Disability income insurance (DII) new business fell 9.4% to $386 million in the 12 months to March from a year earlier, the lowest recorded since 2011, according to a new report from research house Dexx&r.

New sales for the March quarter declined 9% to $91 million from the preceding three-month period, but rose 2.8% from the corresponding quarter of last year.

Dexx&r says the decline in new business to a 10-year low reflects in part the difficulties advisers faced during various COVID lockdowns as the curbs hindered their access to clients.

The sales slump also illustrates long-running problems facing the DII market, where years of unsustainable pricing have led to billions of dollars of losses in the past few years.

At the same time the exodus of advisers from the profession because of increased regulatory pressures has impacted the distribution channel.

“COVID has made it more difficult, but we also have fewer advisers because there’s a lot of exits from the industry at the moment,” Dexx&r MD Mark Kachor told insuranceNEWS.com.au.

“In effect the distribution system is shrinking and shrinking, and you’ve got the combined effects of lockdowns and everything like that.”

The Dexx&r report says total in-force business comprising of individual and group products rose 2.5% to $16.1 billion in the year to March but new annual premium declined 21.66% to $2.15 billion.

Individual lump sum in-force premium increased 0.87% to $6.6 billion during the year while new annual premium fell 1.15% to $970.1 million.

For disability business, in-force annual premium grew 2.67% to $2.8 billion and new business decreased 9.43% to $386.4 million.