Rising insurance costs jeopardise re-broking culture
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Intermediaries are being warned that a significant rise in protection premiums in 2012 could put an end to the re-broking culture of recent years.
It has been widely predicted that the recent European Court of Justice ruling on gender will push up protection costs in 2012 and this will be exacerbated by a new tax structure for protection offices announced in this year’s Budget.
From 2013, protection business will be taxed on profits rather than investment minus expenses, and reinsurer RGA has predicted that this, combined with the ECJ ruling, will result in a price rise of as much as 30% for life insurance policies.
Kevin Carr, chief executive of Protection Review, says this may put an end to the constant switching of policies for cheaper deals that has helped shore up mortgage brokers’ business in recent years.
He says: “After a prolonged period of falling premiums, we are now likely to see a significant increase in the cost of protection insurance such as life cover and critical illness in 2012 and 2013.
“This could put an end to the re-broking culture the market has seen in recent years.”
However, Carr adds that the changes also represent an opportunity for brokers to boost protection sales before the price rises take effect.
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