I’ve heard many advisers say that protection insurance has ‘gone to the dogs’, but it appears that this viewpoint is literal as opposed to merely a whimsical lament.
The FCA life insurance sales data shows that during 2024, 2.19m life insurance plans were purchased and, according to the 2025 Swiss Re Term & Health Watch, 545,251 critical illness (CIC) plans were bought.
These statistics compare unfavourably with the 4.6 million pet insurance policies that the ABI advised were purchased during 2024. Do consumers really favour insuring their cats and dogs over themselves and their families?
If we look back over the past 12 years, we see that pet insurance is growing in popularity. During 2023, 4.4m pet insurances were taken out – a significant increase from the 2.7m purchased in 2013. 25% 0f all dogs and 12% of all cats are insured, according to the ABI.
By way of comparison 531,700 CIC plans were arranged during 2023 and 638,269 a decade earlier in 2013.
If we look at mortgage lending over the same period, we also see a growth trend – 734,000 mortgages in 2013 rising to 1.2m in 2023. Therefore, the question that arises is why are CIC sales down 15% when pet insurance sales increased by 70% and mortgages increased by 66%?
Could it be that 2013 was a one-off bonanza year for CIC plans? Apparently not: total CIC sales in 2003 achieved an all-time high of 1m although admittedly some of these were riders to endowment plans.
When speaking to insurers it seems that sales are fairly evenly split between the cheaper core plans and the more expensive comprehensive offerings.
The annual Swiss Re publication confirmed that sales of all types of term insurance fell for the fourth year running. It also highlighted the distribution trend where aggregator sites now take over 8% of the life insurance market.
The penetration rate for critical illness plans is lower at 3%, but online purchasing of all types is on the increase, and it seems likely that more consumers will go down the non-advised purchase route.
The concern here is that consumers risk ending up with the wrong plan, or a less comprehensive one, and with no protection via the Financial Ombudsman Service (FOS).
Consumer education is one of the problems, but any remedy here will be a slow process. Confusing and badly written plan brochures must surely contribute something towards this antipathy. However, the main problem seems to be a lack of interest from those advisers who focus entirely on mortgages, pensions and investments.
When I entered the industry in 1978, there were 300,000 insurance advisers who primarily focused on protection insurance. Numbers are now less than 15% of that figure sped up by regulation and the Retail Distribution Review (RDR).
Networks like Mortgage Advice Bureau (MAB) have shown how protection sales can be substantially increased and the innovative ‘signposting’ scheme has led to many mortgage and wealth advisers pointing their clients towards a competent protection adviser who will agree a split commission arrangement.
Yet, despite this, sales figures have continued to fall. Additionally, insurer numbers have fallen off the cliff, reducing from 51 in 1995 to the 10 insurers that serve the adviser market today.
Whatever route an adviser takes to ensure their clients are protected is a good one. After all, having assisted them in taking on the biggest financial commitment of their lives, it is only sensible and moral to ensure that they are adequately protected against premature death and ill health.
