Swiss Re’s annual survey of new business for the UK individual term life, critical illness, income protection and whole life products has revealed that last year 1.6m new term assurance, whole life, critical illness and income protection policies were sold, an increase of 4.1 per cent.
The number of term life cover only new policies increased by 5 per cent, while the number of term life cover with critical illness included increased by 5.6 per cent.
In terms of whole life cover, the number of new guaranteed acceptance whole life policies fell by 1.2 per cent, but the number of new non-linked whole life policies increased by 13.8 per cent and the number of new unit-linked whole life policies increased by 9.5 per cent.
The number of new critical illness policies, stand-alone and acceleration of life cover combined, increased by 4.4 per cent, and the number of new income protection policies increased by 6.7 per cent.
The firm stated that while it is good to see some increases, protection cover among UK citizens remains “woefully low”.
The report also pointed to findings that consumers are very aware that they will need to do more themselves as the welfare state comes under greater pressure - but that they often lack confidence in their ability to take the right decisions.
The research uses the views of 47 leading industry figures, questioned in March and April.
“Encouragingly, most believe that the protection market has the ability to adapt to the changing demands and needs of its present and future customers,” it noted. “Specifically, that respondents indicated that they feel the industry is responding well by improving its online propositions.”
It added that digital and other direct to consumer channels will help to access customers but they will only buy if they are engaged to do so. “Our challenge, therefore, remains to turn the mass dis-engaged into the mass engaged.”
Meanwhile Legal and General paid 97 per cent of all claims on its group protection products, totalling £264m, representing a £26m increase on the 2013 figure of £238m.
This is also more than one fifth (21 per cent) of the £1.26bn paid by the group protection industry overall.
For group life policies the company paid £220m and 99.7 per cent of 2014 claims received, up from 99.3 per cent in 2013 and close to the industry average of 99.8 per cent.
L&G’s claims were also paid quickly - over 96 per cent were paid within 5 working days of receiving all the information. Group critical illness claims paid increased from £7m and 79 per cent in 2013 to £8.6m and 82 per cent in 2014, slightly higher than the industry average rate of 80 per cent.
The benefits paid by their group income protection policies also increased - up from £28.2m in 2013 to £35.4m and the proportion of claims paid remained high at 95 per cent, compared with the average of 83 per cent.
peter.walker@ft.com
