The insurer’s annual Term and Health Watch report, released yesterday, shows a modest increase in new term assurance business but Swiss Re points out that much of this may be down to the tax incentives offered by pensions term assurance.
Swiss Re believes “the withdrawal of PTA only a few months after its introduction will definitely not have helped inspire consumer confidence”.
But rates for term assurance fell in 2006 by an average of 6 per cent due to greater competition for business with higher sums assured.
Price remains the key factor when intermediaries are deciding where to place business and Swiss Re found there is very little difference between the most competitive rates and frequent re-pricing has become the norm.
But unfortunately 2006 saw an 11.5 per cent reduction in new income protection business which means only 130,000 new policies were written so it comes as no surprise that the income protection gap has stretched to £175bn.
Swiss Re says: “The industry needs to increase its efforts to inform consumers that income protection is an essential, good value method of protecting their lifestyles.
“A radical rethink is required to make this a mass market product with much of the complexity needing to be taken out and simple marketing messages being utilised.”