The Chancellor of the Exchequer has announced initiatives in the UK’s Spring Budget that will create opportunities for the insurance industry. An extension to the stamp duty holiday till the end of September will be a welcome announcement for the industry and will create opportunities in the protection insurance market.
The initial stamp duty holiday has led to a boom in housing market activity, and the extension looks set to continue the trend further into 2021. Insights from GlobalData’s 2020 UK Insurance Consumer Survey indicate that the most common trigger for purchasing an income protection insurance policy was buying, moving, or remortgaging a property, with 22% of policyholders stating this as the triggering event. This creates an opportunity for the insurance industry to grow the income protection market further over the coming months as housing activity increases.
The Spring Budget also included announcements aimed at getting more people onto the housing ladder. The 5% mortgage deposit scheme is aiming to help bridge the gap in individuals’ finances and allow them to move away from the rental market.
GlobalData’s findings indicate that the leading reason individuals find themselves renting a property is because they are unable to save for a deposit, with 28% of survey respondents stating this. The government scheme will clearly go some way to helping some of these individuals and provide a further boost to housing market growth. However, this will not allow all individuals in the rental market to access the housing market, as some survey respondents identified non-financial reasons as the cause of them not purchasing a house.
2021 will undoubtedly be a challenging year for insurers, as COVID-19 will continue to impact the claims landscape and new business opportunities, but the Spring Budget will go some way to creating opportunities for insurers to generate growth in gross written premiums.