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Life insurance sector set to shrink by £6bn in 2023

by | Dec 14, 2023

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Analysis by Final Duties, the UK’s most experienced probate brokers, has revealed that the estimated size of the UK’s life insurance sector is set to fall by -8.5% in 2023, following three years of consecutive growth spurred by the pandemic. 

Final Duties analysed data on the market size of the sector based on revenue and how it has grown over the last decade.

The figures show that prior to the pandemic, the sector peaked at £66.3bn in 2017, up from £54.7bn in 2013. 

 

However, this peak was followed by two consecutive years of decline, with the sector retracting in size to £20bn in 2019. As a result, revenues generated from the life insurance sector hit their lowest in the last decade, just as one of the worst pandemics in recent times was about to hit. 

Following the outbreak of Covid-19 in early 2020, the size of the life insurance sector predictably exploded, climbing by 132.4% in a single year to £46.6bn in 2019. 

It continued to grow by a further 12.7% in 2021 and then by another 36% in 2022, hitting a decade high of £71.4bn. 

However, the analysis by Final Duties shows that this boom in growth is set to subside in 2023, with the market expected to shrink by -8.5%. 

As a result, total market size is estimated to fall to £65.4bn, although it will remain some 226% larger when compared to the pre-pandemic low seen in 2019. 

With some 326 businesses estimated to be operating within the UK’s life insurance sector, this puts the average revenue per business at £2.5m, up from £59.5m in 2019.  

This increase in revenues versus the pre pandemic landscape comes despite the fact that less people hold life insurance policies. Additional analysis by Final Duties shows that the number of life insurance policies is predicted to fall by 2.5% in 2023 to 26.3m across the UK. 

While this follows the trend of declining revenues in 2023, this drop in policy numbers has been developing for some time, with total policy numbers falling every year since 2018, down from 30.1m (2018) – a drop of 12.6%. 

This suggests that while less of us may be holding life insurance policies, those who do are opting for greater levels of cover following the pandemic, while premiums may also have climbed due to Covid.

Managing Director of Final Duties, Jack Gill, 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.”

Data tables

Data tables and sources can be viewed online, here.

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