Research
Research carried out by reinsurer RGA suggests that providers have an unrealistically optimistic opinion of the general health of the protection market. The survey, which was carried out during an actuarial workshop, asked whether there was a demand for pension term assurance. The questionnaire revealed 17 out of 30 respondents believed that the protection market will see little change in 2005 from previous years with growth or decline of no more than 5%.
RGA, however, claims that such estimates fail to factor in the strengthening stock market, rising premiums and the cooling housing market. With such considerations taken into account, it expects a decrease in protection business of more than 10%.
RGA also predicts that providers will soon be witnessing a significant increase in critical illness (CI) claims, somewhere in the region of 50% year-on-year. "The longer a policy is in place the greater the likelihood of a claim," said Jason Hurley, head of sales and marketing at RGA.
Participants were also asked their opinion on whether income protection would be capable of achieving significant growth, to the extent that it could impact on CI cover. Exactly half of those asked believed that even if commission rates increase and underwriting is made easier, the product would still never reach anything close to CI sales.
