Closing the protection gap will mean improved engagement with individuals as their circumstances change throughout their life.
This is according to Protection Distributors Group (PDG) chairwoman Emma Thomson (pictured right) who was in conversation with Income Protection Task Force MD Jo Miller on the third day of Income Protection Action Week.
At the start of the week, the Financial Conduct Authority (FCA) charged the PDG with developing a market-wide initiative aimed at addressing weak consumer engagement and understanding of protection.
Thinking about individuals
Thomson told Miller that closing the protection gap means thinking about individuals, not just families.
“We need to think about how we engage with all different groups,” Thomson said.
“We need to make sure that it’s not just thinking about a traditional family. There are lots of blended families out there with lots of different needs.
“You need to make sure that you’re thinking about lots of different types of individuals and their circumstances, whether they’ve got children living with them or not, whether they are with a former partner, whether they are going to potentially be having children in the future.
“We need to make sure that we are engaging with individuals and meeting those needs, and also thinking about their future needs as well. Is the product that you’re recommending today going to futureproof them going forward.”
Products not where they should be
But Thomson maintained that while there are products on the market that flex as an individual’s circumstances change, they are not where they need to be and some are better than others.
“So are there products that are going to be better for that individual if the adviser through the conversation identifies that actually the situation may change in the future,” she continued.
“We’ve got renters that we’re not really engaging with and so many people are not able to buy until they’re later on in life and by the time they’ve actually done that, a lot of those have actually had children.”
Role of wider market
Though Thomson noted that this lack of consumer engagement is not always the adviser’s fault as individuals are more likely to engage with protection at the point of taking out a mortgage for example, and the wider protection market has a role in addressing this.
“Some of the insurers are pretty good at advertising and reaching out to consumers that perhaps might not have been in a position to speak to an adviser,” she continued.
“We used to have banks talking about protection a lot – that’s not really there anymore and probably needs to change.”
Role of price comparison websites
Thomson maintained that the likes of price comparison websites also have a role to play.
“And then you’ve got your other organisations such as your price comparison websites, which a lot of people do criticise, I’m from an organisation that absolutely believes in the value of advice, but we also recognise that there are lots of people that wouldn’t come to an adviser,” she continued.
“That could be a first stepping stone and a lot of those price comparison websites have got partnerships with advisory firms that can help that individual to engage far more with protection.
“But that could be the first stepping stone for them to engage with our market.
“So everyone has a really important role to play and with the FCA’s focus on the protection gap, there are so many people that we’re just not reaching out to at the moment and we’ve got to make some changes.”
