By Ranamita Chakraborty
The UK government’s recent COVID-19 emergency ‘mini budget’ has the potential to stimulate demand in the life insurance market according to data and analytics firm GlobalData.
Last Friday, the government unveiled budget measures worth up to GBP30bn ($37bn) including a stamp duty cut on house purchases of up to GBP500,000 until 31 March 2021.
This change in stamp duty is expected to help boost activity in the housing market and benefit an estimated nine in 10 buyers. It also provides an opportunity for the insurance industry to capitalise on, given that protection products are marketed effectively.
Findings from GlobalData’s 2019 UK insurance consumer survey indicates that buying a new home ranks as one of the top three reasons behind purchasing term assurance, critical illness and income protection products.
According to GlobalData analyst Daniel Pearce, stamp duty savings made by prospective homeowners will enable them to purchase houses that were previously out of their price bracket, resulting in a higher amount insured and an increase in premiums.
“The industry will benefit as COVID-19 will have increased the awareness and interest in protection products among consumers. However, it should be clearly outlined under what conditions a claim can be made, as COVID-19-related claims will likely be excluded,” he said.
However, he highlighted that the new measures only offer a glimmer of hope and are unlikely to spur the market into high levels of growth as continued economic uncertainty and employment security concerns could weigh heavy on consumer confidence.
Instead, the measure is expected to reduce the extent to which the market contracts in 2020 and give some reprieve to life insurance providers – many of which have been under increased pressure from claims and balance sheet performance due to financial market volatility.
Asia Insurance Review