And the GlobalData research predicts it will take until 2022 for the market to recover lost GWP
The personal lines market in the UK will contract by an estimated 2% in 2020 as a result of Covid-19.
Research from GlobalData found that travel insurance will be the worst affected personal lines product in the UK, with GlobalData’s UK Insurance Market Essentials: Covid-19 Update report forecast suggesting that the gross written premiums (GWP) will contract by 48.7%.
GlobalData expects this to be a short-term hit, however, and forecasts strong GWP growth in 2021 and 2022. The growth is then expected to return to more normal levels in 2023.
Daniel Pearce, senior insurance analyst at GlobalData, said: “Trips abroad by UK residents have been largely on hold since the lockdown measures came into effect. Two-week quarantines periods for those entering the UK from almost all foreign countries will limit any hope of a recovery in the summer season.
”We do expect the market to return to growth in 2021 and 2022, with large GWP increases in both the years. A combination of an increase in the number of trips abroad and the loss of the EHIC system will play a vital role.”
Across the whole personal lines market, GWP is estimated to contract by 2% by the end of 2020, returning to growth of 1.2% in 2021 and 3.7% in 2022. GlobalData has then forecasted growth of 2.5% in 2023 and 3.7% in 2024.
The impact of COVID-19 is also expected to have a significant impact on the distribution of products. The affinity channel, in particular, is expected to see its share decline.
Pearce concludes: “The affinity channel’s prominence within the travel market will see its share of distribution fall, while we expect to see the specialist advice provided by brokers become increasingly important. This is especially true within commercial insurance, where Covid-19 has highlighted the importance of understanding exactly what risks businesses are exposed to.”