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Karen Mc Dougal
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Inefficient Life & Pensions Industry(UK & Ire?)
Insurance analyst Ned Cazalet has labelled the insurance industry's business model as "crazy", saying the industry is woefully inefficient and operationally dysfunctional.
In his annual review of the UK life sector, Cazalet says the sector's overall spending on admin and acquisitions was a staggering £12bn in 2002. Of this, he says £7bn was spent on acquiring new business, including commission, equating to £330 per UK household.
At the same time, he says life companies paid out £40bn on surrendered life and pension policies last year - £17bn on life surrenders and £23bn on pensions - which compares poorly with the £24bn in new life single premiums written last year and £35bn of new pension single premiums.
Cazalet says he holds little hope of improvement in life companies' solvency for the end of 2003 and believes that many life company non-linked funds will struggle to produce a return of more than 5 per cent in 2003. He says excess capital has "slumped" by more than £100bn since the start of 2000.
Cazalet says: "An industry that is spending over £300 per household per annum on seeking new business is clearly operationally dysfunctional and this gives credence to those who say that the UK life industry is woefully inefficient."
Source : Money Marketing
Insurance analyst Ned Cazalet has labelled the insurance industry's business model as "crazy", saying the industry is woefully inefficient and operationally dysfunctional.
In his annual review of the UK life sector, Cazalet says the sector's overall spending on admin and acquisitions was a staggering £12bn in 2002. Of this, he says £7bn was spent on acquiring new business, including commission, equating to £330 per UK household.
At the same time, he says life companies paid out £40bn on surrendered life and pension policies last year - £17bn on life surrenders and £23bn on pensions - which compares poorly with the £24bn in new life single premiums written last year and £35bn of new pension single premiums.
Cazalet says he holds little hope of improvement in life companies' solvency for the end of 2003 and believes that many life company non-linked funds will struggle to produce a return of more than 5 per cent in 2003. He says excess capital has "slumped" by more than £100bn since the start of 2000.
Cazalet says: "An industry that is spending over £300 per household per annum on seeking new business is clearly operationally dysfunctional and this gives credence to those who say that the UK life industry is woefully inefficient."
Source : Money Marketing