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IFAs grab a bigger slice of protection market

Independent advisers increased their share of individual protection sales across all product lines last year, taking business from the tied channel.

Swiss Re’s annual Term & Health Watch report shows the IFA/independent channel, which includes limited panel advisers, saw increased share in 2009 for individual term insurance, critical illness and income protection.

IFAs’ market share for individual term insurance rose from 50.2 per cent in 2008 to 53.5 per cent in 2009. IFAs’ share for CI plans increased from 47.6 per cent to 50.3 per cent.

Income protection saw the biggest uplift in market share for IFAs, from 46 per cent to 55 per cent.

Tied share of individual term insurance fell from 43.7 per cent to 41.2 per cent and the tied share of critical cover dropped from 50.6 per cent to 47.9 per cent. Tied sales accounted for 42.7 per cent of total IP business last year compared with 53.6 per cent in 2008.

Kevin Carr Consulting managing director Kevin Carr says: “Everyone is saying IFAs are moving out of protection and tied sales and internet sales are taking over but these figures suggest the opposite and show the percentage of protection sold by advisers is increasing in comparison with the tied market. This is positive news for the industry.”

Overall, new whole of life, term insurance and CI sales all increased last year. New whole of life business rose by 12.6 per cent from 282,438 policies to 318,078, term insurance sales were up by 4.1 per cent from 1,477,895 to 1,507,685 and CI sales grew by 3.8 per cent, from 511,045 to 530,214.

IP was the only sector to see a decline in sales figures last year, with a 7 per cent drop from 126,815 plans to 117,288.

It follows a rise in IP sales in 2008 when the number of new policies rose from 111,780 to 126,815. This was due to the success of a limited payment budget plan from HSBC that was written on a long-term basis but which only paid for a maximum of one year.

Highclere Financial Services partner and Adviser Alliance director Alan Lakey says: “If we take HSBC out of last year’s figures, then IP sales actually fell. Maybe HSBC blitzed all its client bank last year and this year there is less for it to do whereas there has been an uplift in IFA sales.”

The report found that the life insurance protection gap has grown from £2.3tn to £2.4tn, the first rise since 2004.

Swiss Re attributes this to a decline in the number of in-force policies, mainly endowments taken out to support a mortgage, which have now matured.

Co-author of the report Ron Wheatcroft says there are encouraging signs that the industry is bringing out more innovative products but admits that growth is modest.

He says: “The Government can play a key role by setting out clearly to consumers that they need to take positive action to protect themselves against risk.”

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