While this is set to return to steady growth between 2021 and 2023, it will not return to previous levels by 2023, as the pandemic will “have a lasting impact”.
However, strong regulation should “help to protect leading insurers in the short-term”, according to GlobalData.
GlobalData insurance analyst, Deblina Mitra, said: “The strong capital balances of top life insurers in the UK will partially insulate the impact of Covid-19. Notably, Solvency II has helped insurers to shore up capital.
“Solvency II capital coverage ratios remained strong in the first quarter of 2020 for life insurers due to hedges against the falling interest rate and capital benefits driven by matching adjustments, amid wider credit spread.”
It predicts that a rise in the number of Covid-19-related fatalities in the country, combined with a decline in equity prices of life insurers, and an expected decline in product demand due to a rise in economic and financial uncertainties will significantly challenge UK insurers’ profits.
Mitra added: “One lasting positive from the pandemic will be the improved digitalisation capacity that insurers have been forced to prioritize. They are digitising key business processes including policy renewals, sales of new policies, claims management and customer relations to a greater extent.”