The Pru will still be collecting premiums in cash from existing policies in the next century, but in future its sales force will only sell policies that are paid by direct debit and other modern methods of payment.
The Pru's sales force of 8,500, the largest in the country, has been split into two categories: salesmen and collectors. The 6,500 salesmen will continue to sell ordinary Pru savings and pension policies to those who will pay by direct debit.
The 2,000 collectors will continue door-to-door collection of premiums once a month. There will be no redundancies.
The Pru has 2.1 million customers who pay their premiums to a collector. But sales have been declining sharply. In 1990 the Pru sold new business worth pounds 65m in annual premiums. By the first half of this year sales were down to pounds 4m.
Some years ago, to save the cost of collecting such small sums, it stopped collecting penny premiums and last year it offered interest-free loans to policyholders with policies that had been running for more than 20 years so that no more premiums had to be collected. The average cash collection premium is now pounds 8 every four weeks.
Across the industry industrial branch business, as cash collection is known, has been declining slowly. The number of new policies has dropped from just over 2 million in 1990 to 1.2 million last year. But 47 million policies are still in force, bringing in annual premiums of pounds 1.38bn.
CIS, Pearl, Liverpool Victoria, London & Manchester, Royal London, Britannic and a few other insurers and friendly societies still operate a cash-collection service.
But many are changing the role of the door-to-door salesman. Pearl, which has 4,300 agents and 1.5 million policyholders visited at their home, has a television advertising campaign to trumpet its home service. But many of the policies it now sells at policyholders' homes are paid by direct debit. 'Cash is diminishing,' said Martin Fox, Pearl's general manager, marketing. 'We are still trying to offer the same service in the home without the hassle. We stay in touch and look after people.'Reuse content