Half of level term assurance policies sold in 2020 were unadvised as the market share for these channels continued to grow, Swiss Re’s Term and Health Watch found.
According to the data, 394,544 (49.9%) of the 790,335 new standalone level term assurance policies were arranged without advice, a 2.5% increase since 2019.
For level term and critical illness (CI) this was 23.9%, for decreasing term assurance it was 24.2% and for decreasing term and CI it was 10.3%.
With that in mind, Swiss Re technical manager and joint author of the report Ron Wheatcroft warned that advisers should expect this trend to continue.
“Our new way of life means that the number of policies being purchased online or independent of an adviser is only going to grow as we move forward,” he said.
“While this is fine where the consumer chooses to do so, it is incumbent on us all to ensure that the quality of the purchase, including making sure that the proceeds are designated for the intended beneficiary, is of a standard and quality that they would expect.
“A better quality approach can only improve the persistency of business written. If there was any doubt about the need to consider the quality of what is presented, there should be none, with the FCA now consulting on a Duty of Care to deliver good outcomes in retail consumer markets.”
Mortgage-related sales slide
Sales completed alongside mortgage advice appeared to fall, despite the red-hot property market in the second half of the year.
In 2020 new decreasing term assurance sales, which are cited as a reasonable proxy for mortgage-related sales, reduced from 531,264 to 494,820, a drop of 6.9%. This reversed the positive trend in 2019.
IPipeline, which contributed to the report, noted a 44% drop in mortgage volumes between February and May.
“Against that background, it was perhaps inevitable that we would see a decline in new mortgage-related sales overall, based on decreasing term sales data,” the report said.
And it emphasised that more needed to be done to respond to the needs of renters.
“As we become a nation where renting is more common, there can be little doubt that this is a potential area ripe for market development,” it said.
“We applaud the efforts of a number of product providers to promote their products to cover rental payments but we are barely scratching the surface.
“The FCA Financial Lives 2021 survey shows that 23% of adults now rent. Furthermore, it reports that 66% of renters had characteristics of vulnerability and 47% low financial resilience.”
L&G and Royal London benefit
The report also analysed the insurer market and found Royal London had increased its market share across the three main product types while Legal & General reclaimed its position as the largest provider.
Despite the overall shrinking market for the first time since 2013, Royal London increased the number of products sold in the term assurance, critical illness and income protection sectors.
It sold 194,785 term assurance policies (with and without CI) in 2020, 59,826 more than in 2019, leapfrogging it over Aviva and AIG Life to become the second largest player in the market, but well behind L&G which sold 504,061.
It was a similar story in the critical illness market with Royal London growing its total by 23,554 to 73,019 taking it above Zurich and Vitality, but still behind L&G and Aviva.
And in the IP sector, L&G overtook Aviva for the most sales with 37,488, while Royal London also increased its share by 4,354 to become the third largest provider completing 20,590 sales, just 161 more than LV=.