The UK’s life insurance sector is due to reduce by an estimated -8.5% in 2023. This is according to a recent analysis by Final Duties, a probate brokerage in the UK. This revelation comes after three years of expansion that saw the sector’s revenues rise in response to the global health crisis.
Data scrutinised by Final Duties indicates that the sector reached its peak at £66.3 billion in 2017. This represents an increase from £54.7 billion in 2013. However, the subsequent two years witnessed a downturn. It shrunk to £20 billion in 2019, marking the lowest revenues in the past decade just before the start of the pandemic.
Following the outbreak of Covid-19 in 2020, the life insurance sector experienced a boom. It soared by 132.4% within a year to £46.6 billion in 2019. This growth persisted, with a further 12.7% increase in 2021 and a subsequent 36% surge in 2022, culminating in a decade-high of £71.4 billion.
Despite this sustained growth, Final Duties’ analysis predicts a reduction of -8.5% in 2023, resulting in an estimated total market size of £65.4 billion. Despite the downturn, this figure still reflects a 226% increase compared to the pre-pandemic low in 2019.
The UK’s life insurance sector has 326 businesses operating. Analysts calculate that each business, on average, earns £2.5 million in revenue, showing an increase from the £59.5 million reported in 2019. This rise in revenue is notable, considering that fewer individuals are holding life insurance policies. Experts anticipate a decline of 2.5% in 2023 to 26.3 million policies across the UK.
The decline in policy numbers has been an ongoing trend since 2018, falling from 30.1 million and marking a 12.6% decrease. Despite this decline, the data suggests that individuals who maintain life insurance policies are opting for higher coverage levels. This may reflect increased awareness and financial prudence in the wake of the pandemic.
Jack Gill, the managing director of Final Duties, commented:
“Much like the other formalities associated with death, such as forming a will, life insurance is a formality that must be taken care of ahead of time, regardless of how morbid it might seem.
It provides a financial safety net for the loved ones you leave behind and this is vitally important as we never know when our time might be up.
It’s hardly surprising that the importance of life insurance was brought to the forefront due to such an unprecedented event as the Covid pandemic. This caused the sector to grow to its largest in a decade and while this growth has now started to subside, the life insurance market remains substantially larger than the pre-pandemic landscape.”