exit from this space in recent months so anyone wishing to compete here needs to take care to understand the audience and definitely ‘mind the gap’!
And finally for the funeral plan market and NAFPP (the trade body representing firms) there is an opportunity to better educate the FCA, and consumers overall, that a funeral plan much better meets the funeral planning need than an Over 50s life insurance plan. We see evidence that these life insurance products are increasingly being positioned, and sold, as ‘funeral planning’ solutions when they do not meet the core consumer needs as well as a funeral plan does. FSE believe the FCA need to level up the regulatory playing field and our customer insight evidences the confusion that exists among purchasers and those looking to purchase.
Want to find out more?
Purchase the full report
A full copy of our 2024 funeral plan market report is available to buy. This independent and unbiased report explores how FCA regulation has shaped the market and how funeral directors and firms are faring. We look at how direct cremation and traditional plans are evolving, we outline trends impacting sales, we explore consumer attitudes from our survey of 1,500 UK adults, and how those views will shape the battle for the ‘premium’ direct cremation opportunity. We also outline areas where we feel the FCA will continue to focus to further improve customer outcomes in line with Consumer Duty rules.