2019 was another record-breaking year for the UK individual protection market, according to latest industry figures just released, with income protection (IP) being the “stand-out” success story in a “stand-out” year.
Total APE (annual premium earned) for the year topped out at £779m, a 6% increase on 2018, according to the figures, compiled by GenRe.
The reinsurer’s monthly Protection Pulse report shows that over 2.2 million new policies were sold in 2019, an increase of 7% over 2018.
The report said it is “great” to see this increase in coverage, including the continued “dramatic” growth in IP sales buoyed by the Universal Credit “carve-out” for mortgage payments and the launch of bespoke solutions for the rental market, resulting in a 21% rise in IP APE on 2018 at £68.9m.
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The report also said it was encouraging to see a similar increase in IP sales by policy count, with sales up 19% – unlike 2018 – leading the report’s authors to suggest that the trend to cheaper, budget IP products may have perhaps slowed.
All product lines in Protection Pulse experienced growth in premium volumes across 2019, with steady growth of just over 5% in the term life market, a 6% growth in the underwritten whole of life market, driven by a strong second half of the year and an 11.8% increase in the sale of guaranteed acceptance over-50 whole of life plans.
Critical illness (CI) premium volumes increased by a smaller amount – just 2.5% – which the report’s authors described as “disappointing” in comparison to other product lines, although they said the industry could “take comfort” from the fact that sales of CI continue to grow.
Premium growth from the non-advised channel continues with a 9.7% growth in 2018 backed up with an increase of 7.4% in 2019. The report authors said this continues to be an area to watch as the challenger brands in the space develop and improve their propositions.
The report authors said: “We have seen considerable volume come through these newcomers, the growth in established brands selling direct to their consumers is of interest. Revenues from the independent and restricted advice channels have increased by 7.6% and 1.2% respectively.”
The authors added: “We are happy to see the hard work from across the industry to widen access and improve on product offerings has led to considerable growth across all segments. This means more people getting the life, CI and IP cover they need.
“We recognise that 2020 will continue to be a challenging year for many reasons. We hope, however, that we will see continued growth in the protection market, that we continue to offer much needed insurance to the UK population and look forward to a return to more normal times.”
Roy McLoughlin of advisory firm Cavendish Ware and a member of trade body the Protection Distributors Group, said that in “such uncertain times” the figures will provide a “welcome boost” for the protection industry.
He said they show that “prevalence of communication”, coupled with
“collaboration within the industry” can clearly result in increased sales.
He said: “As the COVID-19 crisis manifests itself, people will naturally examine their own mortality. The industry should therefore continue its new wave of increased communication, as in many situations the natural
solution will to be to review levels of protection.”
He added that the furlough scheme – whereby the Government has covered, to date, a proportion of individuals’ incomes throughout the pandemic – has drastically changed the landscape “undoubtedly” and arguably has led to many, including the Government, to appreciate that increased levels of financial self-sufficiency are required.