10 Jul 2020
Posted in Insurance
COVID-19 mini budget gives UK life insurance market glimmer of hope, says GlobalData
An increase in threshold on which stamp duty is paid to £500,000 from £125,000 in the UK Government’s ‘mini budget’ has the potential to stimulate demand in the life insurance market, according to GlobalData, a leading data and analytics company.
Findings from GlobalData’s 2019 UK Insurance Consumer Survey indicate that buying a new home ranks as one of the top three reasons behind purchasing term assurance, critical illness and income protection products. With the change in stamp duty expected to help boost activity in the housing market and benefit an estimated nine in ten buyers, there is an opportunity for the insurance industry to capitalize on, providing that protection products are marketed effectively.
GlobalData analyst, Daniel Pearce, commented: “The industry will benefit as COVID-19 will have increased the awareness and interest in protection products among consumers. However, it should be clearly outlined under what conditions a claim can be made, as COVID-19-related claims will likely be excluded. Stamp duty savings made by prospective homeowners will enable them to purchase homes that were previously out of their price bracket, resulting in a higher amount insured and an increase in premiums.
“However, it should be highlighted that the new measures only offer a glimmer of hope and are unlikely to spur the market into high levels of growth, as continued economic uncertainty and employment security concerns will likely weigh heavy on consumer confidence. Instead, the measure is expected to reduce the extent to which the market contracts in 2020 and give some reprieve to life insurance providers, many of whom have been under increased pressure from claims and balance sheet performance due to financial market volatility”.