Online protection may not pose big threat to IFA sales
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Direct online protection sales may not pose a major threat to IFAs as insurers review the profitability of these models due to narrow margins, says Lifequote.
Head of new business at Lifequote’s parent company Direct Life and Pensions Phil Jeynes says: “A lot of the bigger insurers do not play in the direct space that well so I would have thought there will be quite a lot of them that are reviewing how they interact in the online space because the margins are so tight.”
According to Swiss Re’s latest Term and Health Watch Report, the internet accoun-ted for just 1.4 per cent of the total number of individual term insurance policies sold last year. It also represented 0.2 per cent of critical-illness cover sales and 0.4 per cent for income protection.
IFAs accounted for 53.5 per cent of the individual term insurance market in 2009 and 50.3 per cent and 55 per cent of critical-illness cover and income protection sales respectively.
Jeynes says: “There is still a question mark over the quality of some of the business that comes through channels where there is not an adviser involved and potentially the product has not been exp-lained fully.
“In those cases, there is definitely question marks over the persistency.”
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Readers' comments (1)
James Markwick | 13 Jul 2010 3:23 pm
Good article...however although online sales were just 1.4 per cent, what about the protection websites that generate leads that are purchsed by IFA's. I suppose that this is not trackable and that sales are attributed to IFA's. We all know that some IFA's bread and butter is web leads...
Purchases made on protection sites have either carried out their own due diligence or have had advice from an IFA. The decision to purchase online is usually due to the IFA charging too much to set up a simple life insurance plan.
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