Protected.co.uk has ceased trading after a bid earlier this year was made to restructure and save the business, which had sustained heavy financial losses.
In a statement on LinkedIn, founder and CEO Luke Ashworth explained that he had returned to run the business in March 2015 after stepping back from the day to day running of the business in July 2011.
The company had sustained large financial losses in the first quarter of 2015.
Ashworth said that he had restructured the business and the way its front end sales process operated, which returned the company to a small profit in Q2 and Q3 last year.
However, the sales process was then hit by another contributing factor - the underwriting rule changes of a large life insurer, which COVER understands was Legal & General.
The firm ceased trading on 26 February 2016 with immediate effect and will go into liquidation.
The Fareham-based non-advised protection firm was founded in 2003. It had around 130 staff.
Industry comment
Phil Jeynes, head of sales and marketing at UnderwriteMe said:"Protected have always had a reputation for trying to achieve good quality sales and, having worked with Luke and his team many times over the years, I've been impressed by the ethical and family focussed approach they took to selling protection.
"I was very sad to see that Luke had had to make the tough decision to close Protected's doors, and I wish him and his staff all the best of luck in the future."
Tom Baigrie, chief executive of LifeSearch said: "It's really sad to hear of the loss of a well-regarded firm that helped many families protect themselves. From what we know the business was trying to do things right but sometimes events outside our control become critical factors.
"As there is no regulatory reason to do otherwise, it is feasible that non-advising firms will have a propensity to favour the insurer they feel is the most convenient or commercially best, and that can lead to a lack of diversity, overdependence and thus increased risk. It's not a job for the regulator in truth, but for those who manage non-advised businesses.
"Either way the quality of underwriting across our industry remains a key factor in protection pricing, but current underwriting processes are inefficient and expensive so managing them costs intermediaries far too much.
"Hopefully insurers can now see more clearly that they need to simplify swiftly and through universal systems that allow their distributors safer operating margins."
