Protection sales have slumped as a result of the COVID-19 pandemic, with income protection (IP) taking a particular hit.
That is the analysis from iPipeline, which provides “next- generation solutions and services” to the life and pensions market
iPipeline’s statistics for new protection business processed through its platforms in Q2 2020, when COVID-19 was at its peak in the UK, show that sales were up 25% year-on-on-year.
But a spokesman for iPipeline said that this “does not represent the market impact of COVID-19”.
He said that when new clients are stripped out from its evaluation, protection sales through its platforms were down 13% year-on-year.
Income protection (IP) sales saw a year-on-year dip of 30%.
For all protection sales (IP, ife and critical illness cover) per advice channel, call centres were the only channel to see an improvement, with a 9% increase in new business like-for-like, year-on-year.
Mortgage brokers were the worst-hit sector, with a 23% decrease in new business year-on-year, followed by wealth IFAs at which were hit by a 16% drop and general IFAs that faced an 8% decrease.
PROTECTION: A MARKET IN FLUX
* Average protection premium was down 7% year-on-year in Q2 on a like-for-like basis
* iPipeline’s SSG Digital Platform has now processed more than 3.5 million policies, equating to 30% of UK new protection policies
The iPipeline spokesman said that despite the decrease in new business during Q2, early indications for Q3 look “positive” and July saw the highest volume of cover processed since lockdown was announced in March.
Ian Teague, UK Group Managing Director at iPipeline, added: “The protection industry was riding high going into 2020, so it came as a real shock when the full extent of COVID-19 became clear and the consequences of the pandemic began impacting sales.
“Unsurprisingly, considering the freeze in the mortgage market, mortgage brokers have been worst affected. Research has identified that people want and need protection more than ever and our industry has an important role in having more protection conversations and helping them meet their financial resilience goals.
“We anticipate market-wide protection volumes returning closer to pre-pandemic levels as mortgage broking and IFA businesses increase capacity.
“We believe that we will see growth in the protection market as our industry meets the UK population’s increased demand for improved financial resilience, though this could be dampened should economic headwinds or further lockdowns really bite in Q4.”