Banks challenge lead in protection sales held by IFAs

Thursday, September 2, 2010

According to a new announcement issued by the Financial Services Authority (FSA) in Britain, Independent Financial Advisers are still behind the largest proportion of protection sales within the UK, despite the recent economic challenges faced by the insurance industry and protection market.

The statement suggested that the role played by IFAs is now at risk of being challenged, as more banks and high street building societies support their customers to purchase insurance products. In the FSA’s annual survey, the results of which were recently released to the industry, figures show that pure protection products are increasingly being sold by banks and building societies to consumers.

IFAs were responsible for just under thirty percent of protection sales over the course of the last twelve months, with banks and building societies coming a close second with 22% of sales. This figure has increased from eighteen percent the previous year, showing a steady growth in the sales achieved by organisations within the financial sector for their customers.

According to the FSA, this growth in sales by banks and building societies is set to continue in future, as more people obtain advice and guidance from their advisers within these organisations. The report states: "Although the trend has been for a reduction in the sale of pure protection products across the board, not all types of firms have been equally affected. Banks and building societies are performing particularly well, with growth rates of 36% year-on-year (yoy) in Q1 2010, while sales by mortgage business, other insurers and personal investment firms (IFAs) contracted by 30%, 21% and 24% yoy respectively during the same period.”

"As a result, banks and building societies' market share has increased consistently since Q1 2008 and was at 22% in Q1 2010, to the detriment of other firm types, mostly General Insurance Intermediaries, Mortgage Business and Life Insurers.”