Protection distribution growth
The term (life and critical illness) market grew by more than 25% over 2016-2020. But this hides different fortunes for advisers and non-advisers.
Part of a series on protection distribution.
- Distribution choices Choosing the right channel
- Protection term growth 2015-2020. Split by advisory status
- The distribution sandwich. To be written
- What intermediaries want. To be written
- Distribution quality management. To be written
- Execution-only protection. The aggregator-busting approach
- The advice debate. To be written
Channel volumes: 2016-2020
Protection volumes over this period (life term and accelerated CIC, but excluding stand alone CIC and Income Protection which get separate coverage in TermWatch):
Source: Swiss Re’s TermWatch 2021 - page 22
We saw Covid-related declines in 2020, although directly-authorised (DA) sales held up well, with tele-sales probably growing strongly. Over the 5-year period the bank channel has declined and tied salesforces have collapsed, but this has been more than made up by DA growth.
Non-advised protection share
Based on 2020 sales of 1,587,829 term (life and accelerated CIC) policies:
|LTA with CI||248,250||59,248||23.9|
|DTA with CI||179,134||18,398||10.3|
|FIB with CI||1,363||29||2.1|
The directly-authorised market is dominant and growing - see the first table - but over a third of protection policies are now sold without advice. The non-advised share has grown over time:
|Product||2015 %||2020 %|
|LTA with CI||12.0||23.9|
|DTA with CI||4.4||10.3|
Source: Protection Review - have our distribution predictions come true?
It could be that this is an under-estimate of the non-advised share, as the treatment of direct and execution-only business is not entirely clear to me.
Market growth by advisory status
Overall the term market has grown by just over a quarter and restricting to “the big 4” (and thereby missing out Relevant life and FIB) the growth is nearly 30%.
Overall term sales and growth: 2015-20
|LTA with CI||203,945||248,250||21.7|
|DTA with CI||196,174||179,134||-8.7|
But this seemingly overall good news story hides very different fortunes:
- adviser sales have grown by under 4%
- non-adviser sales have grown by over 130%
Advised term sales and growth: 2015-20
|LTA with CI||179,472||188,918||5.3|
|DTA with CI||187,542||160,683||-14.3|
Non-advised term sales and growth: 2015-20
|LTA with CI||24,473||59,332||142.4|
|DTA with CI||8,632||18,451||113.8|
Bottom line: assuming no leakage, without non-advisers the market would have grown at less than 1% p.a. Where does that leave the advice versus non-advice debate?