Mortgage brokers were the worst hit advice channel during the second quarter of the year, with a 23% decrease in new business year-on-year, data from iPipeline has revealed.
The life and pensions solutions provider’s analysis showed that brokers were followed by wealth independent financial advisers (IFAs) with a 16% decrease, and general IFAs with a decrease of 8%.
For all protection sales (income protection, life and critical illness cover) per advice channel, call centres were the only channel to see an improvement, with a 9% increase in new business on a ‘like-for-like’ basis, year-on-year.
“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,” iPipeline UK group managing director, Ian Teague, commented.
“Unsurprisingly, considering the freeze in the mortgage market, mortgage brokers have been worst affected. Research has identified that people want and need protection more than ever and our industry has an important role in having more protection conversations and helping them meet their financial resilience goals.”
Statistics showed that total protection sales processed through iPipeline’s platforms during Q2 were actually up 25% year-on-year, as a result of new clients brought on board in 2019. However, the provider suggested this does not represent the market impact of COVID-19.
When iPipeline stripped out new clients from its evaluation, protection sales processed through its platforms, on a like-for-like basis, were down 13% year-on-year.
Despite the decrease in new business during Q2, iPipeline reported that early indications for Q3 look “positive” – after July saw the highest volume of cover processed since lockdown was announced in March.
“We anticipate market-wide protection volumes returning closer to pre-pandemic levels as mortgage broking and IFA businesses increase capacity,” Teague continued.
“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.”
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