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June 2020 | Protection

Steve Ellis: Compare the concerns

Steve Ellis is head of risk and protection at Premier Choice Group

If there is one thing for which we are in this business – that of protecting people’s health and financial wellbeing – it is to take away from them the worry of losing their income.

Very unfortunately, COVID-19 has put people in the position of losing both their health and their finances.

Comparethemarket.com’s Household Financial Confidence Tracker found that 25% of UK households felt that the easing of the COVID-19 lockdown was causing them to be less confident about their financial situation than they were before.

Among the respondents, 16% were less confident about their employment prospects, 50% were unconvinced that the government’s exit strategy could work, and 43% said that the plan to gradually end the lockdown did not seem realistic or achievable.

Furthermore, 82% were worried that a gradual exit from the lockdown could cause a second spike in the virus, which could have a more prolonged impact on their household finances.

A fifth (20%) of households are not confident that they will be able to keep on top of payments arising over the coming weeks.

Only 65% say they have enough money to tide them over during the pandemic, while 41% feel that their income is not currently sufficient to cover their outgoings.

About a third (34%) of those with children have seen household expenditure increase. Perhaps even more worrying is that, while a proportion (29%) are struggling to pay their bills, 10% are taking on debt with additional credit cards or loans and 10% are borrowing from family and friends.

Clearly for many individuals, taking out cover now may not be as easy; but while it may have limitations as regards specific COVID-19 cover, the acknowledgement of the importance of cover is arguably universally higher now than it has been before. Every one of us is in the same situation – living with a pandemic.

As healthcare intermediaries, advisers and brokers, we are all in a position of realising acutely the concerns and needs of our current or prospective clients.

They want protection. We can’t protect them against becoming ill or suffering accidents or loss of income, but we can ensure they have their health needs paid for, or their lost income replaced or insured against.

Inflation fell from 1.5% in March to 0.9% in April.

Meanwhile, energy costs and petrol costs are down. We are not spending on commuting – or we weren’t – and we aren’t spending in restaurants, pubs or bars.

We may be having more takeaways or buying more to drink at home, but this is still cheaper than paying the mark-up on consumables consumed outside of the home.

And, when shops do begin to open again, there have been reports that clothing and shoes will be discounted. So, there are savings being made and potentially savings to be had.

This will obviously help those who are seeing expenditure rise, as reported above, perhaps because the children are at home all day – or have returned home from independent living – and are eating more!

But there is also a clear angle here to prove to clients that, because they are not going out for a meal every week in the month, for example, they are saving £50 or £60 on average that could more than cover a meaningful amount of protection insurance.

There is much talk of how things will be when we come out of this coronavirus crisis. What lessons we will have learnt, which of those disciplines and adjustments that we have made for the good of ourselves and our environment we will keep in place for the long term, and which bad habits we will fall back into.

One adjustment could be cutting down on a meal out once a month, while a new discipline could be using the money saved from that to put towards life insurance, critical illness insurance or income protection.

House moves which way? One of the many unknowns regarding our world post-lockdown is what will have happened, or will happen, to house prices. Will prices rise or fall? Will there be bargains to be had, or prices to negotiate down?

We will have to wait a month or two for official statistics on house prices, but back in March there was some encouraging news. UK house prices were up over the year to March 2020 by an average of 2.1%, up from the 2% figure for the year to February.

The highest house price increases were in Northern Ireland, up an average of 3.8% to £141,000, then England, up to 2.2%, to an average of £248,000, followed by 1.5% in Scotland to £152,000, and 1.1% in Wales to £162,000.

The best one can argue is that prices had a slight margin before we entered the lockdown period in late March.

It might have been that there was enough of the ‘writing on the wall’ as regards the pandemic to impact on prices.

Individuals were perhaps less inclined to get the price of the house they wanted lowered to not risk the sale going ahead. Equally, sellers may have tried to entice buyers with a lower price.

Who knows how the psychology will run in a post-COVID-19 market. Will sellers employ the same tactics to secure a sale, or will buyers be happy to meet the asking price so to get the house they want and move on (literally) after having so much put on hold in the delays of the crisis?