Industry
Sales of individual critical illness (CI) fell by nearly one third in 2004, according to Swiss Re's latest annual report on the protection market. The reinsurer's Term & Health Watch 2005, revealed that sales of new individual CI were down 30.9% on the previous year's figures, with new sales falling from 1,066,262 to 736,671 - the worst sales year for the past five years.
Swiss Re has attributed the decline in sales to the instability in the CI market, which has recently undergone many price and feature changes. The report also showed that sales of individual income protection (IP) and new term assurance policies dropped in 2004, with sales falling by 25% and 17.3%, respectively. Across the board, mortgage-related sales outperformed non-mortgage business. However, this type of business still experienced a decline, with mortgage-related CI sales falling by 18.7%.
"These figures show action is urgently needed to simplify products. At the same time, intermediaries need to broaden their client base rather than simply replacing existing business," said Mark Johnson, head of UK marketing at Swiss Re's Life & Health.
Commenting on the figures, Nick Kirwan, marketing director for protection at Scottish Widows, said: "The report is overly pessimistic about the market. People buying critical illness cover for the first time accounted for the majority of sales as higher premiums saw fewer people replacing their existing policies. In that context, the market has done well."
