"Advisers cannot recommend the right protection option without background information, meaning that greater consumer education must be a priority for the sector."
- Emma Astley, Managing Director at CoverMyBubble
Introducing this year’s report, Isobel Langton, CEO of The Exeter, said the focus was on workers’ perceptions of insurance and the support they receive, or expect to receive, from employers and/or the Government when experiencing ill health. From high inflation and interest rates to the ongoing pressure on the NHS, “we look[ed] at how these challenges have affected UK workers during the last twelve months and their impact on purchases of insurance products to provide a valuable safety net.”
Although NHS waiting lists are at a record high of nearly 7.7 million, The Exeter found that in the last twelve months, workers in the UK have become less concerned about being able to contact their GP surgery by telephone (37% versus 46% in 2022) and receiving a same day or face-to-face GP appointment (37% versus 49% in 2022). However, more are concerned about the availability of NHS services for non-urgent treatment (33% versus 31% in 2022) and the level of care offered by the NHS (27% versus 26% in 2022). Likewise, over half (54%) of those surveyed (2,000) said they weren’t prepared to sit on an NHS waiting list for more than three months with 18% saying they weren’t prepared to wait more than 30 days.
The Exeter highlighted that these delays have significantly contributed to the deterioration of the nation’s mental health, with three-quarters (76%) of workers aged 18-24 stating that their mental health had been “adversely affected.” Notably, 32% of women said their mental health had been affected, compared to 27% of men.
This has led to nearly two-thirds (64%) of workers using some form of private service in the last twelve months. Across all age groups, there has been an increase in private healthcare appointments, particularly among 18-24 year olds. Gareth Tunstill, Private Medical Specialist at First Choice Health & Protection, said it was “unsurprising” that more workers are worried about being able to afford private alternatives; “medical cover is increasingly being seen as a necessity, not a luxury.”
“No one should feel locked out of private medical healthcare if they need it.”
Discussing spending habits, The Exeter found that 41% of workers are spending less on entertainment, followed the weekly shop (41%), saving less (37%), and limiting electricity, gas, or water usage (37%), while almost twice as many workers cancelled insurance policies compared to 2022. Only 13% said their habits hadn’t changed.
Among those aged 18-44 there has been a slight increase in monthly savings. This could be due to more ‘adult children’ living with their parents rather than independently, with figures from 2021 showing a 15% increase over the last decade. Meanwhile, workers in the 45+ age groups are saving less than last year; The Exeter believes this could explain the rise in workers keen to change employment, with 27% planning to do so within the next two years, up from 21% in 2022.
Exploring the proportion of workers worried about core financial factors, The Exeter found that 75% were worried about the continued rise in the cost of living, followed by less disposable income (69%), tax or national insurance increases (66%), not saving enough (65%), paying for utility or food bills (58%), paying the mortgage or rent (52%), loss of employment or reduced working hours (51%), and a loss of earnings due to illness (47%).
There was a “notable difference” in how the recent economic backdrop is affecting men compared to women with The Exeter suggesting that the gender pay gap (which was 8.3% in April 2022), is having a “significant effect” on how much a woman can save, with men averaging double that amount each month. More than eight out of ten women (81%) are worried about the rising cost of living, compared to 69% of men.
Therefore, The Exeter found it concerning that women are less likely to have, or are applying for, Income Protection (IP) or Private Health Insurance. Only 11% of women have IP and 22% have Private Health Insurance.
Commenting on these statistics, Emma Astley, Managing Director at CoverMyBubble, said, “No one will dispute that 2023 has been a difficult year for the personal finances of many people in the UK, something that The Exeter’s findings make crystal clear […] but it’s particularly worrying to see this translate to an increase in policy cancellation.”
“Clients can have inflated expectations of cost – and are shocked to hear how cheap appropriate cover actually is. Education is essential and rushed sales must be avoided.”
Currently, 29% of workers have Private Health Insurance, 13% have IP, 23% have Life Insurance, and 13% have a Cash Plan. Compared to 2022, this is +11% in Private Health Insurance, -4% in IP, -8% in Life Insurance, and +5% in Cash Plan. Thankfully, the proportion of workers in the UK without any insurance dramatically decreased from 48% to 25% in 2023.
Despite almost half (48%) of workers in the UK being aware of the added-value services attached to their policy, only 26% have used them. Notably, younger people and men were more aware of these benefits - 64% of those aged 18-24 aware compared to 21% of those aged 65+.
Of those who cancelled an insurance policy, 26% did so as they could no longer afford it, followed by 24% because they hadn’t previously claimed, 14% who didn’t see the value, 8% who replaced it with a new policy, and 5% who didn’t know what it was for. The Exeter hopes that this perceived lack of value will be a “less prominent theme in the future,” since Consumer Duty has introduced more stringent requirements for providers to ensure consumers understand these products.
Emma Thomson, Head of Protection Development at Sesame Bankhall Group, agreed that “It’s positive to see so many consumers aware of the added value services available with their policies, but a significant proportion still are not […] Combined with 19% of workers cancelling policies because they didn’t see the value of cover, or didn’t know what it was for, plus 12% who didn’t know why they cancelled, it’s clear increased communication about the value of cover is vital.”
“Most importantly it will enable more people to improve their health and wellbeing through the services available.”
This year’s report also revealed a worrying lack of awareness around sick pay and how much workers can expect to receive, with one in five workers (19%) revealing that they weren’t entitled to employer sick pay and 41% receiving it for no longer than three months.
When asked how much money they thought the Government would give if they were unable to work due to illness or injury, only 27% selected the correct estimate bracket of £76 to £125. The Exeter said this highlights the threat facing uneducated workers and an opportunity for the industry to highlight the value of IP to workers and employers alike.
While discussing perceptions of insurance, The Exeter compared actual cost versus average estimate for Private Health Insurance, Life Insurance, IP, and Cash Plan. Workers underestimated Private Health Insurance, suggesting £43.50 which was £41.50 cheaper than the actual cost. But, they overestimated Life Insurance (£34.70 compared to £26), IP (£35.20 compared to £24), and Cash Plan (£34.20 compared to £7).
Affordability was cited as the most valued selling point (40%), followed by quality of product (26%), customer service (11%), speed of delivery (9%), and diversity & inclusion values (7%). Notably, those in the younger age groups were more likely to cite diversity & inclusion values as the most valued selling point (3% higher than the average).
When asked the best time to purchase Private Health Insurance, 16% weren’t sure when would be optimal, while 15% thought the ideal time was when you’re ill or following an illness. This was followed by when starting a first job (12%), when offered by an employer (11%), when having a child (9%), when buying a property/getting a mortgage (9%), when becoming self-employed (8%), when moving into a rental property (6%), and when approaching retirement (5%). Only 8% thought Private Medical Insurance wasn’t important.
Similarly, only 6% thought IP wasn’t important, with starting a first job (19%) and becoming self-employed (14%) considered the prime times to buy. This was followed by when ill or following an illness (8%), when having a child (8%), when moving into a rental property (7%), when offered by an employer (4%), and when approaching retirement (4%).
Overall, these findings show that workers in the UK do consider these types of insurance to have value, but lack a clear understanding of how exactly it benefits them, the costs, and the risks they face without an insurance safety net, particularly among renters and entering retirement.
“As an industry, we can help address this by increasing and aligning our conversations about protection and health insurance to inform people of the options available, their benefits and value.”
“Only by working together can we increase the financial resilience of households and ensure we provide more people with greater peace of mind,” Isobel Langton concluded.
To read the report, follow the link here
