Full year figures from the ABI (Association of British Insurers) show that sales of all life, pension and collective investment products have remained stable in 2002, despite worsening market conditions. New business sales are up by 1.0% on 2001, from £11bn to £11.1bn.

Alan Woods, Head of Life and Pensions at the ABI said:

“The 2002 figures show encouraging growth in the life and pensions industry during a challenging year.”

These figures are released at the same time as the industry publishes its latest data on the total number of stakeholder sales since the product was launched in April 2001. 1.25 million stakeholder pensions were sold up to the end of 2002 with 340,688 companies designating a scheme.

The IFA channel remains the most significant in the sale of individual regular premium life and pensions business, bringing in 62.2 % of the business and just under £2.3bn premiums during the year.

Growth also remains steady in the Direct Marketing channel, although it represents a significantly higher proportion of regular premium life business than it does pensions, 10.9% compared to 1.9%.

Sales of regular premium life insurance products increased by 9.5% in 2002, having dipped slightly in 2001, representing £1.3bn worth of new premium.

With falling interest rates and increasing mortgage borrowing the number of people setting up a mortgage related term insurance policy increased by 27.5% in 2002. Sales increased from 925,000 new contracts in 2001 to 1.2 million new contracts in 2002.

Commenting specifically on stakeholder pensions and the challenges for the future, Alan Woods said:

“Sales of stakeholder pensions are now running at 33,000 a month less than half their peak of 75,000. The vast majority of employer-designated schemes remain empty boxes, without a single member*. The need for decisive action to start to close Britain’s Savings Gap is clearer than ever. Our response to the Government’s green paper on pensions will highlight the action now required to simulate saving”.

Provided by the ABI