Covid-19 and the impact on UK Income Protection business

Income protection insurance

Duncan Heald (of Scor) and Landi du Toit (of PartnerRe), members of the CMI Income Protection Committee, summarise the results of a Covid-19 survey they recently conducted.

The CMI Income Protection (IP) Committee does not yet have sufficient data to be able to analyse the impact of Covid-19 on IP claim inception and termination experience. Whilst work is underway to address this point, the Committee decided to conduct a survey of subscribing insurers and reinsurers, seeking their views on the impact of Covid-19 on IP providers’ business and experience, and their thoughts on future experience.

Working Paper 156 was issued to CMI Subscribers in November 2021, summarising the responses to the survey and sharing respondents’ views of how Covid-19 has impacted IP business.

What were the key messages?

The events of 2020 were seen by respondents as a reminder of the value of IP business and there was general agreement that there would be greater demand for IP products in the future due to the heightened awareness of IP insurance caused by the pandemic.

However, the varying views highlight the uncertainty of the impact of this pandemic on the experience and future claim development of IP business.

The IP Committee thanks all those who responded to the survey and the insights they provided.

Please note that observations presented below reflect those that completed the survey and may not be representative of the full market.

What impact did respondents observe on claims experience in 2020?

Although one might have expected IP incidence rates to increase during 2020, respondents have observed a mix of changes in the claim inception experience for 2020, with more observing a decrease than an increase.

Various contributing factors were suggested, including Furlough, NHS delays, and operational issues, although it was noted that we could see a reversal of the effect of some of these in the future.

Very few responses were provided on the observed changes in claim recoveries and deaths, possibly due to a lack of credible data and higher volatility in general.

What impact did respondents observe on IP business written in 2020 and actions taken?

A mixture of responses were received in respect of business volumes, with marginally more reporting a decrease in the actual compared to expected volume.

Various operational challenges were mentioned in relation to claims assessment and management, including resourcing, additional administration, and obtaining medical and employment information.

What was the respondents’ outlook on the future?

The general view of respondents on the future experience of IP was that it is too soon to tell and that there remains considerable uncertainty, in particular in relation to:

  • Future inceptions from long COVID and mental health.
  • The impact of the NHS backlog.
  • The removal of furlough support and effect on liabilities incurred in the future.
  • The economic recovery.

Respondents generally agreed that demand for IP would be strong in the near future. In particular, views were expressed that the heightened awareness of IP products, because of COVID-19, by intermediaries, employees, and individual customers might increase demand.

What will the IP Committee be doing next?

The IP Committee is currently collecting and processing data to end-2020 and we expect to be able to analyse the 2020 experience in 2022. It will be very interesting to see the quantitative analysis of the actual experience for 2020, and future years when this is possible, and how it compares to the qualitative views gathered via the survey.

If you would like to provide any feedback on this blog, on the IP Committee’s activities more generally, please email your comments to