At the IPTF we get frustrated that positive intent about income protection (IP) doesn’t always transfer through into impressive sales.
This sense amplifies with the self-employed – at times it feels like there may be more words on these subjects than people insured each year.
We are pleased to see overall IP sales and premiums increase through 2022 but believe that many self-employed remain exposed to risk due to the lack of protection they have against illness or incapacity preventing them from working.
The sobering facts are that of over four million self-employed people in the UK less than 1% bought IP last year and under 10% have an income protection product at all.
We want to help change this and ensure that more of these individuals have protection that would benefit them.
To refute mutterings made in corridors at conferences there are not four million Deliveroo drivers or working parents selling things on eBay.
IPSE and the Labour Force Survey data shows that 24% of self-employed are in skilled trades, 20% in professional occupations and 17% in associate professional and technical occupations.
And 41% have been self-employed for more than 10 years – for many this is a long-term career.
Self-employed people will often be taking a financial risk being in self-employment and backing themselves to make it with their ability, knowledge and ideas.
Their belief and bravery in doing this is admirable and we can support them in one area that no amount of enthusiasm, capability and innovative ideas can do – protecting them against ill health.
There have been many developments by insurers to enable improved conversations and improved outcomes around IP for the self-employed. Four that stand out are:
Calculators: There are a number of solutions available through insurers that focus on the specific situation for the self-employed to make it easier for individuals, and advisers, to see the need for cover and identify an appropriate level of it
Guaranteed benefits: Many policies now have a minimum sum of IP payment that will be made without financial assessment which removes some of the concerns about payment at claims stage which can remove some of the worries about variable income experienced by the self-employed.
Pragmatic approaches to claims situations: The reality of the many different circumstances that can be at play here means that often insurers will say their approach will be on a case-by-case basis. In a world of automation and fear of “computer says no” this can give more opportunity to understand and respond appropriately to an individual’s situation
Value added benefits: With no overlap with any employer provided benefits, and a heavy focus on keeping you at work through 24/7 GP services, counselling and the like, the self-employed ought to benefit significantly from the increase in quality and quantity of value added benefits.
We know there are challenges to writing cover for the self-employed that go beyond simply educating advisers.
There are complexities which are often approached differently by different insurers. We have asked about these in a recent IPTF survey and are sharing the results with all participants.
We recognise this can make it difficult for advisers to confidently approach this subject, specifically around the following four issues:
The approach to claims early in self-employment: There are different approaches taken by different insurers to claims early on in a period of self-employment. Understanding these becomes important as the natural time to engage with someone may be when they are making the move into self-employment and seeking protection.
Link between gaps in self-employment and deferred periods: Different insurers will take different views depending on an individual’s pattern of work and how to approach that occurs if an individual is not earning at that time.
Approach to financial assessment: In our survey it was striking that all insurers gave different answers as to the evidence they would seek for a typical self-employed claim. While all had a similar flavour of reasonableness, the differences may be off-putting to non-specialist advisers concerned about entering a process they do not fully understand.
Speed of claims payment: With the self-employed trending to shorter deferred periods than employed lives the speed at which claims payments are made becomes even more important. This need for speed is challenged by financial requirements and so we are publishing a guide this week to help advisers’ set expectations and smooth the process for claimants.
What can improve things further?
We want insurers to keep pushing new approaches with the self-employed in mind.
Whether highlighting how their products help or by approaching some of these challenging issues above, we hope that by shining a spotlight on this area we can help generate some heat and ideas around this subject.
This week insurers will be running webinars, sharing research and engaging in conversations around this.
We would encourage people with stories on how IP has helped their self-employed clients to share these, as well as letting others know their techniques for succeeding in those conversations with self-employed clients to ensure that we succeed in providing more financial protection for an exciting but vulnerable part of the economy.