The Association of British Insurers has been challenged to reveal how much new business is recycled after its latest figures showed that new life and pension sales leapt by 21.9 per cent in the first quarter of 2007.
Total annual-premium equivalent new business reached £4,115bn from £3,377bn in the same period of 2006. Individual pension business grew by 35.8 per cent to £1,350bn from £994m.
The ABI claims the figures prove the UK market remains in good health but Hargreaves Lansdown head of pensions research Tom McPhail says the ABI must publish data to show how much of this business is recycled.
McPhail says: “It is hard to take its new business announcement seriously when it does not publish its redemption figures alongside it. It is well recognised that much of the insurance industry’s new business is, in fact, recycled existing business. As a survival strategy, consuming your own body parts smacks of desperation.”
ABI spokesman Jon French says such data is not currently available but the trade body is investigating ways of collecting the information.
French says: “Whether or not this data is published, the fact that must be acknowledged is that there is some recycled business but, rather than being churned for the sake of it, on the whole it shows the healthy competition in the sector between providers.
“It also shows how adviser firms, such as Hargreaves Lansdown, are giving their clients the best service by ensuring there are in the appropriate investment vehicle.”
ABI director general Stephen Haddrill says: “These figures show that the long-term life and savings market in the UK remains in good health. The A-Day reforms of April 2006, when the pension tax regime was simplified, led to a significant increase in sales in the second and third quarters of 2006 as expected. It is good news that since that surge, year-on-year sales have remained at higher levels than before A-Day.”