2001 Term Sales Hit Five-Year Peak in UK; GE Frankona Re Survey Reveals One in Four Workers Now Have Term Cover LONDON--(BUSINESS WIRE)--Oct. 21, 2002--
The UK term assurance market witnessed tremendous growth in 2001, according to research by GE Frankona Re. Sales for the year grew by 28%, with 1,353,134 new policies generating a total premium income of 380,898,750 Pounds Sterling. The new sales took the total number of in-force policies to 7,078,201 which equates to approximately one in four UK workers now being covered by term assurance.
2001 was a remarkable year for term sales, far outstripping the 8% increase we saw in 2000, said Louise Roche, GE Frankona Re marketing analyst and author of the report. The booming housing market has undoubtedly contributed most of these sales and as the housing market has continued to flourish we expect to see good sales this year too. The survey also reported further concentration of business in the UK, with the top ten providers growing their market share of new business from 59% in 2000 to 71% in 2001.
Roche added: The rate of concentration is reflective of the nature of pure mortality business. It's high volume, low margin, and the big players have the volume at present. However, with the ongoing dependence on mortgage related sales, providers need to grow other protection areas to ensure these volumes can continue. Family protection and keyperson insurance both hold great potential. GE Frankona Re's survey covered level, decreasing, renewable, convertible and pension term as well as family income benefit. However, level term business continues to dominate new sales, accounting for 53% of new business, followed by decreasing term at 34%.
Independent Financial Advisers grew their share of both level and decreasing term new business, accounting for 40% (up from 37%), and 44% (up from 36%), respectively. This seems to have been largely at the expense of bancassurers whose market share dropped by 6% for both products, accounting for 23% of level and 28% of decreasing term sales. The only market segment where sales volume decreased was pension term assurance, which is declining at a rapid rate due to the new restrictions brought into effect with stakeholder pensions and the new defined contribution tax regime.
GE Frankona Re is part of Employers Reinsurance Corporation, a GE company (NYSE:GE), which is the world's fourth-largest reinsurer and a premier global provider of risk solutions. ERC serves clients in property and casualty reinsurance, life & health reinsurance, commercial insurance and other risk management services. ERC has earned top financial security ratings. More information on GE Frankona
Re in the UK and Ireland is available at www.geercgroup.com/glh/uk_ie.
Notes for editors:
-- The survey excludes sales of term assurance based critical illness cover. These are covered in a separate survey on individual critical illness, which reports term based critical illness sales for 2001 at 676,169.
-- Top Ten Providers by Number of Policies Sold for all Term Assurance:
Norwich Union
Legal & General
Scottish Widows
Halifax
Abbey National
Friends Provident
Scottish Provident
Australia Mutual Provident
Direct line Life
Nationwide
-- Level Term Assurance:
-- New policies sold - 700,218
-- Average sum assured - 86,988 Pounds Sterling
-- Average premium p.a. - 281 Pounds Sterling
-- Level term assurance policies accounted for 53% of total new sales in 2001. Sales of level term assurance policies increased by 29% from 542,372 in 2000 to 700,218 in 2001. The leading five providers generated 61% of new sales in 2001 compared to 43% in 2000.
-- Decreasing Term Assurance:
-- New policies sold - 461,036
-- Average sum assured - 62,070 Pounds Sterling
-- Average premium p.a. - 272 Pounds Sterling
-- Sales of decreasing term assurance policies increased by
20% from 384,059 in 2000 to 461,036 in 2001. 66% of new sales in 2001 were through the top five providers compared to 52% in 2000.
-- A photo is available on request.
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CONTACT: GE Frankona Re (London)
Paul Casey, +44 (0)20 7337 9597
Jeff Wilson
GE Capital Corporate Finance
[email protected]
1-203-749-6340