Despite the economic downturn tightening its grip on the UK economy, new business levels for individual protection polices dipped by just £8m in 2008, from £867m in 2007 to £859m this year.
When broken down, there was a quarterly dip from £208m in Q4 2007 to £201m in Q4 2008.
The drop is a moderate fall for the individual protection market, which includes term assurance, whole of life, income protection, critical illness, long-term care and life products.
Meanwhile, single premium new business sales dropped 19.5 per cent from £1.3bn in 2007 to £1,01bn in 2008.
ABI spokesman Jon French says: “Given the economic situation that we are in its not surprising that in a lot of different categories of new business have fallen. Particularly on the protection insurance front, people should think very, very carefully before they decide to either cancel an existing policy or decide not to take out a new policy against new debt should they be lucky enough to get a loan in these circumstances.
“Protection insurance is very important in the best of times, but particularly during times of economic downturn when redundancies are rising.”
Pru Protect director of protection Kevin Carr has been saying for some time that protection should hopefully ride the current economic downturn quite well.
He says: “While there will always be lapses, there is an increase in demand for protection products right now, especially unemployment cover, which can be bought alongside other core products such as life cover or income protection.
“Our own sales are increasing month-on-month and we expect this trend to continue throughout the year.”
Likewise, Progress from Royal Liver IFA marketing manager Aidan Dewhurst says while predicting the future of the market is proving to be a thankless task, individual protection hasn’t suffered quite as much as other areas.
He says: “This is partly due to IFAs looking for new revenue streams. To a lesser extent the Welfare reforms of last year may have had an impact, increasing the profile of protection with the general public. And, I suppose, the current economic climate has raised the need for protection products with the general public too. So there are factors that would support the suggested upsurge.”
Lifesearch senior policy adviser Matt Morris says individual protection sales are still strong and so far the market has not been severely hit. He says: “Whether that continues is difficult to say. I can’t see a rise in the market taking place without concerted action to raise the profile of protection.”
Highclere Financial Services partner Alan Lakey says these figures are positive. He says: “Hopefully the 2009 figures will hold up given the continuing downturn.”