ABI figures report disappointing first two quarters of 2008 for the product
Sales of stand-alone critical illness (CI) products have plummeted in the first two quarters of 2008, according to figures released by the Association of British Insurers (ABI).
In a table distributed by the body which detailed sales of protection products, the value of total new premiums for the product fell from £11m in Q1 and Q2 of 2007 to £4m in the same periods for 2008.
In contrast, sales of Income Protection (IP) remained steady with a 2007 range of £12-14m being carried over into 2008 with the first two quarters showing the total new premiums to be £14m.
Jon French, assistant director of media relations at the ABI, said the fall was most likely due to the suffering housing market: "Policies linked directly to mortgages are down and others including stand-alone CI which may be linked to mortgages are also down so, by and large, I think this is a function of the slowing property market."
He added: "Hopefully, as the housing market starts to pick up, which it will at some point, the products which are closely linked to house sales will also improve but we can't know or predict accurately when that will start."
Roy McLoughlin, senior partner at Master Adviser, said there was a fundamental problem with CI pricing: "There is this anomaly where I would say 90% of the time that life and CI is cheaper than stand-alone CI. If you do the quote, it works out that way so what's the point of doing CI on its own. Any adviser should be selling guaranteed when they can."
Over all, individual protection premiums have declined from last year but there is still a marked improvement in the second quarter of this year compared with the first. Figures show that while individual protection sales had decreased from £225m in the first quarter of 2007 to £208 in the fourth quarter, the first two quarters of 2008 saw those figures rise to £217m and £215m respectively.
Other figures showed group life sales which were at £37m in the first quarter of 2008 suffer a slight decrease against the quarter before, when they were at £40m, but resurging to £49m in the second quarter.
The value of group premiums had decreased overall from £86m to £68m throughout 2007 but showed a marked resurgence in the first two quarters of this year, rising to £88m in the second quarter. However, the value was still lower than for the second quarter of 2007 where group premiums reached £91m.
