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Research pointing to strong growth for life sector

The UK life market will grow by over £1.8bn in the next four years to around £5bn, according to research by Datamonitor.

In the UK Life Assurance 2004 report, author Liz Hartley says growth will be fuelled by recovery in the stockmarkets and continued popularity of protection products.

However, she warns that life companies will have to work hard to regain consumers&#39 trust.

Hartley&#39s report indicates a revival of the with-profits market in 2006 as equity returns improve, which she believes could cause a decline in the unit-linked bond market.

She predicts the top 10 players in the insurance markets will continue to prosper in the next few years. She says the bigger companies have used their size and ready access to capital to weather more difficult market conditions.

Hartley says medium-sized companies will find themselves as merger targets while the smallest competitors will continue to decline. Her figures show small companies&#39 market share has shrunk from 19 per cent in 1999 to 5.1 per cent in 2002.

She predicts that bancassurers will increase their market share significantly in the next four years.

Hartley says: “Life insurance companies will have to work hard and make sure they have learnt their lessons from the last few years if they are to regain customer trust and interest.”

Norwich Union strategic development Stephen Mann says: “Business is obviously getting sucked towards the bigger players at the moment, leaving the smaller ones in no man&#39s land. They will either have to merge or acquire, which will present a major challenge for many. They will not be targets for the big firms, which will look to grow organically.”


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