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Mixed messages for the protection market in 2012

Paul Thomas

According to a report out from Swiss Re, total protection sales fell 2.7% in 2012, but sales of income protection rose 9% over the period. The provider’s latest term and health watch, published in May, shows protection sales fell from 2,026,374 policies in 2011 to 1,971,074 in 2012. New sales of income protection products rose 8.7% in 2012 to 120,094, up from 110,472 in 2011.

In total, the number of individual term assurance and term with critical-illness policies suffered a 1% dip in sales in 2012 to 1,473,404, down from 1,488,106 in 2011.

On a standalone basis, there were 946,645 term policies sold in 2012, down 1.8% on the 964,225 sold in 2011. However, term with CI policies increased by 0.5% from 523,881 policies sold in 2011 to 526,759 in 2012.

Mortgage-related term sales increased by 7.9% from 529,045 in 2011 to 571,065 last year. Mortgage-related sales equate to 39.7% of total new term sales with and without CI, up from 36.2 per cent in 2011.

Whole-of-life sales suffered a 14.1% fall in sales year-on-year from 400,682 in 2011 to 344,110 in 2012. Individual critical-illness sales were up 1.7%, from 551,382 in 2011 to 560,911 in 2012.

Swiss Re market head for UK life and health Sally-Anne Etienne says: “The market has generally remained stable despite quite difficult economic conditions in 2012. The growth in income protection and mortgage-related sales is very promising… The mortgage market review will be introduced in 2014 and this is expected to make the advice process more professional, making more people aware that they need to protect their loans.”

Financial advisers and mortgage brokers were responsible for the majority of sales in each product category. In 2012, advisers sold 63.9% of term assurance policies, 58.7% of critical illness policies and 56.5% of income protection policies. Providers sold 32.7% of term policies, 40.4% of CI policies and 43% of IP policies, while internet and telesales accounted for 3.4%, 0.9% and 0.1% of term, CI and IP policies respectively.

The top five providers of term and term and CI policies in 2012 were Legal & General, Aviva, Lloyds Banking Group, Friends Life and Royal London, which includes Bright Grey and Scottish Provident. For individual CI sales, the top five providers were Legal & General, Lloyds Banking Group, Aviva, Friends Life and Royal London. The top five providers by IP sales volumes in 2012 were Lloyds, Friends Life, LV=, Aviva and L&G.

The average sum assured in term assurance sales stood at £126,168 in 2012, up 3.7% on the £121,522 average the year before. On average, annual premiums − including term and term and CI – have risen 3.6% from £363 in 2011 to £376 in 2012.

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