Signs of life from insurance market
Published 23/07/2010 | 05:00
IRELAND's life insurance market contracted by just 1pc in the year to June, a stark improvement on the 40pc collapse in the first six months of 2009.
The sector's recovery is charted in draft figures circulated by actuarial consultancy firm Milliman, which compiles a regular "temperature gauge" of the life insurance market.
The latest research found that Ireland's life companies wrote some €459.6m of new business in the six months to June, against the €447.2m written in the same period for 2009.
The figures are calculated using the industry benchmark Annual Premium Equivalent (APE), which includes the full contribution from regular premium policies and 10pc of single premium business.
The figures exclude big-ticket business that has the potential to distort trends, namely group pension business and "investment only" sales, where insurers invest funds for company-administered pension schemes.
The biggest driver in 2010's recovery has been single premium life insurance products, essentially one-off savings bonds, where sales grew 60pc over the half-year to €695m.
Stressing that sales were "coming off a low base" an industry source said there was "certainly more confidence around investments generally" this year while less competitive interest rates from banks were leading investors to favour single premium insurance products over deposit accounts.
Single premium pension sales also performed strongly, with new business growing by 10pc to just under €1.5bn. Industry sources attributed the rise to higher levels of investment in Approved Retirement Funds and increased sales of buy-out bonds, which are geared towards those made redundant.
Regular premium sales of both pension and life insurance products continued to be down, however, falling by 13pc and 3pc respectively.
"That's a true reflection of the market," said one observer, referring to the regular premium performance. "People are saving less in pensions mainly due to affordability."
Outside the core categories, new investment only business grew 87pc to €1.46bn while group pension business was down 41pc to €25.8m. Both categories are highly volatile since large swathes of group business can be moved around the industry periodically.
This year's encouraging life insurance figures come after premiums fell by close to 30pc in 2008 and 2009 as volatile equity markets and uncertainty about a new life insurance levy crippled sales.
The Milliman figures only chart new business.