The ABI attributes the decline to the current economic conditions with the UK population less willing to part with their cash to purchase new investment products.
Total single premium accumulation and protection new business in Q4 2008 also fell by 45 per cent to £11.7bn from £21.4bn in Q4 2007.
In 2008 total decumulation for new business was £13.9bn, a decrease of 1 per cent from £14.1bn in the full year for 2007.
Despite the slump in new business, the ABI says business in force figures have remained fairly steady over 2008 and says people have not actively moved money out of the insurance sector.
An ABI spokesman says: “The recessionary conditions are likely to remain for some time but the insurance industry like all other sectors will be doing its best to work to get Britain out of the situation we find ourselves in.”