ProtectionApr 4 2023

How has the protection market changed post-Covid?

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How has the protection market changed post-Covid?
Long Covid is affecting thousands of people across the UK and around the world. (FT Montage/Dreamstime/Ian Bott)

The term ‘the new normal’ has been used a lot to describe the UK life insurance market post-2020, but is that quite right? Other challenges that have arisen in conjunction with the aftermath of the pandemic make the situation more of a ‘new abnormal’. 

So, what constitutes that ‘new abnormal’ for UK life insurers, and the protection insurers in particular?

When thinking about the main market influences and trends in the protection market, it can be helpful to place them into four categories:

  • 'Post-Covid'.
  • Inflation and the cost of living.
  • Consumer duty legislation.
  • Customer insight and analytics.

‘Post-Covid’

The reason for the inverted commas is simple. While the most severe phase for society may have passed (we hope), Covid-19 is still very much with us as an industry.

Looking back over the past three years, we can reflect on how the actual mortality and morbidity impacts on insured lives have been much lower than first feared.

We can also take pride from how the insurance industry as a whole has demonstrated its adaptability and resilience in the face of remote working and distribution and the need for new ways of supporting clients.

But there is no getting away from the fact that Covid-19 is still having, and will continue to have, a material impact on the UK protection market.

Firstly, while it may become less front-of-mind in a generally vaccinated population, there are still risks from higher mortality and morbidity.

The impacts of long Covid also have to be taken into account. Emerging research shows that around 10 per cent of people who were hospitalised with Covid-19 still have lingering symptoms a year later, including severe breathlessness and heart issues.

Continuing Covid-19 cases, along with long Covid and ongoing staffing and capacity concerns, contribute to a poor outlook for the NHS. It is predicted that the NHS backlog will continue to grow until 2024, and then only gradually decrease, with all that it means for pressures on capacity and waiting times.

If people are waiting 12 months rather than six for operations that has obvious implications for long-term health and mortality. And longer-than-usual waits for ambulances and A&E treatment have been translating into noticeably higher mortality.

While most insurers have not altered mortality assumptions up to now, some winds of change are blowing.

Recently, we have done research to assess the impact of delays in cancer referrals and treatments, particularly following an urgent general practitioner’s referral. This showed such delays could cause of the order of 10,000 or more cancer deaths – a significant consideration for pricing and reserving. 

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