The company’s full-year results revealed a leap in demand for its D2C services, with new business volumes reaching £165m on 31 December 2015, against 2014’s figure of £34m.
According to the report, this dramatic increase was helped by the firm injecting further investment into its targeting non-advised consumers, and the launch of simple direct application life insurance products last year.
Royal London also also revealed volumes for its intermediary pensions business were up 37 per cent, jumping to £6bn in 2015 from £4.5bn the previous year.
The insurer said this was due to the further rolling out of auto-enrolment, boosted by its individual pensions and drawdown propositions.
This follows last week’s announcement that it plans to launch an ‘early-warning’ drawdown service for advisers.
Intermediary protection volumes almost doubled compared to the 2014 figure, reaching £502m from £336m.
“Our direct-to-consumer division is now making significant headway by providing better value for money.” Phil LoneyPhil Loney, group chief executive of Royal London, said it was “pleasing” that sales of protection products through intermediaries are now “surging ahead”, after the company made a considerable investment in its digital and telephone-based propositions.
“Our direct-to-consumer division is now making significant headway in the market segments where it operates by providing better value for money and fairer products than the market incumbents.”
He added: “The strong growth in revenues has allowed a substantial increase in investment in the business at the same time as growing profits and strengthening the capital position of Royal London.”
New business profit for the whole business was up 61 per cent on 2014 at £137m, boosted by sales of group pensions and income drawdown products. .
Mr Loney said 2015 was a record-breaking year for the group’s trading performance, reflected by its healthy increase in operating profit.
“The fourth quarter of the year saw pension sales reach new highs, which is particularly satisfying as it follows on from the announcement that we will in future be sharing part of our profits with pension customers through our ProfitShare arrangement.”
Like most fund houses, Royal London Asset Management saw a downturn in new business inflows, suffering in a year of chaotic market conditions.
The report cited new business inflows of £3.1bn in 2015, down from the more buoyant period of 2014 when inflows reached £3.8bn.
Royal London remains well capitalised, with its surplus increasing to £3.5bn from £3.4bn in 2014.
Matthew Harris, director of Cowdenbeath-based Dalbeath Financial Planning, denied that direct-to-consumer business threatens the financial advice profession.
“Some consumers prefer to purchase pension and life insurance products directly, but others prefer to get professional independent financial advice first.
He said when it comes to pensions good advice pays for itself many times over, particularly because the impact of picking an expensive provider or fund is huge.
“As for getting an IFA to provide life insurance advice, this is usually completely free to the consumer anyway. There is a healthy future for both the direct and advised sales channels.”
katherine.denham@ft.com
