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.