Swiss Re's Term and Health Watch 2013 finds a stable UK protection market in 2012

08 May 2013, London

  • 1% decrease in new individual term assurance sales, growth in mortgage related sales
  • Strong growth of 8.7% in income protection sales, trend towards limited benefit products
  • Individual critical illness covers stable, 1.7% increase in new sales for the year
  • Individual whole life sales drop 14.1%, reflecting changing marketing practices from key market players
  • Swiss Re's Term and Health Watch 2013 finds that the UK individual protection market remained overall stable despite the difficult economic background in 2012. Income protection provides the highlight for the year with a strong 8.7% growth in new sales. The report also finds that the industry generally coped well with the impact of gender-neutral pricing, the changing tax basis for life products and that there is a positive industry feeling towards developing simple products.

    Term and Health Watch is Swiss Re's annual snapshot of the UK protection market. This year's report is based on comprehensive data from 27 insurance providers representing close to 100% of all individual protection sales. The report covers the individual term assurance, critical illness, income protection and whole life markets.

    "The market has generally remained stable despite quite difficult  economic conditions in 2012," says Sally-Anne Etienne, Swiss Re Market Head for Life and Health in the UK. "The growth in income protection and mortgage-related sales is very promising. The Mortgage Market Review will be introduced in 2014 and this is expected to make the advice process more professional, making more people aware that they need to protect their loans."

    Individual term assurance figures for 2012 were stable. Overall there was a slight decline of 1% compared to 2011. However, this result included a significant jump in new mortgage related sales of 7.9%. Average new annual premium showed a slight increase of 3.6%, reversing the negative trend of the last four years.

    Income protection was the big winner for the year, with a substantial increase in new sales of 8.7% compared to 2011. This was driven by a move to limited benefit payment policies, which accounted for 25.2% of new sales.

    The individual critical illness market showed little change compared to 2011, with a 1.7% increase in new sales. For individual whole life, the report finds that a change in marketing emphasis by some providers led to a 14.1% decrease in the number of new policies.

    Ron Wheatcroft, Swiss Re expert on the UK individual protection market and co-author of the report, says: "The protection market had a lot to cope with in 2012. The results show a slight trend towards disability covers with increases in both new income protection and critical illness business. Disability cover will become even more important as welfare reforms bite; consequently, we are optimistic that this will be a strong base from which concerted rapid growth will emerge."

    Term and Health Watch also contains a survey of 48 market participants. Sally-Anne Etienne says: "Many respondents stressed the need to communicate better with consumers, particularly if they are not engaging with the market through an adviser. It is important that we are transparent in our propositions. The findings indicate that while most people believe that publishing claims data can be useful, appropriate case studies give important insights into how our products can meet their needs."

    Key figures from Term and Health Watch 2013
    (number of new sales)

    Product Type

    2010

    2011 2012 % change 2012/2011

    Term assurance

    1,540,798

    1,488,106 1,473,404 -1.0%

    Critical Illness

    534,561

    551,382 560,911 1.7%

    Income Protection

    110,743

    110,472 120,094 8.7%
    Whole Life 371,467 400,682 344,110 -14.1%

    Notes to editors

    Copies of Term and Health Watch 2013 are available on request.

    To obtain copies of the report or to speak to Swiss Re's experts on the UK protection market, please contact Swiss Re Media Relations: media_relations@swissre.com or +41(0)43 285 7171.

    Swiss Re

    The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of over 60 offices globally and is rated "AA-" by Standard & Poor's, "A1" by Moody's and "A+" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe.

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