Premium income plunges at L&M
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The problems facing insurers still providing old-style home service to their clients were underlined yesterday by London & Manchester, as it revealed that total new premium income fell 28 per cent to pounds 23.8m in the year to the end of December.
The company said a large part of the decline was caused by a 30 per cent drop in single-premium income, largely because it was forced to pull out of the guaranteed income bond market.
But London & Manchester admitted that merging its home service division - which exists largely to collect premiums - with its sales channel, had disrupted business.
David Hubbard, chairman, said: "A key strategy in our life company is the merger of our home service and Directions sales channels to form a unified, employed sales force."
This process had disrupted new business efforts but it was a central plank of the business strategy.
He added that success was already apparent in improved levels of retention [policyholders who keep paying premiums to the company]. In 1995 the amount of renewed annual income rose slightly compared to previous years.
Mr Hubbard said he was also cheered by proposed changes from the insurers' watchdog, the Personal Investment Authority, to lift the regulatory burden on home service staff who did not engage in complicated sales procedures.
"This positive and constructive outcome creates a stable background from which we can now move forward," he added.
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