Individual protection policy sales decreased 7.8 per cent in 2022, according to Swiss Re’s Term and Health Watch.
According to a recent analysis created in partnership with iPipeline, the sales of term, whole life, critical illness, and income protection policies would decline noticeably in 2022.
The results show that 2,114,559 new policies were sold overall throughout the year, which is a decrease from the 6.3 per cent rise seen in 2021 when 2,293,704 policies were sold. The recovery from the Covid-19 outbreak, which saw an increase in insurance purchases, can be blamed for this decline in sales.
According to the report’s breakdown of the data, new term assurance sales fell from 1,698,252 to 1,598,809 in 2022, a 5.9 per cent fall for both critical illness insurance and term assurance. Also increasing was the amount of term assurance-only plans.
But there was a noticeable increase in the average new sums assured and premiums for all term assurance and critical illness products, despite the overall decline in new sales for term and critical illness policies.
The overall number of new individual income protection plans sold increased by 2 per cent to 180,547, however, reflecting an increase in income protection policies. Additionally, in 2022 there was a notable 12 per cent increase in the total cost of income protection premiums. With 86,309 and 78,397 policies sold, respectively, new maximum two-year benefit payout policies for the first time outsold the number of “to retirement” income protection policies sold, illuminating a shift in customer preferences.
In the report, the whole life insurance category stood out due to a noticeable increase in sales. Sales of insured whole life plans as a whole saw a significant increase of 34.5 per cent, reaching 27,807 policies. This increase can be partly ascribed to the government’s decision to once again freeze the UK’s inheritance tax limits, which led people to think about whole life insurance. With only 206,802 policies sold, assured acceptance whole life sales, however, saw a steep fall of 31.3 per cent.
According to the report, the year 2022 was marked by a climate of uncertainty, driven by political changes and compounded by high inflation and a growing cost-of-living crisis. The pressure on households across the UK reached its highest point in years as the prices of everyday goods and services continued to rise steadily. The Consumer Price Index, for instance, recorded a staggering 10.5 per cent increase in the 12 months leading up to December 2022.
Swiss Re technical manager & industry affairs manager Joanna Scott says: “The cost-of-living crisis will have impacted households differently depending on their overall financial resilience. However, most people will have felt the impact of inflation in the last twelve months, so it is unsurprising that individual long-term life and health protection sales were impacted.
“It was a challenging year for total new sales compared to 2021, but it was encouraging to see that average sums assured had increased. With the Covid-19 pandemic and resulting bounce back, we are now back to the numbers we saw in 2019.
“We would ideally want to see growth; but, considering the economic environment we experienced last year, the market may be more robust than anticipated. It is positive that people continue to look to protect themselves against shocks.”
Swiss Re technical manager L&H UKI Ron Wheatcroft: “The decline in new level term non-advised purchases is one of the stand-out statistics this year. 42 per cent of total sales is still well ahead of the 24 per cent seen in 2018 but way below the 50 per cent in 2021. New level term non-advised sales fell by 24 per cent and those with a CI benefit by 27 per cent.
“The market faced some difficult challenges, and we attribute this fall in part to the cost-of-living crisis which has put people off making what they may see as discretionary purchases. Above inflation new sums assured for level term in particular (11.7 per cent) reflect that advisers appear to be managing better in the current difficult environment.”
