Advisers buck trend of falling IP sales - Swiss Re

clock • 2 min read

Income protection (IP) sales have continued to slide despite an overall rise in the volume of term assurance products sold, according to Swiss Re.

However it appears advisers are growing in confidence with the product as the IFA and independent distribution channel was the only one to see growth in IP business.

The reinsurer's annual Term & Health Watch report found that new sales of individual term assurance, critical illness (CI) and whole of life policies increased in 2010.

Whole of life policies grew 16.8% to 371,467 (from 318,078 in 2009) while CI was largely static, growing just 0.8% to 534,561 (from 530,214).

And Swiss re noted that despite mortgage lending decreasing further during 2010, term business increased 2.2% to 1,540,798, compared to 1,507,685 in 2009.

New term sales through IFAs and independent distribution channels rose by 7.3%, although the average new sum assured fell 2.7% to £134,742 and average premiums reduced 3.6%.

But concerns still surround the level of IP sales which has fallen in three of the last four years, dipping in 2010 by 5.6%.

In 2006 the market stood at 130,365 sales, but dropped substantially the next year and despite a growth spurt in 2008, it has now fallen below that 2007 level to 110,743.

Maxine Smith, marketing consultant at Swiss Re and co-author of the report, explained: "Despite the increase seen two years ago - mainly as a result of sales from one product provider - the number of new IP sales has fallen once again.

"While the data continue to paint a disappointing picture, the arguments over why income protection sales are so poor are well rehearsed. It is clear that changes are necessary if we are ever to achieve greater market penetration."

"The number of new sales through IFAs/independent intermediaries increased from 64,552 to 67,443, up by 4.5% following an increase of 10.6% from the previous year, and although many providers were unable to separate IP sales by advised or non-advised sales, the data we did receive shows that almost all business is sold on an advised basis," she added.

It is telling that the top selling providers for both IP and CI are bancassurers, with HSBC leading the way in IP and Lloyds Banking Group (in the form of Scottish Widows) dominating CI.

In this sector Scottish Widows' total is almost double second placed Legal & General, while the bancassurer is also third in IP sales.

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