The protection market appears to have started this year where 2016 left off – but it is too soon to get complacent
We are more than a quarter of the way through 2017 and all the signs show the protection market has continued where 2016 left off.
After several years of flat or falling sales, last year saw a solid increase in the levels and values of protection insurance sold – in some cases quite dramatic rises.
The latest figures from Gen Re Protection Pulse show overall new protection sales in 2016 were up by 3.9 per cent, with sales of income protection up by 17 per cent. Sales of critical illness cover rose by just over 5 per cent, with life cover up by 1.5 per cent.
This echoes the new-business figures of some providers for 2016. Aegon reported an 11 per cent rise in protection sales, while Synaptic Software recorded a significant spike in quotes from advisers using its Webline portal: up by 21 per cent for the first two months of the year compared with 2015, with quotes for IP up by 40 per cent.
Synaptic says the increase is in part due to the rise in the number of people remortgaging to take advantage of low borrowing rates, with renters also realising they need cover to help with the high costs they face.
The latest Swiss Re Group Watch report also shows a notable increase in IP coverage through the workplace, with a 4.5 per cent rise in policies in force in 2016.
All in all there is much to be encouraged by, but it is too soon to get complacent.
The rise in sales comes from a low starting point. And the overall level of protection coverage is still very low. Earlier this year, Royal London’s ‘State of the protection nation’ report found that just 26 per cent of people had life cover, with CI and IP much lower at 6 per cent and 4 per cent respectively.
What is more, the level of protection sales linked to mortgage sales is lagging the general increasing trend. As the Gen Re report points out, sales linked to mortgages were up by just 1.9 per cent in policy numbers – and this at a time when first-time buyers (those least likely to have existing cover) make up an increased proportion of the market.
There is a good opportunity for increasing protection sales alongside a mortgage, which should be grasped.
Mark Dennison is principal at LightBlue UK