Gender-neutral pricing will stir up the market but insurers will settle down within a year with no long-term affects, Fitch Ratings stated in a seminar today.
Speaking at The UK Life Insurance Market event this morning, panellist David Prowse, senior director of Fitch Ratings, said the sector would see a lot of price shifting, and other factors, such as I-E tax changes would further cloud the issue.
He said: "There will as a result be more emphasis fromt he insurers on other aspects; it will be more about age and health moving forward. But the insurers will get through it and it will not impact on ratings. I think they are nimble enough to adapt and it will settle down within a year."
Prowse added that while protection business was small in terms of premiums it accounted for the bulk of profit generated by the life sector.
"Sales have come down quite severely for life insurers and they have not recovered. I know of many insurers that are looking to increase their protection business because they are seeing it as a way to grow," Prowse said.
"The reason for a drop off in sales currently is because of the economy, and the housing market has slowed meaning mortgage-related sales will have gone down."
Prowse reported a high level of "scare" in the market, and that insurers had been unfairly penalised because consumers viewed them as the same as the banks.
Other adviser-related topics discussed were the twin-peak split of the FSA and impact of RDR.
Prowse said: "With RDR anything significant changes to distribution matters greatly to insurers. We think it is good for the sales through advice.
"We think it will lead to less mis-selling and better consistency. We do not see major changes in terms of insurer ratings emerging from the RDR."
