Gen Re has reported sales increases for most protection policies with income protection showing the strongest levels of growth while guaranteed whole of life plans have struggled.
Overall new protection business sales increased by 3.9% in 2016 compared to the previous year, while income protection sales increased by 17% during the same period, according to the reinsurer's annual Protection Pulse report for 2016.
In addition, critical illness sales increased by 5.2% and life insurance sales were up by just 1.5%.
Within the life insurance segment, guaranteed whole of life business has decreased "dramatically" by 18% compared to the previous year.
Income protection in depth
However, while the report said that income protection continues to be 'the star of the show', it still only constitutes 6.7% of the market in terms of premium volume.
The income protection growth was attributed to the Seven Families campaign, innovative tools for advisers such as IPipeliene's Solution Builder and a rise in self-employed people looking to protect income.
The report also highlighted that protection sales have increased by 35% compared to 2014.
Life cover: 'the surprising story' of dramatic WOL reductions
Overall life insurance growth in 2016 was limited at 1.5%, but at least it increased — in contrast to 2015 when sales fell by 0.4% compared with 2014.
The reinsurer said this "continues to feel like the under-performer of protection products and this is disappointing given the level of premium rates in the market and the value that term assurance represents."
It also highlighted "the somewhat surprising story" of the second half of last year as the dramatic reduction in the sales of Guaranteed Whole of Life business for H2, which had decreased by over 18% compared with the same period in 2015.
This is following a rise of 5.1% for H1 when compared with H1 2015. This meant that for the year overall, sales were down 5.7% on 2015 by policy count and down 6.9% by premiums.
Gen Re said: "As this product line is sensitive to marketing investment, maybe it reflects a reduction in marketing spend in the second half of the year."
Restricted advice increases
In terms of distribution channels, non-advised sales decreased by 4%, perhaps due to the whole of life trends, restricted advice sales increased by 18.5% and IFA sales increased by just under 1% - although IFA sales still represent 60% of sales overall measured by premiums.
Gen Re questioned whether the growth in non-advised sales could be attributed to the ways insurers reported their numbers or whether more advisers were switching from independent to restricted advice models.
The report has been launched ahead of Gen Re's annual ReGenerate conference, which takes place in London on Wednesday 10th May.
Gen Re: 'Unfortunately Q4 was 'the fly in the ointment'
Jules Constantinou, life/health regional manager: UK and Ireland at Gen Re, said: "It's great to report such positive news. We had been on tenterhooks to see whether the strong growth we reported for the first half of 2016 was going to continue until the end of the year.
"Q3 did not disappoint, although unfortunately Q4 turned out to be the fly in the ointment, with sales falling against the same quarter in 2015.
"So, while the overall trend looks very positive, we need to make sure Q4 was just a blip."
Tom Conner, director at Drewberry Insurance, said: "It's positive to see the protection market grow as a whole and particularly great to see continued double digit growth in income protection sales.
"However, any substantial growth for income protection comes from a low starting point in relation to life and critical illness cover, so a lot more work is needed to educate both advisers and the public on the importance and priority given to this vital policy."
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