New sales of income protection (IP) products were strong in 2025, but the pace of growth slowed compared to previous years, according to NMG Consulting.
However, the firm highlighted that while larger firms were seeing the greatest slowdown, smaller firms were picking up the slack and increasing IP sales.
Presenting its data at the Income Protection Task Force’s mid-year conference, NMG showed that on an annual premium equivalent (APE) basis new IP premiums reached £84m in 2025, this was up 5%.
However, new IP sales had grown from £52m in 2021 to £80m in 2024 – this was up 54% in those three years, with a remarkable growth of more than 19% from £67m in 2023 to £80m in 2024.
During that period, new IP sales grew from 8.6% of all protection new business in 2021 to 13.6% of the whole market in 2024, but this slipped slightly to 13.1% in 2025 as the rapid growth cooled.
“We are still seeing growth in IP, but not quite the same extent as we were this time last year,” said Emma Morris, a senior consultant at NMG Consulting.
The slowdown of growth was not coming from any particular distribution segment and appeared to be across the board.
Smaller firms overtaking larger ones
However, Morris noted there were differences by firm size and it is smaller firms picking up the slack.
“The key standout is that more of the slowdown of growth has come from the larger firms in the market,” Morris (pictured) said.
“More of the smaller firms are continuing to grow their IP at a rate that was faster than this time last year.”
She added that there was considerable positivity for the smaller firms to continue this trend.
“That we have more than 1,700 firms that wrote IP for the first time in 2025 shows there is a strong pipeline of upcoming income protection business in the market,” Morris added.
“We are seeing strong growth from advisers writing IP for the first time, overcoming some of the barriers and challenges they had before.
“The slowdown is more from the larger firms, who are writing new business, but not quite as much as they did this time last year.
“We are seeing strong growth in the IP market, but there is still a long runway of where we can take it as an industry in the next couple of years.”
Shift to whole of life
The contraction in IP sales among these firms could be due to the shift in their focus to whole of life products following the government’s inheritance tax reforms, Morris suggested, with new premium sales growing 99% between 2024 and 2025.
“We have seen astounding growth in the whole of life market,” she continued
“[Inheritance tax reform] has had a massive increase in its importance in the market.”