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Mutuals’ market share will sink as Standard Life floats

20 years ago, mutual offices took over half of new business but this is set to plummet to just 4.5% by next summer

The market share of mutual life offices will fall to its lowest level in over 100 years if Standard Life floats next year.

Mutual life companies are currently pulling in 15 per cent of new busines flows but this will fall to around 4.5 per cent when Standard Life demutualises.

As recently as 20 years ago, mutuals were taking in well over half of all new business but since then Norwich Union, Friends Provident, Scottish Equitable, Scottish Widows and Clerical Medi- cal, among other have all demutualised.

Standard plans its flotation for next July and this will leave Royal London as the biggest mutual with a 2.3 per cent market share followed by NFU, Liverpool Victoria, Wesleyan, MGM and Alliance. Others, such as Homeowners Friendly Society, have such a small market share they do not register on the ABI’s market share figures.

Cazalet Consulting principal Ned Cazalet says the share of mutuals is likely to continue moving down as the big insurers sew up distribution deals such as multi-ties.

Cazalet says: “There are very few mutuals left writing significant levels of business. When Standard Life demutualises, mutuals’ market share will be under 5 per cent and the biggest by a long way will be Royal London.”

Which? senior policy adviser Mick McAteer says this long-term trend worries him because mutuals typically provide better value to consumers, particularly in such areas as higher with-profits payouts.

He adds that the lack of big mutual players in the market could reduce competition and result in higher charges as the proprietary companies bow to pressure from shareholders for hig- her returns.

McAteer says: “I am concerned that in the longer term, there will be a levelling down of competition as proprietary companies have to find money to pay dividends, reducing payouts to policyholders.”


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