Regulator notes vital insurance need

Earlier this year, the Financial Conduct Authority published the results of its latest Financial Lives Survey. These showed, among other things, that COVID-19 had presented a severe test for the population’s finances, and that about a quarter of UK adults displayed signs of low financial resilience. Such signs include over-indebtedness, low levels of savings and low or erratic earnings.

There were two stages to the FCA survey: the first covered the period August 2019 to February 2020; the second was conducted in October 2020 to test the impact of COVID-19 on the population’s financial health. The pre-COVID stage presented a mixed picture, with some positive findings but also some areas of concern in matters such as protection insurance cover.  

Mind the gap

On the plus side, FCA reported, ‘The proportion of people holding any insurance product increased from 81% in 2017to 88% in 2020.’ However, the survey exposed what FCA referred to as ‘a significant protection gap’, as its data showed that 53% of respondents held no protection products whatsoever, albeit an improvement from 59% in 2017.

The protection gap was particularly marked among those aged 18-24 as well as a range of other groups, including those with vulnerabilities or lacking confidence in managing their money. Yet many in these groups are responsible for families that would likely suffer hardship if they were to die prematurely or suffer unexpected illness or injury.

There may be many pressures on the financial resources of adults in the younger age ranges and on vulnerable groups, but it is important for them to have adequate protection if possible perhaps with help and encouragement from wider family as appropriate.