The number of critical illness and income protection policies sold through IFAs increased in 1999, a...
The number of critical illness and income protection policies sold through IFAs increased in 1999, according to Swiss Re's latest Healthwatch report.
The reassurer says 270,440 CI policies and 61,022 IP contracts were sold via the IFA channel, an increase of 22.5% and 2% respectively.
While intermediaries significantly increased their market share of CI business from 31.8% in 1998 to 34.5% in 1999 (up 22.5%), their share of the IP market dropped by 18% to 32.3%. However, Swiss Re research shows that the value of IP policies arranged through IFAs is more than double those arranged through direct salesforces and appointed representatives.
The average benefit of a policy arranged through an IFA was £13,995 compared with £6,708 from a direct salesforce/tied agent while the average IFA premium was £412 compared with £296.
Accelerated term CI sales via IFAs grew by over 90% in 1999 and endowment acceleration by 6.7%. Sales in both areas reached nearly 114,000 through this channel. Accelerated whole of life sales fell, as did purchases of standalone cover.
Top five companies in terms of CI sales were CGU, Legal & General (L&G), HSBC, Lloyds TSB and Scottish Provident. Top five IP providers were Lloyds TSB, L&G, Friends Provident, Countrywide Assured and HSBC. Both L&G and HSBC are new entrants to the IP market yet achieved sales of 17,445 and 12,904 respectively.
Overall, new policy sales for critical illness grew to £738m, rising by 12.8% in 1999 and representing a tripling in sales since 1994. New IP sales were up 21% on the previous year to almost £190m.
Ron Wheatcroft, technical manager at Swiss Re Life & Health, said that sales figures were likely to have been boosted by the UK's strong housing market and that these healthy levels may not be sustainable. He said: "Once again, this year's growth is linked to the buoyant mortgage market and there is concern that a downturn in mortgage-related business will result in a fall in new health protection sales.
"Increasing consumer awareness of the need for self-provision and to provide income replacement is being reflected in sales figures and there is a clear challenge here for product providers to extend their repertoire."
But Wheatcroft warned: "The UK CI and IP markets are becoming more sophisticated and the impact of medical advances and improved diagnostic techniques will call for sharper risk management and pricing skills."
