A report from data provider Timetric entitled Life Insurance in the UK – Key Trends and Opportunities to 2017, warned continued economic uncertainty is likely to affect the sector long-term.
It said this is “likely to constrain growth in the category and life insurers will face competition from the banking and wealth management sector offering savings and investment alternatives.”
The report also said the value of gross written premiums had declined from £56.5bn in 2007 to £24.2bn in 2012.
Meanwhile, gross written premiums in the UK’s life insurance category also fell by 57% between 2007 and 2012.
According to the research, the UK life insurance category is forecast to grow by an average of 3.5% over the next five years.
Despite such adverse factors, this expansion will be underpinned by the country’s strengthening economy, aging population and renewed consumer confidence.
Unit-linked investments are expected to dominate the segment. Life insurance penetration represents 1.6% of the country’s GDP, and has remained significantly below its pre-crisis levels. Life insurance density also fell sharply, totalling a value of £384.1bn in 2012.
In addition, the role of low-cost channels in securing new business will grow significantly over the forecast period, with e-commerce and direct marketing expected to further dominate the distribution of guaranteed acceptance plans, the report concluded.