According to a Timetric report, Annuities Insurance in the UK, Key Trends and Opportunities to 2018, which is available at the Insurance Intelligence Center, following new pen¬sion flexibilities the UK individual annuity market has declined sharply. As a result, the value of individual annuity new business premiums plunged 43.3%, from £12.4bn ($19bn) in 2013 to £7bn in 2014, which makes it vital for providers in this space to innovate and adapt to new opportunities.
Despite the backdrop, Vanessa Owen, head of retirement proposition at LV=, says there is additional interest and potential for growth in fixed term annuities.
“People like the idea of having some income secured and a fixed term annuity can do that, and then investing the rest. We are cer¬tainly seeing people mix and match and that is something we will see more and more of going forward,” Owen comments.
Similarly, Partnership’s head of product development Mark Stopard, says the business has seen a flow of enquiries and other activity, and hopes this will result in a pickup of business.
“We expect guaranteed income for life solutions to remain a reasonably core part of people’s retirement planning, but maybe the way they buy them will start to change,” Stopard says.
On the other hand, Neil Lovatt, sales and mar¬keting director at Scottish Friendly, claims the reforms will make annuities a ‘niche pur¬chase’ in future, saying that “it will not be a product that many people will use”.
According to the Timetric report, the top-10 annuity providers accounted for 84.5% of the total individual annuity market in the UK during 2014.
Aviva remained the market leader through¬out 2009-2013, and accounted for 14.3% of the total individual annuity sales.
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