Change is constantly on the horizon and the life industry is not immune. The latest is in a proposal...
Change is constantly on the horizon and the life industry is not immune. The latest is in a proposal from the Conservatives' Economic Competitiveness Policy Group to scrap inheritance tax (IHT).
Whether the Conservatives will adopt the proposal is yet to be seen, as is whether the Labour Party will respond with its own proposals.
But whatever happens, the debate once again highlights the fact that certainty for the life industry is unlikely. Those that do well are the companies that are able to adapt to the changing environment they operate in. And international life offices have again proven their ability to meet that challenge, having just released impressive results for the first half of 2007.
At Aegon Scottish Equitable, offshore sales were up 54%, compared to the first half of 2006. Based on the standard industry measure of new annual premiums plus one-tenth of new single premiums (API), year-to-date offshore sales reached £43.5m. Other international life offices also posted results which showed they are holding their own when compared with their onshore counterparts.
While any change to IHT is bound to have an impact, especially on trust business, a number of compelling reasons remain for people to use offshore products. Just one of these is the increasing numbers of Brits moving abroad. The Office of National Statistics' latest figures, released last month, highlight the trend. In the year to mid-2006, there were an estimated 574,000 people migrating to the UK for a year or more, while long-term migration from the UK increased by 49,000 to 385,000 - providing a good reason for advisers to talk to their clients about offshore products.
And the growth is not just in the UK, but in other jurisdictions as well. Asia is increasingly providing opportunities for international life offices, as demonstrated by recent efforts by Friends Provident International and Skandia International to establish a presence in Singapore.
So while changes are a threat, they can also be seen as an opportunity. The industry is building its credentials and demonstrating it is able to evolve in a shifting environment. Last year, the international life industry achieved sales of £7.2bn in offshore bonds, compared to just £2bn in 2002. It remains to be seen whether it can beat that figure but people are always going to need good advice to help them plan for the future and offshore products are increasingly becoming part of that planning.
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From 6 April 2019