Critical illness sales soared by over 35% in 1997, fuelled by the recovery in the mortgage market which accounts for almost three quarters of sales.
Healthwatch, the annual survey of the critical illness and income replacement insurance market from reinsurer Swiss Re Life and Health, found that a record 635,764 new critical policies were sold last year, up from 470,468 in 1996. In recession-bound 1991 the figure stood at just 132,500.
However, Swiss Re claims that there is still substantial room for growth. “Mortgage-related free standing critical illness policies remained constant at 23% of overall free standing sales and mortgage related sales increased by 13% over those in 1996,” it said. “This is an area that has great potential and the number of existing mortgages that are not covered by critical illness could be very productive in the future.”
The average sum insured under CI showed a recovery of almost £8,000 to £49,368 after declines in 1994 and 1995.
Bancasseurs now have 60% of mortgage-related sales of free standing policies and 36.5% of the total market. The four largest writers of new business during 1997 were Halifax, Black Horse, Midland Life and Nat West Life, together notching up 150,000 new policies. IFAs had a good year, with sales up 33.6%, nearly 30% of all individual CI sales.
New sales of income replacement insurance rose by 12.6% with 143,533 new policies taken out. But the levels are still some way short of the 160,000 sales in 1991. Average new annual benefits increased by 6% and Swiss Re technical manager Ron Wheatcroft said there were between 1.2m and 1.3m income replacement policies in force in the UK at the end of 1997. IFA sales were up 4% and direct salesforce/ appointed representatives up just over 8%.