Swiss Re’s term and Health Watch report a decrease of 7.8% in the sale of individual protection policies in 2022, a year characterised by uncertainty, with recurring political change, compounded by high inflation and a growing cost-of-living crisis.
The pressure on UK households was the highest it has been in years as the costs of everyday goods and services rose continuously, with the Consumer Price Index rising by 10.5% in the 12 months to December 2022.
Joanna Scott, the Author of Term & Health Watch 2023, and Technical Manager & Industry Affairs Manager, at L&H UKI, at Swiss Re, said there is no doubt that this had some impact on the new business numbers for individual long-term life and health protection sales in the UK.
The report that has been produced in conjunction with iPipeline, found that in 2022, there were 2,114,559 new term, whole life, critical illness, and income protection policies sold. Comparatively, there was a 6.3% growth in 2021 where 2,293,704 policies were sold, following the bounce back from the COVID-19 pandemic.
The total new term assurance sales in 2022 fell by 5.9% from 1,698,252 to 1,598,809. The number of term assurance-only new policies decreased by 5.3% to 1,149,976. Although there was a drop in new sales for the term and critical illness overall, average new sums assured and premiums for all term assurance and critical illness products saw a rise. The total number of new individual income protection policies sold rose by 2% to 180,547. While total income protection premiums increased by 12% in 2022.
New maximum two-year benefit payment policies surpassed the number of “to retirement” income protection policies sold for the first time standing at 86,309 and 78,397 policies respectively. The total underwritten whole-life sales increased by 34.5% to 27,807 policies. This is credited in part, to the reaction to the government’s decision to freeze the UK’s Inheritance Tax thresholds once again. Total guaranteed acceptance whole-life sales were 206,802, showcasing a drop of 31.3%.
Scott commented, “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.”
Ron Wheatcroft, Technical Manager L&H UKI, at Swiss Re, said, “The decline in new level term non-advised purchases is one of the stand-out statistics this year. 42% of total sales is still well ahead of the 24% seen in 2018 but way below 50% in 2021. New-level term non-advised sales fell by 24% and those with a CI benefited by 27%. 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%) reflect that advisers appear to be managing better in the current difficult environment.”
