Life Insurance Forecasts
/Individual Life
Overview
Forecasts of the Life Insurance Individual Risk Market 2020 - 2029 have been prepared using data and experience up to December 2019, based on models for each line of business and each life company. Preparing the Forecasts is a complex exercise due to the many recent changes in life company ownership, the advisory market, remuneration, permissible products and sales practices. Factors affecting the short-term and long-term outlook of the market have been considered.
Features
Two forecasts are provided: Medium and High. The Medium Forecast takes a conservative approach to New Risk Sales in 2020, anticipating a further reduction from sales in 2019, with recovery only expected to occur from 2021 onwards. The forecasts cover each of the three individual risk product markets: Term Life and TPD, Trauma and Income Protection.
Results
The split between True Sales and CPI/Age increases is important as it demonstrates the extent to which each segment supports new risk business. Annual Premium plus new Single Premium have been combined when arriving at total projected sales. The separation of true new annual premium and CPI and age-related premium additions, discontinuances, and the build-up of in force from 2020 to 2029 are provided for each company.
Uses of the Forecasts
The major use of the forecast is in the short term, where the 1-year forecast in 2020 provides results for use in setting budgets. The 2 to 5-year range is also very useful for strategic planning. Beyond this, the outcomes should be treated as demonstrating what could occur if prior trends continue (which are substantially dependent on the distribution channels used by each company).
Direct Life
Projected Sales and In Force/Inflow are set out in detail in spreadsheet format. Each company has been forecast using its own characteristics which are evidenced by recent inflows and lapse rates.
Group Life
Group Risk Forecasts have been separated from Individual Risk Forecasts. The Group Life Forecasts provide new business arising from increases, genuine new schemes and rate changes, as well as an estimate of sexist and scheme terminations. Schemes which move from one insurer to another have not been forecast, but the data does provide details of each scheme which has transferred in the last 3 years.
