The earnings safety insurance coverage market within the UK has skilled important development, with current information indicating a marked enhance in gross sales, significantly amongst youthful demographics.
Analysis by Eleos and Gen Re reveals that earnings safety annual premium equal (APE) has almost doubled over the previous 4 years, reaching an estimated £108 million in 2024, up from £58 million in 2023. This development will be attributed to a number of key elements, together with financial instability, international well being issues, and shifting client behaviours, particularly amongst youthful adults.
Progress in earnings safety gross sales pushed by youthful generations
One of the crucial hanging traits recognized in Eleos’ analysis is the surge in earnings safety coverage uptake amongst youthful adults. The 25-34 age group now accounts for 52% of policyholders, whereas the 35-44 age group represents 30%, indicating that youthful adults are more and more viewing earnings safety as a key a part of their monetary planning.
This demographic shift will be linked to a number of elements, together with elevated monetary literacy and better consciousness of the necessity for monetary safety in an unsure financial setting. The rise of the gig financial system and fewer job safety might also be prompting youthful adults to hunt safety for his or her earnings.
In response to Kiruba Shankar Eswaran, CEO of Eleos, “The findings of our report underscore a significant shift in the income protection insurance landscape. We’re seeing younger generations taking proactive steps to secure their financial future.”
Financial circumstances and international well being issues drive uptake
Financial instability has been a major driver of earnings safety gross sales lately. Main occasions such because the 2022 mini-budget, which led to elevated mortgage charges and financial uncertainty, have heightened consciousness of monetary vulnerabilities. For these buying insurance policies throughout the final two years, 47% cited financial circumstances as a key influencing issue, in comparison with simply 15% of policyholders who took out insurance policies greater than two years in the past.
The associated fee-of-living disaster, pushed by excessive inflation, has additional underscored the necessity for monetary safety, with households looking for methods to safe their earnings towards future financial shocks.
Along with financial elements, international well being issues have additionally performed a major position in driving earnings safety gross sales. The long-term results of the COVID-19 pandemic, coupled with ongoing issues about new well being threats and the NHS’s challenges, have elevated consciousness of the necessity for monetary safety within the occasion of sickness. A 3rd of current policyholders cited international well being circumstances as an affect on their resolution to buy insurance coverage, a major enhance from earlier years.
Shifting motivations between households with and with out youngsters
Eleos’ analysis additionally highlights variations within the motivations for buying earnings safety between households with and with out youngsters. Non-parents have been extra more likely to be influenced by exterior elements comparable to financial circumstances and international well being points, whereas dad and mom have been extra centered on defending their quick household unit. This distinction means that household standing performs a key position within the decision-making course of, with private and family-centric concerns taking priority for households with youngsters.
The earnings safety insurance coverage market within the UK is on a robust development trajectory, pushed by youthful generations more and more prioritising monetary safety within the face of financial uncertainty and well being dangers. As international challenges persist, earnings safety is changing into a significant part of monetary planning, particularly amongst these with out youngsters who’re extra attuned to exterior dangers. The continued evolution of the monetary providers sector, coupled with digital innovation, gives important alternatives for additional development on this market.
The mixing of earnings safety into digital platforms and super-apps presents an thrilling alternative for insurers to seize market share and enchantment to the digital-first mindset of youthful shoppers. As financial and well being uncertainties proceed, earnings safety insurance coverage is more likely to stay a rising and important monetary product within the years to come back.
