Uncertainty over the financial strength of companies is turning more customers towards guaranteed annuities, says the Annuity Bureau, quoting figures from the Association of British Insurers.
The departure from the market of names such as Britannic Retirement Solutions, Challenger Life and Equitable Life have already pushed the stability issue to the top of the agenda, and that was before Standard Life ran into its troubles in the past month.
Peter Quinton, managing director of the Annuity Bureau, says people are aware more than ever of the squeeze put on insurers by demographic changes coupled with falling profit margins linked to investments.
”The trend is to play safe in what are still being seen as uncertain times, and I see this as being the theme for several months ahead,” he says.
A major issue raised by the ongoing challenges to providers is whether supply will actually be able to meet demand in future, i.e., whether providers can afford to continue writing new policies.
However, Quinton sees new entrants willing to come in on the back of increased regulatory certainty, coupled with changes to distribution driven by de-polarisation, which should secure the annuity market in years ahead.
"Looking forward, I am more cautiously optimistic that 2004 bodes well for the annuity market as the Government's long-standing uncertainty on annuities and their future is likely to end by the end of the first quarter,” he says.IFAonline
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