Advisers are divided over whether Legal & General’s prediction that the UK protection market will shrink this year will prove true, but they believe there is plenty that intermediaries can do to keep the market buoyant.
L&G’s prediction featured in annual results released yesterday, with the insurer warning it expects the UK protection market to shrink this year after reporting record retail sales in 2021 driven by the busy housing market.
But advisers Health & Protection has spoken to are divided over prospects for the year, noting that while the quieter housing market and rising inflation may hurt enquiries, awareness from the pandemic and potential boosts from group and business clients could increase demand.
Online searches well down
Tom Baigrie, chairman of LifeSearch, told Health & Protection the number of online searches on terms related to protection are well down on last year, so he expects L&G will be proven to be right overall.
“We believe the pressures on household finances of rises in the cost of living are what is impacting the appetite for protection,” Baigrie said.
“We do though see another issue as contributing to the stagnation and possible decline of our market. More and more online enquirers are met by sales processes that are simply not in the consumer’s, or the market’s best interests.
“If insurers can improve the behaviour of their poorer quality distributors, so that those consumers who do approach our market are treated with more care, tolerance, honesty, openness and excellence, we will stand every chance of renewed growth.”
Quieter year expected
Alan Lakey, director of CI Expert, said he expects a quieter year for the market.
“The mortgage market normally drives protection sales and with rising rates and the aftermath of last year’s stamp duty reductions it is fairly obvious the market will be quieter this year. I can certainly attest to that,” Lakey said.
“Other factors also influence things but, on the reverse side, when costs rise clients are more amenable to reviews, particularly if money can be saved.”
Richard Charlton, director at Phoenix Health & Protection, agreed that if the property market slows, protection sales associated with those movements would shrink – so he would not be surprised if sales drop this year.
But Charlton added that a significant number of people with mortgages do not have insurance so it is always worth having a conversation with these potential clients about why they lack cover.
Policies cancelled as budgets squeezed
Naomi Greatorex, owner of Heath Protection Solutions, revealed she has found clients are increasingly concerned about their budget when talking about their protection options due to the rising cost of living.
But she noted an increasing point of concern is around in-force policies being cancelled as household budgets come under strain.
All of which means, Greatorex added, that advisers need to be engaging with existing clients, and educating new ones on why some protection is better than no insurance at all.
“As a protection adviser, I work closely with women’s groups to help them access advice,” Greatorex added. “I am working on the steering committee of the Income Protection Task Force (IPTF) to support the workstream for this underserved market for IP in 2022.”
But Andrew Wilkinson, director at Moneysworth, told Health & Protection has not noticed a slowing of demand for the firm’s services despite customer concerns about cost of living increases.
“As a specialist protection only broker we are trying to encourage more advisers to introduce clients to us, where the advisers arrange less protection themselves or they run out of options for clients who are living with a health conditions,” Wilkinson said.
“We also continue to seek more protection solutions to cover the gaps for customers living with health conditions.”
Opportunities ahead for group and business protection
Roy McLoughlin, associate director at Cavendish Ware, also struck a more optimistic tone, arguing that awareness of the importance of protection due to the pandemic will continue.
He highlighted there have been recruitment drives among mass market protection advice firms, that more advisers are now getting out and about to drive sales and with more firms setting up, there will be more opportunities within the group and business protection markets.
Meanwhile, Charlie Cousins, founder of Hooray Health & Protection, said protection sales were on track to continue to rising for the firm due to an increase in the number of start-up firms.
“These innovative start-up companies will only become more numerous as 2022 continues, and this is where our specialities lie,” he said.
“These sorts of businesses are all looking to attract and retain the best talent possible, especially within the current climate where attracting top employees is competitive.”
Cousins added that providing a high salary is no longer enough to obtaining a success return of investment and enticing top talent.
“Employees want to feel protected both in their personal lives and at work. The pandemic has brought this massively into the spotlight,” Cousins continued.
“The importance of supporting the health and wellbeing of employees has never been higher, meaning more and more companies need no-obligation advice to help them establish an employee benefits package that is a perfect fit for their employee needs.
“We are all more aware of our own vulnerabilities and the call for a better work-life balance. The workplace is becoming this space where employees can feel safe after the events of the last two years – meaning more work for our market,” he concluded.