Income protection hot

Income protection insurance continues to be a major growth area for insurers, figures from the Investment and Savings Insurance Association (ISI) show.

Association members sold 17,853 income replacement, accident and trauma policies to individuals in the June quarter. That compares with the 6422 policies sold in the same quarter last year.

Sales of individual income protection policies generated annual premium income (API) of $12.0 million in the June 2002 quarter, compared with nearly $8.0 million a year earlier.

There was also growth in group income protection schemes – 3140 were sold in the June 2002 quarter, compared with 1054 a year earlier.

ISI chief executive Vance Arkinstall says income protection sales have been growing for several years and the expansion shows no sign of easing. "Increasingly there’s a recognition that an individual’s ability to earn income is one of the most important assets they have."

The product stands out in an otherwise flat market, where growth in sales of conventional life policies has been slow. About 50,250 life policies were sold in the June 2002 quarter, with API of $33.9 million. That compares with 49,104 policies sold a year earlier, bringing in API of $29.6 million.

The trend in unbundled life policies was equally as unexciting. This year 1570 policies were sold in the June quarter, with API of $5.5 million, compared with 1754 sold last year with API of $7.8 million.

Total premium income earned by insurers dropped to $585.8 million in the quarter, compared with $715.6 million last year. The only two category of policy to show growth in total premium income were group and individual income protection. Premium income fell for annuities, conventional and unbundled life policies, and personal and employer superannuation schemes.