Concerns around job security across the UK are growing as signs of a weakening labour market continue to become more apparent. Job vacancies have fallen; redundancies have become more commonplace, and those out of work face tougher competition trying to secure new employment. As a result, many people are experiencing longer periods out of work.
This uncertainty has had a direct impact on the unemployment insurance market, which has seen demand for cover soar over the last year. Enquiries for unemployment cover more than doubled in 2025, rising by 105.5% between Q1 and Q4, according to data from Best Insurance, as a growing number of households seek ways to safeguard their finances should their income suddenly stop.
Claims have also risen as more people turn to unemployment cover during periods of redundancy, with the number of unemployment cover claims 180% higher at the end of Q3 2025 than at the start of year.
UPWARD TREND
Historically, spikes in demand for unemployment cover often point to broader shifts within the labour market. As economic and employment uncertainty continues to grow, workers tend to seek financial protection before the full impact of sector-specific redundancies begin to take hold.
The recent rise in enquiries of unemployment cover is no exception. Figures from the Office for National Statistics (ONS) show the UK unemployment rate hit a five-year high of 5.2% at the end of 2025, while unemployment among young people aged between 16-to-24-years-old also rose to 16.1% – the highest it’s been in more than 10 years.
Add to this the ongoing uncertainty in the Middle East, which is placing increased pressure on the global economy, leading to a further tightening of household and employer budgets, and it is unlikely that things will improve any time soon.
OPPORTUNITIES FOR MORTGAGE BROKERS
Despite this somewhat pessimistic outlook, there is still an opportunity for mortgage brokers to use these developments to revisit conversations with clients about financial protection and income security.
Much of the growing demand for unemployment cover is coming from mid-career workers – the same group that often carries the largest financial commitments.
Many of these individuals are at a crucial stage in their financial lives, with mortgage and rental costs, school and childcare fees and caring for younger and elderly dependents often accounting for a large part of their income.
In fact, Best Insurance’s data shows that claimants aged 46-55 accounted for 30% of all Accident, Sickness and Unemployment (ASU) claims made in Q1 last year. This rose to 38.75% in Q3, while those aged 36-to-45-year-olds represented the largest share of claims in Q2 (38.46%).
These workers are also more likely to have long-established careers and to recognise the early signs of disruption within their industry.
CHALLENGES ARE WIDESPREAD
However, demand for unemployment cover is not just confined to those with greater financial commitments, concerns about unemployment is being felt across of range of different sectors.
ONS figures show that the retail and whole sectors have experienced significant challenges over the last year, with 65,000 jobs lost since January last year. Meanwhile, Best Insurance data shows that people working in the IT and financial services sectors were most likely to claim on their unemployment cover. Those working in banking, insurance and telecoms were also at heightened risk.
In the current economic climate, the need for financial protection has never been greater and with the rate of unemployment expected to keep rising, it would seem that no sector is immune to the challenges facing UK industry.
For mortgage brokers, this presents an opportunity to bring unemployment cover into the mortgage conversation and ensure clients are protected and financially resilient should they suddenly find themselves without a job.
