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Quality plea to help close 2trn gap

Protection firms urged to address consumers’ needs

Protection sales have dipped again and the industry has failed to make a dent in the 2.3trillion protection gap, according to Swiss Re’s Term and Health Watch report 2006.

The firm says it is encouraging that the gap remained unchanged last year as it has risen each year since 2002 but it says the industry needs to reassess the quality and value of its products and how these are communicated to consumers rather than focusing on price alone.

The report reveals that individual term insurance, including accelerated critical-illness sales, fell by 10.4 per cent last year to 1,584,208 policies sold compared with 1,767,208 sold in 2004. Individual term insurance policies excluding CI also dropped by 8.5 per cent.

Individual CI policy sales fell by 14 per cent from 736,671 to 632,285 and individual inc ome protection sales fell by 9 per cent from 162,061 to 147,285.

Whole of life saw the smallest proportionate reduction of 6.5 per cent from 219,927 to 205,532 plans. About 75 per cent of whole life plans are sold through direct mail, 15 per cent are sold through IFAs and 10 per cent are tied sales.

Swiss Re head of marketing Mark Johnson says: “It would be easy to become depressed reading these figures. Another year of falling protection sales, despite further reductions in term and critical-illness premium rates, signifies a sector that is struggling to get the benefits of its offering over to consumers. As continually reducing premiums alone does not appear to stimulate demand, perhaps the industry sho-uld focus more on raising awareness and understanding of protection needs.”


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