Sales of new individual protection insurance policies rose very slightly in 2024 with a strong fourth quarter completing a turnaround from a weak start to the year.
According to reinsurer Gen Re, 2,015,559 individual protection policies were sold last year, 2,492 or 0.1% more than the 2,013,067 completed in 2023.
However, the figures remain around 100,000 fewer than were sold in 2022 after a sharp fall in 2023.
The fourth quarter of the year saw just over half a million contracts completed, up from 467,754 in the same period of 2023, although this was down on the 521,000 to end 2022.
The biggest changes came in the income protection (IP) and term life markets.
IP sales rose 15% across the year to 287,000, up from 249,000, while term life plan sales fell 4% to 1,036,000 from 1,077,000.
Accelerated critical illness (CI) sales dipped slightly to 420,000 from 422,000 but standalone CI rose by 12%, albeit from a smaller starting point to reach 81,000 from 73,000.
Guaranteed whole of life plans were down 2% to 175,000 but underwritten whole of life policies were up 9% to 16,000 from 15,000.
In contrast, premium value across the market dipped by 1% or £9m on an annual premium equivalent (APE) basis from £776m to £767m.
“Ordinarily, this would suggest a reduction to average policy sizes, but the inflation context of the last few years does need to be considered,” Gen Re said.
“The lower level of inflation in 2024, compared to 2023, led to smaller increments for policies that are linked to inflation, which for some lines of business – notably IP and underwritten whole of life – can be quite material.”
IP a ‘standout performer’
It also celebrated the growth in the income protection market.
“IP continues to be a standout performer, with a 15% increase in the number of policies sold,” the reinsurer said.
“This growth highlights a continued growing awareness of the need for financial security.
“However, despite this sharp rise in demand, total premium value increased by only 1% over the year.
“This was driven by a combination of factors, again including the impact of inflationary increments and how much smaller they are this year compared to previous years. Consumers’ purchasing preferences would also have had an impact on this.”
Life and CI
Gen Re noted there was a more positive end to the year for the term life market, which declined by 3.1% compared to 2023, with a drop of 7.8% in the first half of the year.
“However, there was a rebound in the second half when premiums grew by 2.2%,” it said.
“The reduction in mortgage rates and increased property listings in the latter half of the year probably contributed to the recovery we have seen in the term assurance market.
“As borrowing became more affordable, mortgage-related protection products also regained traction.”
And the reinsurer added that the ongoing shift from accelerated to standalone CI continued.
It noted the drop in accelerated CI aligned with the decline in the term assurance market, as accelerated CI is often linked to mortgage-related sales.
“The rise in standalone CI reflects a growing preference through some distribution channels for more flexible, standalone coverage options and people purchasing a combination of products of different sum-assured sizes through menu-based products,” it added.
