The personal lines market in the UK will contract in 2020 as a result of COVID-19 impacting a range of different lines of business, with the travel sector being particularly vulnerable. This is according to GlobalData’s UK Insurance Market Essentials: COVID-19 Update report, which forecasts a decline of 2.0% in gross written premiums (GWP) in the personal lines sector for 2020.

Travel insurance will be the worst affected personal lines product in the UK, with GlobalData forecasting GWP to contract by 48.7% from our 2019 estimate. GlobalData expects it to be a short-term hit, however, as it forecasts strong growth in 2021 and 2022 in terms of GWP. Growth should then return to more normal levels in 2023.

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uk personal lines insurance covid-19

 

Trips abroad by UK residents have been largely on hold since the lockdown measures came into effect. Two-week quarantine periods for those entering the UK from almost all foreign countries will limit any hope of a recovery in the summer season. We do expect the travel insurance market to return to growth in 2021 and 2022, with large GWP increases in both years. A combination of an increase in the number of trips abroad and the loss of the EHIC system will play a vital role. However, we do not expect a return to pre-pandemic levels of growth before the end of our forecast period.

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The affinity channel, in particular, is expected to see its share decline. The channel’s prominence within the travel market will see its share of distribution fall, while we expect to see the specialist advice provided by brokers become increasingly important. This is especially true within commercial insurance, where COVID-19 has highlighted the importance of understanding exactly what risks businesses are covered for by their insurers.