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Bigger rates and lower complaints

Reports published last week have revealed that protection has weathered the economic storm better than most financial products.

By and large sales figures were up and complaints to the Financial Ombudsman Service were down. But which product had the strongest umbrella?

In the Swiss Re annual term and health watch report on the UK protection market, income protection sales increased 13.5 per cent in 2008 to 126,815 from 111,780 in 2007, and new whole life business increased by 28.8 per cent from 219,362 policies in 2007 to 282,438 policies last year.

But despite Swiss Re life and health technical manager Ron Wheatcroft claiming that the £2.3trn protection gap is still very much there, this is still encouraging for the industry.
One product area which experienced a slight dip, however, was critical illness.

Individual CI sales fell 4.7 per cent from 536,143 in 2007 to 511,045 in 2008, and new term assurance sales including accelerated critical illness cover dipped 6.1 per cent from 1,541,930 to 1,447,895 policies.

Overall Bupa Individual Protection head of product development Steve Casey says Swiss Re, “as usual”, has produced an “excellent publication that is seen by many as the benchmark in protection sales”.

Pru Protect director of protection development Kevin Carr says: “I think given the wider economy its a positive sign for the protection industry that sales are holding up, and even rising in some areas.”

While the Swiss Re figures are mixed, Lifesearch senior policy adviser Matt Morris says it is great to see IP finally on the rise.

He says: “I think the credit crunch and recession have played a part in this. People are worried about maintaining their income, especially against unemployment, and this has had a knock-on effect for income protection sales.”

In a separate report, the Financial Ombudsman Service annual review, the number of income protection complaints dropped by 7 per cent, from 832 in 2007-08 to 774 last year.

The number of critical illness claims also dropped by 8 per cent, to 586 last year compared to 638 in 2007, indicating that the industry is working hard to remedy customer problems and improve clarity for the consumer, says Morris.

The drop in complaints has also been a result of the Association of British Insurer’s Code of Practice on long-term protection, suggests Carr.

He says: “The ABI initiative around non-disclosure is delivering positive results here and helping to re-establish trust.”

However, Casey points out that while the results from the FOS are promising, more work needs to be done to understand why these numbers of people are still complaining.

Need I point out that PPI complaints increased three-fold, representing 31,066 of the FOS’s total 127,471 complaints. Surprised?

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