Protection sales have gone up, but more awareness required, says Swiss Re

More Awareness Required About Protection Products, Says Swiss Re

More Awareness Required About Protection Products, Says Swiss Re

A report by Swiss Re says although IFAs have increased their share of distribution of protection products while new business has also gone up, still more needs to be done to increase public awareness.

Sales of whole life policies, individual term assurance and critical illness covers had been higher, observed the 32 pages Term and Health Watch.

Whole life new business grew by 16.8 percent to 371, 467 policies in 2010 compared to 318, 078 in 2009, while critical illness covers registered a modest 0.8 percent growth over 2009.

New business for term policies grew by a modest 2.2 percent despite a fall in mortgage lending, while sales through independent distribution channels and IFAs rose by 7.3 percent, the report pointed out.

Income protect products were less popular and sales dropped by 5.6 percent to 110,743 compared to 117,288 in 2009.

“Despite a challenging environment, new retail protection sales figures held up well in 2010. This year could be difficult but reductions in welfare spending in the next few years could provide great opportunities for the insurance market in the longer term”, said Ron Wheatcroft, co-author of the report.

“In the meantime it will be important to keep getting out simple and unambiguous messages about the need for people to purchase protection. The industry has made progress in communicating with consumers but more needs to be done”, he added.

Commenting on the survey, Roy McLoughlin of Master Adviser said: “The positives here are that more protection is being sold through IFAs. The negative is the fall in income protection because it should arguably sit at the head of the protection table, and the fact that those figures have come down is disappointing.

“Being ill long-term is the thing that is most likely to happen to you in your lifetime. The more cover that is sold the better, but income protection should be going up”, he added.

Agreeing with Swiss Re’s findings, he alleged IFAs are not doing enough to raise awareness about income protection, which is still perceived by many as an unnecessary expense.

“You would have thought that the welfare reform act and all the subsequent publicity around it would have encouraged people to examine their long-term illness situation more, which would lead to an increase in income protection sales. This has not happened. There is a huge education process that needs to take place among advisers and the public”, he said.

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