The COVID-19 pandemic has led many consumers to reassess their financial situation. In some cases, vulnerabilities have been spotted, causing them to seek out the relevant protection insurance, with the income protection market being one of the most sought after.
GlobalData’s 2020 UK Insurance Consumer Survey indicated that one in 10 consumers’ top financial concern was being able to pay their mortgage or rent. With mortgage and rental payments being the biggest expenditure in many households, it is understandable that so many see this as their biggest financial concern.
Given that job security has become increasingly unstable due to the economic consequences of the COVID-19 pandemic, this concern will likely remain if not worsen. However, this does create an opportunity for the insurance market to increase the uptake of protection products, in particular income protection policies, as these can be tailored to provide cover for unemployment, accident and sickness, or both.
GlobalData’s findings indicate that there has been a shift towards broader protection with comprehensive cover (unemployment and sickness or accident protection) in 2020, with 47% of policies purchased being of this style, an increase of five percentage points when compared to 2019. Protection against unemployment also increased in popularity in 2020, accounting for 17% of policies during the year, compared to 14% the year before. These increases are even more significant given that some providers paused the sale of these types of policies. For consumers looking to protect themselves financially as a result of the COVID-19 pandemic, the deferment period on policies has clearly shifted them away from policies that protect against accident and sickness, as the typical length of COVID-19 symptoms is shorter than the deferment periods, meaning no payout will occur.
This year looks set to be a positive one for the income protection market, as combined with the growing interest and demand for more comprehensive products directly linked to the pandemic, there is also delayed interest from those taking advantage of the stamp duty holiday who are expected to engage with the protection market once their transactions have taken place.