The disruption caused by COVID-19 has caused delays in closing new business sales in life insurance. Changes to underwriting and difficulties obtaining GP reports have made onboarding new customers particularly challenging.
According to GlobalData’s 2019 UK Insurance Consumer Survey, 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.
Go deeper with GlobalData
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 minimise the spread of the virus and a fear of overwhelming the NHS have made obtaining GP reports challenging. In particular, delays in the decision-making process were more significant at the start of 2020 than mid-year as the lockdown is gradually eased. While insurers have limited the requirement of medical examinations or GP reports, this has not always been possible, with delays in applications ultimately resulting in fewer life insurance sales due to COVID-19.
In addition, several insurers have mitigated losses by waiving the need for physical medical examinations, instead favouring virtual screenings in a bid to assess applicants. Again, there have been limitations to the use of virtual screenings: AIG, for example, offers this service to life insurance policies with no critical illness benefit only, while Vitality has introduced virtual screenings yet has also required GP reports.
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. Applications where coronavirus symptoms are noted have been delayed until the applicant has made a full recovery. In some instances, this means proving this by obtaining a negative coronavirus test and requiring no treatment whatsoever.
Meanwhile, 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 will likely contract over the short term.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
