iPipeline has published statistics for new protection business processed through its platforms in Q2 2020, when Covid-19 was at its peak in the country.
In Q2 2020, protection sales processed through iPipeline’s platforms were up 25% year-on-year as a result of new clients brought on board in 2019. However, the platform provider says this does not represent the market impact of Covid-19. When iPipeline strips out new clients from its evaluation, protection sales processed through its platforms, on a ‘like-for-like’ basis, were down 13% year-on-year. Income Protection (IP) was the hardest hit area, with a 30% like-for-like, year-on-year decrease.
For all protection sales (IP, Life and Critical Illness Cover) per advice channel, call centres were the only channel to see an improvement, with a 9% increase in new business like-for-like, year-on-year. Mortgage brokers were the worst hit sector, with a 23% decrease in new business year-on-year, followed by wealth IFAs at 16% decrease and General IFAs at 8% decrease.
Whilst IP was dramatically down in Q2 2020 compared to what was a very strong Q1 2020, iPipeline 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.
Average protection premium was down 7% year-on-year in Q2 on a like-for-like basis.
iPipeline’s SSG Digital Platform has now processed more than 3.5 million policies, equating to 30% of UK new protection policies.
the platform provider said that, despite the decrease in new business during Q2, early indications for Q3 look positive: July saw the highest volume of cover processed since lockdown was announced in March.
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.”