City Professionals and Estate Agents Take the Hit on Redundancy and Accident Cover but Who’s Next?
by Ritchie Mehta (10 September 2008)
Owing to the heightened threat of bankers being made redundant by the credit crunch many insurance companies are taking a protective stance and not insuring these professionals against key life events. Estate agents fall into the same category as the housing market in recent months has come to an abrupt and grinding halt with mortgage approvals reaching new lows and house prices falling month on month. The combination of the credit crunch and the slumping housing market has effectively made many estate agents close shop.
The trend of city lay-offs and estate agent closures has certainly rippled through the capital and other parts of the UK with Lehman Brothers set to be the latest casualty with an estimated 1,500 job losses while Halifax’s closure of its real estate arm will no doubt have caused mass redundancies.
The knock on effect of this has had an impact on the vast majority of financial sector workers as it has become much harder to obtain protection of any kind in the recent turmoil. The most prominent form of insurance is a payment protection plan which covers a mortgage payment in the event of an unforeseen circumstance such as redundancy, sickness or an accident. However, as there is an enhanced risk of redundancy, most insurers are staying clear of offering this product to vulnerable sector workers at all.
With two very prominent industries on the decline we can begin to see the ripple effects run through to other related industries. The most obvious being the construction industry which has been in rapid decline as the market for new builds has dried up, leading to many
self-employed individuals who once made a healthy living from the trades now finding it hard to get work. Additionally, with the growth in the number of start-up companies in the UK slowing due to the harsh economic environment, are we likely to see the insurance industry close their doors to these segments too? One thing is for sure with all this uncertainty it is likely that the price of insurance will only go in one direction for: up.