Gen Re shares the results of its Protection Pulse for the half year 2015, revealing a freefall in restricted advice sales but a pick-up in income protection (IP.)
Did 2015 start on a positive note?
As 2015 dawned, ever the optimists, we asked ourselves whether we could look forward to a better picture.
Unfortunately, the figures in Table one [all tables are below] tell you all you need to know.
Q1 sales were down significantly on the same period last year, with January being a particularly poor month (see Table two).
So where are the good stories?
Not in the area of restricted advice, that is for sure! Sales in this channel continue to freefall and as you will see from Table five, in the first half year they have outstripped the decline we saw in Q4 last year, which was 20%.
Although in premium volume terms, sales through the non-advised channel fell between Q1 and Q2 this year.
They are still at their highest level since the start of 2014 and for the half year 2015, are higher than 2014 by just over 9%.
Sales through this channel now represent just less than 13% of the total market sales, with restricted advice at 21% and independent advice at 66%.
So where do the customers, who were previously serviced by the restricted advice channel go now to buy insurance?
If the overall market statistics are to be believed, it would seem that some of those customers are not going anywhere.
We looked at the position by policy count to see whether this showed a different picture (see Tables six and seven).
While there was a greater increase by policy count in the independent advice channel in Q1, this was not seen in Q2, and the increase in sales in the non-advised channel looks fairly consistent both by premium and policy count.
So while at least some of the restricted advised customers are turning to different distribution channels to buy insurance, if you look at the fall in policy count, not all of them are.
Did Cinderella finally go to the ball?
While mortality and critical illness continue to dominate as a proportion of overall sales, the underlying picture is not quite so rosy. Mortality sales were down in Q1, but with a better Q2 result, they ended up flat for the half year.
Accelerated Critical Illness sales fell in both Q1 and Q2, and as seen in Table 10 ended up down by 5.3% on the same period last year. This echoes the pattern we saw in Q4 last year.
As in the last bulletin in 2014, it is not immediately obvious what is causing this decline in Accelerated Critical Illness sales.
Could advisers perhaps be turning their attention to income protection (IP), or is it possible that the restricted advice channel (which has declined dramatically) was selling more of this type of business?
Sales of IP have continued to increase quarter on quarter and for the half year were up 16.3% on the same period last year (see Table ten).
Sales are now at their highest since the start of 2013 and compared with the first half year 2013, they are up by almost 25%. It seems that Cinderella may finally have got to go to the ball!
