Providers pushed to increase product innovation
The crisis in the housing market is the biggest threat facing the protection market, according to a Watson Wyatt report.
Andy Sanders, senior consultant at Watson Wyatt, said the market was set for a challenging year with providers having to look towards product innovation to survive.
The greatest threat is the "pessimistic" outlook for the housing market and in particular "the risk of a sustained decline in the number of residential property transactions taking place relative to previous years".
He said that bancassurers were most likely to suffer as a result.
However, Sanders added the protection market could reap rewards on the back of the credit crunch as protection product sales were not completely reliant on residential property.
He concluded the market should examine "the needs of different segments of the population and focus propositions accordingly," and that innovation may well be "the only way to encourage more consumers to get the long-term protection cover they truly need".
