The recession has led to business casualties all over the world. Several industries have seen their output levels and demand for their products and services fall by a large amount.

The insurance industries are no exception and in particular the life insurance industry has experienced a severe decline in terms of sales and profits.

Potential and existing customers have been seen to be limiting or completely cutting off their insurance policies, in the hopes of saving money and cutting down on their expenditure, as the number of job losses rises and is expected to reach more than three million by the end of the year.

Standard Life sales fall

One life insurance provider, Standard Life, recently reported a 20 per cent drop in their sales during the first quarter of the year, citing 'challenging markets' as the cause.

In the UK, polices for life insurance and pension sales fell by 27 per cent, down to £2.7 billion. The insurer stated that falling value in its Pension Sterling Fund was the cause.

However other factors have appeared to be behind the fall in the company's profits.

The insurer decided to provide refunds to thousands of its customers, after the value of the Fund fell and Standard Life was accused of misleading people about the Fund. Most customers were surprised to learn that the underlying investments of the Pension Sterling Fund, was based on mortgage-backed assets, rather than cash, as many had thought.

Despite this, the fall in sales overrode analysts' expectations and the firm said that its capital surplus was 'strong'.

Group chief executive, Sir Sandy Crombie, said: "Standard Life has delivered a solid underlying performance in the first quarter despite the impact of financial markets, which are significantly lower than a year ago.

"Although we see the challenging market conditions continuing, our strengths remain unchanged. We continue to focus on our capital strength, innovative and capital-lite propositions and the opportunities that come from our strong distribution relationships and excellence in customer service."

Axa UK earnings axed

Another insurer, Axa UK experienced similar conditions, where its earnings fell almost 20 per cent in 2008. The firm said that the results were 'resilient in challenging markets'.

In the UK and Ireland, underlying earnings decreased by 19 per cent from £354 million in 2007 to £288 million in 2008, although this was a smaller decline than analysts had predicted.

The Group's chief executive, Nicolas Moreau, said: "The current crisis has demonstrated that Axa UK's business model is sound and that we are financially strong. Our asset portfolio and solvency margin remain robust in today's weakened financial environment."

Job cuts result from economic downturn

Added to this, in April Norwich Union Life announced that it will be cutting 1,100 UK jobs by the end of the year as it restructures the business; although the firm hoped to minimize redundancies through natural turnover and redeployment.

The firm is slashing its UK life and pensions workforce in an effort to improve efficiency, with the majority of the roles in business change and IT.

Mark Hodges, chief executive at Norwich Union Life, said: "Making decisions that affect our people is always difficult and we are fully committed to doing everything we possibly can to minimize the number of compulsory redundancies."

In total, Norwich Union expect around 800 permanent staff will leave the firm, while another 590 contract positions will also be cut.