How a year of biblical proportion has affected insurance in the UK

After more than a year of tragedy across home and health, the question of mortality is at the forefront of many peoples’ minds. In addition to this, the economic impact of the pandemic has led to a frenzied property market, bringing many new and significant financial obligations for many.

The impact of this “perfect storm” of disruption has drastically affected the insurance arena: the World Insurance Report 2021 found that over 60% of insurance firms surveyed said the pandemic had severely impacted their business, resulting in the Insurance market recovering far more quickly than the economy at large according to Swiss RE.

However, despite the increase in societal awareness towards insurance, many remain exposed to the most unexpected eventualities of life, which translates to a significant risk to property and the livelihoods of millions should the worst happen.

Home insurance:

Almost a million people purchased a home and moved over the last year, with data from property concierge app Moveable showing that 12% of Brits rushed this time-consuming and important process. The peripheral fallout is evident; amidst a rush to complete in time for the stamp duty holiday deadline comes a very apparent risk that Brits may overpay due to rash decisions or forget their home insurance entirely. This will have added to the 6 million uninsured homes according to Nelson Insurers, and the £266 billion of content and trillions of pounds of property, that is totally unprotected.

The consumer habits of a country in lockdown has added fresh risk to this significantly underinsured market. Whether this is the near 700,000 people that have had a home gym installed according to Moveable, the new gadgets that so many have bought, or the home improvements undertaken, the last year will have seen millions of policies drastically affected, void entirely, or totally forgotten. Adding to the potential scope of risk, the recent and disastrous floods in China, Europe, and most recently London and the South are testament to the importance of staying protected.

Life insurance:

Life insurance is the ultimate safety net, as it protects your loved ones from lasting debt, which is particularly poignant after a year of tragedy for so many. This has prompted some 5.8 million, or 11% of UK adults, to buy, or consider buying, life insurance according to 2021 research by Canada Life.

Yet there are still 32.9 million, or 63% of adults in the UK, that don’t have an active life insurance policy in place. This cover is particularly vital to those with mortgages and homes, yet according to Aviva, 42% of people with a mortgage have no life insurance in place whatsoever. This leaves the families of millions at risk of being burdened by property debts, particularly after so many people have purchased a new home.

This new risk to the lives of many is exemplified by the uptake of health insurance policies, as Compare the Market reports that there had been an average 40% increase in private health insurance in 2020. This highlights the new fears people have for their health, particularly as the pandemic has had such an asymmetric impact across the board, with certain people far more at risk of harm than others.

Simon Bath, CEO of Moveable, discusses the importance of insurance after the pandemic:

“The last year and a half has impacted the lives of everyone. This turbulent time has reminded many of us how important being protected against the worst-case scenario is, as the worst-case scenario has been felt by so many millions throughout the world. People have considered insurance as a result of this – particularly health and life insurance in record numbers, but many sectors are still woefully underinsured, particularly the property market after such an intense period of activity. It is always worth being covered.”