Highclere Financial Services partner Alan Lakey is concerned over the slump in protection sales in the first half of this year.
He has voiced concerns about a possible widening of the protection gap as insurers’ interim results reveal widespread falls in protection business.
Standard Life saw sales fall by 50 per cent and Prudential’s business was down by 33 per cent compared with the first half of 2006 and Aviva’s sales dropped by 23 per cent.
Companies which did report rising sales have seen only small increases. Market leader Legal & General’s sales were up by 5 per cent, Aegon Scottish Equitable business rose by by 2 per cent and Friends Provident saw a 1 per cent rise. Bright Grey bucked the trend with a 24 per cent increase.
Lakey says: “These figures are scary. I think that Standard Life, in particular, is lacking focus in protection and that, in a flat market, product providers need to be at the top of their game.”
Standard Life spokesman Barry Cameron says: “The market was quite subdued in the first half, forcing even greater price competition, which is not something that we are interested in getting involved in.”
Aviva also says fierce price competition contributed to poor sales but Prudential claims its focus has been on its joint venture with Discovery and developing its flexible protection Plan for a September relaunch rather than pushing sales.
Friends Provident says rising interest rates starting to filter into the property market significantly contributed to the stale protection market and Legal & General believes this will only worsen in the second half of this year.