The pandemic wrought havoc in the life insurance sector – causing insurers to introduce Covid underwriting restrictions and meaning they also had to show understanding to those experiencing issues paying premiums.
But as lockdown restrictions continue to lift along with Covid underwriting restrictions, is this filtering through to improved conditions for advisers?
“We’re finding it a bit more constrained,” Richard Walker-Gunns, head of financial services and compliance at M&N Insurance, told Health & Protection when asked about how the market was faring.
“In other words, wherever anybody has any symptoms or recently been diagnosed or tested for Covid, it’s just puts a hold on their life insurance application at that stage,” he says.
“I would say that towards the end of last year and beginning of this year that was quite challenging because that was when we were finding that most people were getting tested and coming up with positive results. So even though it wasn’t life threatening, it was holding back on life insurance applications.”
Jackie Kerwood, claims philosophy and governance manager at Aviva, told Health & Protection that during the first wave of the pandemic last year the insurer did add additional questions to its application process to address those people who were at particular high risk and make sure they were seen by actual underwriters.
Although Kerwood adds the insurer still managed to offer life insurance to more than nine in every 10 customers throughout the pandemic.
“The vaccination rates and in particular breaking that link between infections and serious illness and death has meant we’re able to remove most of our additional questions, which means we can offer terms to even more customers and even those customers that have manageable chronic conditions,” she says.
“So definitely the vaccination programme has allowed us to ease those restrictions on underwriting and allow more and more people to get that protection in place quickly.”
Helen Morris, head of underwriting and claims for protection at Aegon UK, says the insurer has been actively monitoring and reviewing the situation and as more people have received their first and second jabs, it took the decision in the past week to lift Covid underwriting restrictions introduced last year.
“We were keen to ensure that any changes we made returning us to our previous underwriting approach were permanent,” Morris says. “The easing of restrictions, the acceleration in the UK vaccination programme and the fall in Covid related mortality rates have been encouraging and have facilitated the removal of some of our underwriting restrictions.”
The improved picture around the pandemic also appears to leading to a reduced number of claims.
Emma Walker, chief marketing officer at LifeSearch, revealed while the broker had previously dealt with many Covid claims for life insurance over the pandemic, there has been a “considerable” drop off more recently.
“We’ve also had a number of income protection claims where people think they can claim during the ten day isolation period, although their deferred period is often longer, typically one to three months, which wouldn’t be covered,” she says.
“We saw a marked increase in enquiries for income protection during the first lockdown, and a strong demand for life insurance throughout, fuelled by a strong housing market.”
And according to Walker-Gunns as restrictions lift, the life insurance market appears to be settling down.
“It created a bit of a logjam for us when insurers were trying to find their feet in terms of what questions to ask,” he continues.
“It was quite tight at the beginning because if anybody had any symptoms or they had a positive test we couldn’t progress, so that was a challenge at the beginning but things have settled down now.”
Zanele Sibanda, head of internal markets at Towergate Health & Protection, echoes those sentiments.
“In recent weeks insurers have issued statements confirming their revised stance with respect to Covid; in all cases to say that they have a greater understanding of the risks and are taking a more relaxed approach to underwriting in this area,” she says.
“We’re seeing a steady return to pre-Covid acceptance levels and appetite for risk, and the vaccine rollout has given insurers more confidence to accept more lives at higher sums assured than was previously acceptable.”
But Covid-related risks refuse to go away, with the UK recently recording its highest infection rates since the start of the year ahead of schools breaking up and the summer season reaching full swing.
Against this backdrop, Inez Cooper, founder of William Russell, raises the question of whether customers travelling abroad for work or holiday to a country experiencing a spike in Covid cases might constitute a willful exposure to needless danger.
She added she expects debates such as these to play out in the press and possibly in the courts with many insurance companies.
Ultimately, though, Cooper says the most important change the life insurance market has been forced to contend with is connected to people failing to pay their premiums due to financial difficulties.
“Life insurance companies have had to work out mechanisms to help customers very quickly, for example payment holidays or helping customers to pay less by permanently or temporarily reducing life cover,” she says.
“In our view, insurers have been remarkably sympathetic to customers during the pandemic.”