A report focusing on Europe looks at a likely increased use of insurance-based wealth management and wealth structuring products in the next few years.

The use of life assurance products by high net worth and ultra-high net worth individuals could double to 20 per cent of their portfolios in the short run as regulatory pressures make these channels more attractive, a study of European industry professionals says.

These findings, drawn from The Future of Life: The anticipated role of life assurance in wealth management, a report by NPG Wealth Management and Scorpio Partnership, are based on the views of 50 wealth management and life assurance professionals.

If the predictions are borne out, they will fit with arguments this publication has heard in recent years from players such as Lombard Assurance, Swiss Life and Vie, among others, that insurance is an under-utilised channel for wealth management and structuring. Some areas, such as private placement insurance policies, for example, are often not widely understood and different jurisdictions will treat them differently as in the case between, for example, Switzerland and the US. (To see an article exploring these issues, click here.) There is also a significant market for such channels in Asia.

The survey showed that 53 per cent of respondents said anticipated growth will come from the HNW portion of the market, while 29 per cent said it will be from the UHNW sector and 18 per cent said it will be driven by the mass affluent.

The research indicates that the European life assurance market, which is currently made up of €700 billion (around $771 billion) worth of investments, is undergoing a state of evolution as high and ultra-high net worth clients become more sophisticated and demand portable and tax efficient investment products for estate planning and liquidity management.

The report said that jurisdictions such as Ireland and Luxembourg are becoming more popular as destinations for life assurance offerings.

Some 70 per cent of existing European life assurance volumes come from Germany, France, Italy and the UK. Wealth professionals indicate that the potential UK opportunity for life assurance is around €1.5 billion in possible new business. By contrast, in France, where assurance penetration as a retail product or tax wrapper is much higher, experts see the opportunity as being around €750 million.

Among specific benefits, survey respondents said clients investing via life assurance vehicles tend to have relationship tenure with their private bank that is four times as long as if they were in an unwrapped product. Furthermore, the product arrangement fee can typically span between 3-6 per cent of the total value of the premium cover, generating valuable fee income for wealth institutions.