The Association of Mortgage Intermediaries (AMI) is urging advisers to clearly communicate the value of protection cover, effectively signpost to third parties and increase the sharing of real-life claims stories.
The recommendations are key parts of the trade body’s five-point plan published in its third annual Viewpoint report which AMI hopes will bring about a change in how advisers consider the market.
The five-point plan which concludes the report calls on:
- Advisers to consider whether they clearly and confidently articulate the value of protection advice to consumers. Advisers should be clear to consumers on the cost of advice vs the benefits the consumer receives from the advised route and to shift overall protection conversations away from price to price and quality.
- Firm and network principals to consider their approach to protection in light of the FCA Consumer Duty and feed AMI Viewpoint findings into their Consumer Duty work. Where firms do not advise on protection or are unable to assist a customer with their protection needs, they should consider signposting customers to a third party – this could be another firm, a signposting service such as BIBA ‘Find Insurance’ or a relevant and reliable party, such as a charity.
- Providers to commit to working with advisers to understand the pain points and seek to address them where possible. To help advisers’ confidence when discussing medical conditions with customers, providers to consider how they can help educate advisers on what is being asked for in the application process and how these topics can be handled sensitively and empathetically.
- Providers to consider ways to supplement claims statistics and widen the use of case studies, such as by sharing customer views on their experience of the claims process and by sharing real life stories of why customers have protection cover, featuring diverse customers from a range of backgrounds.
- AMI to work with its Protection Specialists Group, Royal London, L&G and the wider industry to develop thoughts on how it can tackle the barriers highlighted in the report. AMI to discuss with lenders their role in helping consumers recognise the benefits of protection insurance when taking out a mortgage.
The report also contained research carried out in partnership with Legal & General and Royal London, which asked 3,000 UK adults and over 250 advisers their views on issues relating to the protection market.
Purchasing protection
Among the main findings affordability continued to be one of the main barriers preventing customers taking out protection, with more than a third (35%) of consumers cited cost as a barrier, rising to almost half (48%) of those aged 35-44.
Almost a third (30%) of younger people (18-34 years) thought they were too young for protection cover.
In terms of how customers prefer to purchase protection, if buying today, more than half (56%) would go online compared to just a quarter (27%) who would want to buy it face-to-face and just 3% by video call.
And for a third year in a row, half of consumers (50%) think commission is a broker’s main motivation if they suggested protection.
Promoting protection
In terms of what can be doing to promote protection among consumers, advisers think lenders (84%), the regulator (84%), consumer groups (83%), government (79%) and their peers (86%) should be doing more.
But over two-fifths (44%) of advisers anticipate that the Consumer Duty will increase the focus on protection.
Client misconceptions
The research also pointed to a number of misconceptions on the client’s part.
Notably, two-fifths of consumers (43%) thought protection cover was always the same whether purchased through an intermediary or directly from insurers.
On average, consumers think they could receive £123 a week Statutory Sick Pay (SSP), rising to £153 among those aged 18-34, when in reality it pays just £99.35 a week.
More worryingly, while many self-employed people are not eligible for SSP, on average they still believe they could get £95 a week.
Just over half (52%) of those consumers with a protection policy were aware of the added-value benefits and a fifth (20%) have used them.
Almost a third (31%) of consumers mistakenly thought they could not get income protection if they were self-employed, rising to 42% of those aged 18-34.
A similar proportion (34%) of consumers believed they could not get income protection if they had suffered from a mental health condition, rising to 40% of those aged 18-34.
Client conversations
In terms of conversations between advisers and clients, the research indicates almost a fifth of protected consumers (19%) have never reviewed their policies, rising to a quarter (24%) of women, and more than a third (35%) who used a broker have had no contact again since the initial meeting.
More than two thirds (67%) of advisers did share personal stories with clients when advising on protection and just over half (52%) used insurer sales aids and tools, while 35% used insurer claims stats.
One in five consumers (20%) said they did not discuss life insurance with their broker, rising to one in four for income protection (28%) and critical illness (25%) products, while a quarter of consumers did not discuss with their broker their ability to pay the mortgage if they fell ill or were injured (23%) or if they were to die (26%).
Almost a fifth (18%) of consumers were not confident about talking to their broker about their health, while less than half of brokers (48%) were very confident talking to consumers about their physical and mental health as part of the protection journey.
For a third year in a row, the research shows over half (56%) of consumers did not trust insurer claims stats, rising among older people, and on average they believe just 72% of life insurance and 60% of income protection claims are paid.