Sales of new long-term individual protection policies fell by 5.5 per cent over 2023, research from Swiss Re has reported.
The research, Swiss Re’s Term & Health Watch, found 1,997,450 new term assurance, whole life, critical illness, and income protection policies were purchased last year.
This represents a continued decline from 2022 which saw a 7.8 per cent decrease in sales.
However, Swiss Re technical and industry affair manager L&H and co-author of the report, Joanna Scott, pointed out that products were not impacted equally.
She said the overall drop could be mainly attributed to the performance of the term insurance market, which experienced a 10.4 per cent drop overall, and the critical illness market.
Meanwhile, good growth was observed in income protection, guaranteed acceptance whole of life, and underwritten whole of life insurance.
Scott also attributed the fall in sales to a rise in mortgage rates.
“Last year and the year before we saw the Bank of England raising interest rates 14 times consecutively and had the corresponding increase in mortgage rates,” she explained.
“We think quite a lot of the slowing mortgage market can be attributed to this as, while not all protection sales are linked to mortgages, quite a lot of protection conversations happen there.”
Scott also attributed the fall in sales to “distribution changes” as there was a large drop in the non-advised sales in the protection market, especially for level-term assurance which saw almost 100,000 policies drop.
“Some non-advised firms, due to the introduction of consumer duty, either shifted to advised firms or ended up shutting entirely, so quite a lot of the drop came from that area particularly.”
Positivity
The report was not all doom and gloom however as there was positive growth in income protection.
“For income protection, only 7 per cent of that product is non-advised so we would expect that to be a bit more insulated from the drop we saw in other areas,” Scott explained.
She additionally said there has been some “great work” from the industry in promoting income protection, such as from groups like the Income Protection Taskforce.
Scott also said: “There’s definitely some positive news for the advised numbers because, if we were to take away the non-advised numbers, the advised numbers would stay relatively stable.
She stated that, considering it has been a tough couple of years, this is “no mean feat” and that advisers have “done a great job” in both getting new customers and keeping customers’ cover.
tom.dunstan@ft.com
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