"We would ideally want to see growth; but, considering the economic environment we experienced last year, the market may be more robust than anticipated."
Sales of individual protection policies fell by 7.8% in 2022, according to Swiss Re's Term and Health Watch.
The report, produced in conjunction with iPipeline, found that there were 2,114,559 new term, whole life, critical illness, and income protection policies sold last year. This compared to 6.3% growth in 2021 where 2,293,704 policies were sold, following the bounce back from the Covid-19 pandemic.
Total new term assurance sales fell by 5.9% to 1,598,809. The number of term assurance-only new policies decreased by 5.3% to 1,149,976. Despite a drop in new sales for term and critical illness overall, there was a rise in average new sums assured and premiums for all term assurance and critical illness products.
The total number of new individual income protection policies sold rose by 2% to 180,547. 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 (86,309 and 78,397 policies respectively).
Total underwritten whole life sales increased by 34.5% to 27,807 policies. Swiss Re says this appears to be, in part, a reaction to the government's decision to freeze Inheritance Tax thresholds again. Total guaranteed acceptance whole life sales were 206,802, a drop of 31.3%.
Joanna Scott, author of Term & Health Watch 2023 and technical industry affairs manager at Swiss Re, has said:
“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, added:
"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 the 50% in 2021, while new level term non-advised sales fell by 24% and those with a CI benefit 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.”