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.

Protection market growth dissected

Part of a series on protection distribution.

  1. Distribution choices Choosing the right channel
  2. Protection term growth 2015-2020. Split by advisory status
  3. The distribution sandwich. To be written
  4. What intermediaries want. To be written
  5. Distribution quality management. To be written
  6. 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):

Channel volumes 2016-2020 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:

Product Total Non-advised %
LTA 790,335 394,544 49.9
LTA with CI 248,250 59,248 23.9
DTA 315,686 76,657 24.2
DTA with CI 179,134 18,398 10.3
FIB 29,540 2,307 7.9
FIB with CI 1,363 29 2.1
Relevant life 23,521 1,543 6.6
Total 1,587,829 552,726 34.8

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 30.6 49.9
LTA with CI 12.0 23.9
DTA 12.4 24.2
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

Product 2015 2020 Growth (%)
LTA 555,907 790,335 42.2
LTA with CI 203,945 248,250 21.7
DTA 225,582 315,686 39.9
DTA with CI 196,174 179,134 -8.7
All above 1,181,608 1,533,405 29.8
All term 1,255,786 1,587,829 26.4

But this seemingly overall good news story hides very different fortunes:

Advised term sales and growth: 2015-20

Product 2015 2020 Growth (%)
LTA 385,799 395,958 2.6
LTA with CI 179,472 188,918 5.3
DTA 197,610 239,290 21.1
DTA with CI 187,542 160,683 -14.3
All above x,950,423 x,984,849 3.6

Non-advised term sales and growth: 2015-20

Product 2015 2020 Growth(%)
LTA 170,108 394,377 131.8
LTA with CI 24,473 59,332 142.4
DTA 27,972 76,396 173.1
DTA with CI 8,632 18,451 113.8
All above x,231,185 x,548,556 137.3

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?