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Lifesearch warns rate rise will see sales fall

Protection rates will rise, resulting in a potential loss of business for IFAs, according to the latest quarterly report by Lifesearch.

Lifesearch says premiums could rise by as much as 10 per cent this year, leading to falls in sales across all forms of protection products.

The firm is also predicting that with industry sales falling last year despite a slight dip in critical-illness cover premiums, last year’s sales figures could show a 20 per cent drop compared with 2003. Industry sales figures are due to be published in April.

Lifesearch says the cost of regulation of the industry and the increase in capital-adeq-uacy requirements for life offices have dampened sales.

It also warns that proposals to put VAT on GP reports could result in higher premiums while the increased cost of getting medical evidence and less intrusive questioning on HIV could restrict life offices’ underwriting capabilities.

Senior technical adviser Kevin Carr says: “Sales from rebroking and first-timers will drop with increasing rates industrywide so the amount of business being written will be affected in the long term.”

Chadborn Baker and Kearle principal Peter Chadborn says: “I have got the whole of the market to select from. If I was a multi-tie set-up, I might feel like my hands were tied somewhat and be more concerned.”

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