Mortgage brokers have seen new protection sales plummet 23 per cent in the second quarter of this year as the industry battled the fallout from the coronavirus pandemic.
Figures from iPipeline showed that for all protection sales - income protection, life and critical illness cover - mortgage brokers were the ‘worst hit’ sector, followed by wealth IFAs, which saw a 16 per cent decrease in new business year on year, and general IFAs (not specialising in wealth or protection) which saw an 8 per cent drop.
According to iPipeline, call centres were the only advice channel that saw an improvement in protection sales, with a 9 per cent increase in new business.
Overall, the life insurance software provider found protection sales processed through its platforms had fallen by 13 per cent year-on-year on a like-for-like basis.
Income protection was the ‘hardest hit’ area, where sales fell 30 per cent, although the software provider noted an “uptick” in such sales in June.
Additionally, iPipeline noted early indications of a “positive” third quarter, with July seeing the highest volume of cover processed since lockdown in March.
Ian Teague, UK group managing director at iPipeline, said: “The protection industry was riding high going into 2020, so it came as a real shock when the full extent of Covid-19 became clear and the consequences of the pandemic began impacting sales.
"Unsurprisingly, considering the freeze in the mortgage market, mortgage brokers have been worst affected”.
Mr Teague added: “We anticipate market-wide protection volumes returning closer to pre-pandemic levels as mortgage broking and IFA businesses increase capacity.
"We believe that we will see growth in the protection market as our industry meets the UK population’s increased demand for improved financial resilience, though this could be dampened should economic headwinds or further lockdowns really bite in Q4”.
But Aly Kassam, director at Easier Finances, said his firm had seen an increase in protection sales in Q2, as the coronavirus appeared to have focussed clients’ minds on “what might happen”.
Mr Kassam added: “For us, having the conversation with every client about protection, keeps you front of mind when they do consider cover, even if it is not at the point of purchase”.
Research by protection provider Guardian found advisers were seeing a change in consumer attitude towards protection as a result of the coronavirus, as the majority reported a greater willingness by clients to talk about protection.