The protection market has seen a significant drop in individual critical-illness cover and income protection sales of 8.7 per cent and 11.8 per cent respectively last year, says the Swiss Re protection market report.
The report, Term & Health Watch, cites several reasons for the fall in sales. A major factor is the hardening of reinsurance rates and price increases due to the reduction in long-term guarantees.
It also points to medical advances, leading to earlier diagnoses.
The survey points out that CI still overshadows IP sales and it identifies an income protection gap in annual benefits of £130bn.
Low IP sales, it says, are due to lack of consumer awareness about the need for this type of cover. It concludes: “It is a sad indictment of our industry that despite the obvious place for IP in protecting individuals' basic income, product providers and intermediaries have manifestly sidestepped the real issue in favour of the simpler appeal of CI.”
But Lifesearch PR manager Kevin Carr says the remark is flawed although he concedes that CI is the simpler sales option.
He says: “There are a lot of mortgage lenders and exclusion-only people that do not offer income protection. The distribution of critical-illness cover goes far wider. What reinsurers need to do is work on an income protection product that is attractive to the client and not work on profit margins.”
Swiss Re global communications manager Tim Dickenson says: “Market commentators have generally predicted a fall in the number of intermediaries advising on protection business from 2005 onwards. This presents a risk that, without face-to-face advice, consumers will not purchase cover.”