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IFAs facing a challenge in income protection sector

Income protection sales sho-wed a “disappointing” 3 per cent rise last year, a further indication that providers are failing to penetrate the market, claims reinsurer GE Frankona.

In its survey of the IP market in 2001, GE Frankona says the overall growth in the market was fuelled by sales of budget-style products which offer less coverage and charge lower premiums.

Budget sales, which are often linked to mortgages, increased by 25 per cent to 35,168 from 28,066 in 2000 while sales of traditional plans dropped by 2 per cent to 148,701 from 151,383.

IFAs accounted for 44 per cent of sales, selling 53 per cent of standard plan sales but only 8 per cent of budget sales.

Tied salesforces and bancassurance took 33 per cent of overall sales, with appointed representatives making up the remaining 23 per cent.

By the end of 2001, there were 1.3 million individual plans in force, up from 1.26 million in the previous year.

An additional 1.8 million lives were covered under group schemes. Further details about group business will be forthcoming in two weeks when GE Frankona publishes its group survey.

Marketing analyst Louise Roche says: “The continued success of budget income protection comes as no surprise, given the ongoing housing boom and the fact that over 90 per cent of budget income protection sales are linked to mortgage protection. The market for the traditional product is clearly not growing. As this is where IFAs generate most sales, they clearly have a challenge ahead of them.”


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