The Association of British Insurers has reported an 8.3 per cent drop in regular-premium life and pension business in the first quarter of the year from £1.35bn to £1.24bn.
Total single-premium accumulation and protection new business sales plunged by 43 per cent to £9.65bn from £16.8bn in the same period last year.
Individual pension sales fell by 10.5 per cent to £751m from £839m. On a single-premium basis, individual pensions new business dropped by 28 per cent to £3.36bn from £4.68bn.
Sales of investment and savings products fell by 15.5 per cent from £20m to £17m while single-premium investment and savings new business was £3.03bn, down by 58 per cent from £7.27bn.
Total decumulation new business was up by 1.7 per cent to £3.42bn from £3.37bn.
ABI spokesman Jon French says: “It is not surprising, given the economic circumstances, that new business is down. This is the usual pattern in a recession. On the investment bond side, the effects of the recession have been exacerbated by ill-considered changes to the capital gains tax regime.”
Hargreaves Lansdown pensions analyst Laith Khalaf says: “We know that the credit crisis has encouraged people to borrow less and save more but that does not seem to be helping the insurance companies.
“The notable exception is retirement decumulation, where new business was fairly flat despite substantial falls in the value of many pension funds.
“No doubt this is down to demography and the baby boom generation coming to retirement, which can be expec-ted to inflate decumulation sales in the next few years.
“Single-premium sales have particularly suffered. That could have something to do with the CGT changes in April 2008, which made investments subject to capital gains rather than income tax more attractive.”