10 Jul 2020
Posted in Insurance
COVID-19 complications cause delays in life insurance sales, says GlobalData
Life insurance sales are slowing as COVID-19 has led to disruption in the processes and fewer house purchases, a key trigger for life insurance purchases, says GlobalData, a leading data and analytics company.
In many instances, the purchase of a life policy is triggered by a key life event. By far, the most common type of life cover is term assurance, which is often linked to a mortgage.
According to GlobalData’s 2019 UK Insurance Consumer Survey, (carried out in Q2 2019 with 4,000 respondents) 51.3% of term assurance policyholders held mortgage-related term assurance cover. Buying, moving or remortgaging a house was the most common reason for purchasing this type of policy, as cited by 47.3% of policyholders while having a child or an addition to the family was the second most common reason (12.7%).
In contrast, the largest proportion of non-mortgage-related policyholders stated that no key event or factor had triggered their purchase, as was the case for almost one quarter of policyholders.
Beatriz Benito, Senior Insurance Analyst at GlobalData, comments: “The lockdown has also interrupted the real estate business. This has slowed down property sales, a trend that is expected to continue in the near future. A fall in property transactions will further drive down the term assurance market, given that many customers buy life cover as a result of home moving. Added onto the difficulties of onboarding new customers, life insurers can expect a sluggish market that is likely to contract over the short term.”
Other factors have also contributed to the slowdown. It is customary for life insurers to require medical records from individuals as part of the application process for some life policies, particularly for those that are underwritten. Yet, lockdown measures to minimize the spread of the virus and a fear of overwhelming the NHS have made obtaining GP reports challenging.
Ms Benito concludes: “Additionally, most life insurers have tightened up or made changes to their underwritten requirements, further impacting sales. It has become relatively common to ask questions about coronavirus to new applicants, including whether the individual has experienced a continuous cough and/or fever or a temperature, if they had tested positive for coronavirus, or if they have been self-isolating.”