For the first time in five years direct insurance sales have declined, new figures from Plan For Life have shown.
The latest Direct Life Insurance Market Update reports that year on year premium sales have fallen by 3.6% in the 12 months to December 2014. Sales in the direct channel for the period were $538 million, compared to $558 million in the year to December 2013.
Plan For Life said term life, TPD and trauma business continued to dominate sales in the direct risk market, collectively accounting for 51% of sales over the past year. Income protection sales made up only 6% of the market.
…term life, TPD and trauma business continued to dominate sales in the direct risk market
In relation to lapse rates and persistency, the researcher’s analysis showed that the closer the sale is to the needs of the purchaser, the greater the persistency. In particular, sales which arise from the purchaser’s own instigation have the highest persistency. Analysis of lapse rates within direct risk channels indicate the two dominant channels are in-bound calls with 50% of sales and a reasonably high retention rate and the internet channel with 40% of sales and a fairly high retention rate.
The average premium for direct life insurance was found to be 17% higher than for retail life insurance in 2014. Direct trauma premiums were 10% higher than retail, and income protection premiums were 28% higher.
Despite the decline in sales, Plan For Life Actuary, Simon Solomon, said the direct market remained strong.
“The direct risk insurance market now represents a major part of risk insurance in Australia, with annual inflows having passed the $1600 million mark by the end of 2014. This figure has virtually doubled since 2009, making it one of the fastest growing types of distribution in the life insurance industry,” Mr Solomon said.
