Big Changes In The Insurance Market Cause A Rukus
The insurance sector is currently going through a list of big changes and it's affecting more than just the firms within the industry. The past year has seen a string of big changes and the mega deals that are taking place recently are a testament as to how companies are trying to protect themselves against these new policies that are surfacing within the industry.
In 2014, the Chancellor's (George Osborne) budget shook up the insurance industry, announcing that people who have retired would no longer be required to purchase annuities with their pensions. The knock-on effect is that the sales figures for these annuities will drop like a ton of bricks. Standard Life said: "Our results in 2014 have seen a significant reduction in demand for individual annuities and we consequently expect a step down in the profitability of our spread/risk business in the coming years."
Standard Life's UK and Europe boss Paul Matthews said: "We're preparing for an increase in demand for more investment-focused products, such as drawdowns and ISAs."
A number of firms are following in Standard Life's footsteps, moving away from the traditional norm and into the investment sector. This is causing all sorts of problems for the Association of British Insurers (ABI). Aegon have announced that they want to leave the ABI because they want to 'put their point of view forward direct to the government and regulators'.
The ABI's general director Huw Evans said (re Aegon's departure): It is always disappointing to lose a member. However, given the changes within Aegon, this was not unexpected. The ABI remains the one voice of our industry which both government and regulators will engage with to progress their reforms and, with the board's support, we continue to adapt our organisation to meet the changing needs of our membership as their business models evolve."
James Savery, 18 September 2015