Speaking at the Marketforce future of life assurance conference yesterday, Matthews admitted that the industry “took its eye off the ball”.
He added that firms became “mesmerised” by writing new business at the cost of the long-term needs of customers and admitted the sector failed to stamp out poor sales practices.
He said: “Our industry took its eye off the ball in recent years. I believe the embedded value accounting system did not help with its over emphasis on new business and new business profits.
“The industry became mesmerised by new business, writing it at too high a cost, acquisition costs were unsustainably high, product complexities were designed and concealed commission and poor sales behaviour was condoned rather than stamped out.
“Our hunger for ever-increasing new business numbers was insatiable. Just like people at large our short-term wants overrode our long-term needs.”