The reinsurer has reported an increase in sales of new term assurance, critical illness and whole life insurance in 2009, while income protection sales fell. However, the ‘Protection Gap' has widened further.
In the latest edition of its annual Term & Health Watch report, a snapshot of the level of new individual protection business written in 2009, Swiss Re strengthened calls on the industry to increase income protection sales.
Ron Wheatcroft, co-author of the report, says: "The environment for the sale of protection products in 2009 continued to be difficult, especially for those in the mortgage sector. Despite some evidence of market recovery, mortgage lending in 2009 is down 43% compared with 2008, and is at the lowest annual level since 2000.
"Against this background, it is good news that new term assurance sales, both with and without critical illness cover, have increased. The industry is responding well: new non-mortgage protection sales are up by 8% following a 15.1% increase last year. This suggests that consumers are beginning to take more responsibility for financial planning by buying the basic life cover they need."
For the first time since 2004, there is an increase in the amount of the Life Assurance Protection Gap which, measured in sums assured, has grown from £2.3trn to £2.4trn.
The Income Protection Gap remains at £190mn annual benefit, the same as 2009 but much higher than the £130mn level when the gap was first identified by Swiss Re in 2002.
Ron Wheatcroft concludes: "There are some encouraging signs that the industry is making progress through sales of more innovative income protection products, such as those which incorporate redundancy or unemployment cover or through shorter deferred periods.
"But the growth is modest when compared against the overall net decline in sales. The government can play a key role here too by setting out clearly to consumers that they need to take positive action to protect themselves against the risks they run."
Key facts, figures and trends
New whole life business showed an increase of 12.6% (totalling 318,078 policies, compared to 282,438 in 2008)
New term assurance sales totalled 1,507,685 policies, up 4.1% (compared with 1,447,895 in 2008)
Critical illness sales increased by 3.8% to 530,214 (compared with 511,045 in 2008)
Income protection sales fell 7.5% to 117,288 (compared with
126,815 in 2008)
