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E&Y predicts RDR to claim life company scalps

by Michelle Abrego on Nov 28, 2012 at 07:00

E&Y predicts RDR to claim life company scalps

Ernst & Young executive director Malcolm Kerr has argued the impact of the retail distribution review (RDR) could lead to major life companies closing to new business over the next three years.

Speaking at the Association of British Insurers RDR conference, Kerr (pictured) said that the RDR would bite for providers over-reliant on legacy business, and unable to compete in the platform and direct-to-consumer sectors.

‘When you look at life companies around the UK you see where value is being created its actually being created by a large extent by the legacy business and in some instances the new business is detracting from that value,’ he said.

He predicted two to three providers would close to new business by 2016, adding that the sector’s struggles to make money from the platform sector would contribute to the trend.

‘Profitability on platforms is very hard to achieve even in the current environment. In the long run you can argue that there’s one direction that platform fees will go, and that’s down,’ he said.

7 comments so far. Why not have your say?

Sam Matthews

Nov 28, 2012 at 08:36

Spot on Malcolm. Given most of the Life Co's arent facilitating AC on many of their legacy products they may well see a massive churn of their back book just compounding their issues - suddenly they will see all their profitable business fly out of the door.

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David Hatton

Nov 28, 2012 at 08:39

How come all these points are being raised now at the 11 th hour when the damage has already begun & nothing can be changed?

Any one with a little forethought could have seen this years ago. Next watch for the initially RDR authorised advice firms closing when they can not cover their costs?

It's been obvious from the start of this trip, just join up the dots!!

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Bob Donaldson

Nov 28, 2012 at 09:59

Add that to the clients that won't be able to access advice and you have one fine mess.

Put these insurance companies in order of demise:



Friends Life

Scottish Provident

Bright Grey


Soon we will be left with the government as the insurance company of the last resort!

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David Ferguson

Nov 28, 2012 at 10:45

Years of zero cost control and fantasy economics will do that to a sector. The writing has been on the wall for more than a decade.

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Jonathan Kirby

Nov 28, 2012 at 13:14

It was predicted 20 years ago that both qualifications would have to rise and that the number of life companies would fall significantly.

Who predicted this, was it a government body concerned about the future of the welfare of the British public and the drastic effect on employment and tax receipts?

I forget who the speaker was, but it was at an LIA meeting and all the predictions have come true.... and more.

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Nov 28, 2012 at 14:45

To Bob, Just out of interest, why do you expect Scot Prov/Bright Grey and LV to go under as these firms mainly do protection only and that isn't affected by RDR? Isn't it more likely that protection sales rise as IFA's who don't have enough HNW clients look to earn?

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Philip Melville

Nov 28, 2012 at 15:05

Life companies have been failing for ever and will continue to do so - nothing to do with the RDR .

Just look back 15/20 years and count the names which disappeared long before the RDR was even a glint in anyones eye.

Just another lazy comment by a bystander who wants to be an expert on something he has never done.

Watch out for the demise of the talking heads as next year unfolds and they have to find other doom laden forcasts to justify themselves.

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