Income protection sales ‘hardest hit’ as market impact of Covid-19 starts to show, iPipeline stats show
While protection sales processed through iPipeline's platform were up 25% year-on-year as a result of new clients brought on board in 2019, its figures without new clients show that sales on a ‘like-for-like' basis were down 13% during Q2 compared to the same period last year.
For all protection distribution channels - income protection (IP), life and critical illness (CI) - call centres were the only sector to see an improvement, with a 9% increase in new business like-for-like, year-on-year.
In light of a frozen housing market during this period, protection sales from mortgage brokers have been worst hit by the pandemic, showing a 23% decrease in new business, alongside wealth IFAs (16% drop) and general IFAs (8%), according to iPipeline's Q2 figures.
iPipeline's Q2 stats also show that average protection premium was down 7% year-on-year in Q2 on a like-for-like basis.
The hardest hit product is IP, which is down 30% like-for-like, year-on-year despite having a very strong Q1.
Despite this, iPipeline has started seeing an uptick in sales in June. Occupation mix also shifted during Q2, with more professional occupations taking out IP compared to manual workers, although this began to revert back to pre-pandemic ratios in June.
Ian Teague, UK group managing director at iPipeline, said: "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."
iPipeline also said its SSG Digital Platform has now processed more than 3.5 million policies, equating to 30% of UK new protection policies.