View from City Road: Gloomy forecasts for life companies

While life companies continually bang the drum about the need to save, fewer and fewer customers are marching to the industry's tune. Figures released yesterday from the Association of British Insurers show the industry has quite a challenge on its hands.

In the first three months of this year, the industry's sales of regular premium life insurance fell to pounds 378m, 9 per cent down on the same period last year. Regular premium sales have steadily declined for three years; this year's total seems set to fall short of 1991's record pounds 2bn takings by about 25 per cent.

The picture for mortgage endowment sales, that staple of the 1980s, is much worse. Sales of with-profit endowments have halved in three years. While individual pensions business has generally proved more robust, the latest quarter shows a 7 per cent fall in pension single premiums, perhaps reflecting recent bad publicity.

It is hard to see things getting any better. Tougher rules on transfers from company pension schemes will hit that source of business. Most important, however, disclosure of commission payments will bite from next January and we'll all know for the first time just how much the industry has been charging us to save our money. Life companies will be put on a level playing field with other forms of saving. Little wonder then that unit trusts and other cheaper savings media are rubbing their hands.