Opinion & Analysis
Drewberry: 4.2 Million UK Workers Newly Considering Income Protection Due to COVID-19
08 Apr 2021
According to the Office for National Statistics, 31.1 million UK adults aged 16-64 were in some form of paid employment in the 3 months to January 2021. That’s a vast potential market for protection insurers to tap into, especially given less than 1 in 10 adults have Income Protection. This unprotected 90% of working adults amounts to just shy of 28 million people.
Now, thanks to a brand new survey Drewberry has just run, The Pandemic Protection Survey 2021, we have figures which reveal that 15% of UK working adults are considering Income Protection in the wake of the COVID-19 pandemic.
15% of the unprotected 28 million means 4.2 million people actively considering protecting themselves against future illness or injury. After what I’m sure so many people working in the industry will agree was an incredibly tough year, we have a real opportunity to turn 2021 into a true protection success story.
Raising Awareness to Reach New Clients
One of the first barriers to dismantle is a lack of awareness around Income Protection. It still gets far less attention than Life Insurance and Critical Illness Cover, perhaps because the UK has so many homeowners and aspiring homeowners, which means many people take out mortgages and get Life & CI with them.
Yet when it comes to Income Protection — which arguably provides far broader coverage and, with long-term cover, payouts can last until retirement — it remains that too few clients have heard about its benefits. A bigger and better awareness campaign could go a long way, especially now there are more clients interested than before due to the coronavirus pandemic.
Changing Client Perceptions
A second barrier we need to address is the perceptions the clients who’ve heard about Income Protection have about it and the cover available elsewhere.
For example, the Q1 Protection Survey 2021 found that, when asked why they wouldn’t take out Income Protection, 18.9% said it was too expensive. Furthermore, when asked how they thought the pandemic had affected the cost of Income Protection, a huge 75.5% of workers said it had become either more expensive or significantly more expensive.
The reality, of course, is that the cost of Income Protection remains largely unchanged despite the pandemic.
Meanwhile, distrust in insurers presents a further barrier. 15.3% of working adults wouldn’t buy Income Protection because they don’t believe the insurer will pay out when they need it.
When looking at consumer perceptions about life claims, which are typically far more clear cut, 44% of the people surveyed believe that insurers have paid out less than 50% of Covid-19 related Life Insurance claims, when actual figures are plus 95% according to the ABI.
As an industry, that indicates we should be trumpeting successful claims data from the rooftops, not hiding it away in press releases. Too often insurers don’t make a big deal out of their annual claims data and the rest of the industry follows suit. It’s time to shake up the presentation of these statistics and champion client success stories.
Will 2021 Be the Year of Income Protection?
As an industry, all we want to see is a well-protected population properly insulated against financial shocks with appropriate insurance coverage. No one wants clients protected more — and with a vast new potential client base considering Income Protection, now’s the time to work out what we need to do to make that happen.
COVID-19 has highlighted to clients just how vulnerable they and their incomes are to illness. It’s provided a big wakeup call. If any good at all can be salvaged from the tragedy of the pandemic, let’s make that good a better-protected population who has a more secure financial future.
Tom Conner BSc MPhil