The Financial Conduct Authority’s (FCA) pure protection market study at the start of the year pointed to a significant protection gap across the country.
But health outcomes are equally affected by stubbornly high NHS wait times and accessibility to insurance and private care – meaning certain sectors of society feel they have no other choice than to just wait for treatment.
Ethnic minorities and the disabled are disproportionately affected and certain conditions like sickle cell continue to fly under the radar.
Though there seems to be consensus across the sector that the answer to these issues is not more cover, but more tailored products and human conversations which make the difference to closing the gap.
Targeted support
Earlier in the year, the FCA released its interim report on its pure protection market study which proposed a series of actions and options it can undertake to help the protection insurance industry close the protection gap.
These include extending its targeted support regime to the pure protection market, encouraging firms to nudge consumers at appropriate points and working with government strategies.
It also noted work supported by Fair4All Finance to explore gaps in income protection (IP) products for groups who may see significant benefit.
In the report, the regulator noted that helping consumers navigate their financial lives was a central part of the FCA’s strategy, and it wanted to help the sector close the protection gap.
Need to be braver
But according to Alan Waddington, distribution director at Cirencester Friendly, now is the time for the sector to be braver.
“As the FCA noted, there is still a substantial protection gap in the UK and this is in all likelihood larger for those in diverse communities,” Waddington tells Health & Protection.
“We need to work harder to reach these groups, raising awareness how to build financial resilience and what options are available to do this.
“It is clear if we stick to the communication methods and channels we’ve always used, that we will not reach the wider population.
“It’s vital that insurers are braver and try different angles to more of the people who could benefit from protection.”
Lack of engagement and trust
For Joanna Streames, owner of Velvet Mortgage and Insure Services, diverse communities are not engaging with protection for an array of reasons.
“This can be due to language barriers not just spoken language but language used around the industry,” Streames says.
“It is still complex. Even the umbrella term protection is massively misunderstood.
“There is also a lack of awareness – some don’t know they can get many of the benefits unless they happen to speak to an adviser who will go through it in detail with them.”
Though trust is at a premium and cultural attitudes are also at play here.
“Culturally, we don’t expect to insure ourselves and we think having a benefits system and the NHS to look after us somehow means we are safe from severe adversity,” Streames continues.
“But there is also limited access to trusted advisers.
“The industry needs to be more diverse so others can see and speak to others they resonate with.”
Poorer health outcomes
Where gaps persist, there is a link to poorer health outcomes.
Kristian Breeze, director of healthcare at Ascend Health, tells Health & Protection the most pronounced gaps appear across ethnic minority communities, who continue to experience poorer health outcomes, higher disease burden and additional barriers to accessing support and information.
But other groups are similarly affected.
“Inclusion health groups – such as people experiencing homelessness, people seeking asylum and people affected by substance dependence – face disproportionately high exposure to health risks and practical obstacles to accessing care,” Breeze continues.
“And disabled people often find that products and services are not designed with accessibility in mind.”
Falling short on sickle cell
Unfortunately there are specific conditions where the sector is falling short – particularly sickle cell resulting in frustration from advisers despite the issue even being raised in Parliament as recently as at the end of last year.
Alan Knowles, co-managing director at Cura Financial Services, describes the condition as a prime example that has come up many times where life insurance is possible for many living with the condition, but critical illness and income protection continue as a real challenge.
“There’s HIV too,” Knowles continues.
“We’ve made strides on this; income protection is now on the table and we can offer life insurance for some people with the condition at standard terms.
“But when it comes to critical illness cover, we just have a single insurer considering terms and the vast majority of cases are declined due to the strictness of underwriting the condition.
“These are just a couple of conditions where we could be doing better for communities where these conditions are more prevalent.”
Tailored products
But the jury is out over whether different products for different communities would prove effective if rolled out across the sector.
“More broadly, I’m not sure that we need different protection products for different communities,” Peter Hamilton, head of market engagement at Zurich UK, tells Health & Protection.
“Although it will depend on how ‘community’ is defined,” Hamilton continues.
“Over recent years, we have seen new distribution networks and firms emerge to better serve specific ethnic communities, alert to any cultural differences, and that feels a very positive development.
“If you look at ‘gig economy’ workers though, there’s a case to say our existing long-term products don’t fit neatly with transient work opportunities and short financial time horizons.”
Low health literacy
Though even where cover is extended to groups who have never had access to it, they still need help navigating these benefits, according to Hugh Bennett, UK director for corporate consulting at Howden Employee Benefits.
“There has been progress, but availability does not always mean accessibility,” Bennett says.
“Many products exist, yet for people with diverse needs, complexity itself becomes a barrier.
“For those fortunate enough to have a policy that meets their needs – because not all are flexible or tailored enough to do so – we still see people delaying care not because cover isn’t there, but because they don’t understand what’s covered or how to access it.
“That disproportionately affects those with lower health literacy and less confidence navigating systems.”
Simpler products
Claire Kelly, proposition and marketing director at British Friendly, tells Health & Protection she would like to see a consensus emerge that recognises the importance of developing simpler, clearer products with straightforward language and a more flexible approach to underwriting.
“This will help reach broader demographics and lead to more collaboration across the industry to improve consumer awareness and prompt earlier engagement, particularly outside traditional advice channels,” Kelly explains.
“There may also be opportunities for cross-sector collaboration between health, protection, mortgages and wealth to help identify and speed up the sales and application process.
“A lot more could be done here to help close the gap and focus on underserved communities.”
On an encouraging note, it does appear that providers are grasping the nettle in this regard.
Oliver Jones, commercial director at National Friendly, says: “Encouragingly, we are now seeing more innovation in product design – simplified products, modular benefits, and more flexible underwriting approaches which broaden access.
“Products like Friendly Shield and Friendly Health reflect a broader shift in thinking: that protection should be accessible at different entry points, for different life circumstances.
“However, accessibility is not only about product design. It is also about communication, cultural understanding, and distribution.
“The industry still has work to do in ensuring that diverse communities both see themselves represented, understand the value that is given to them and feel confident engaging with providers.”
Real human conversations
Flexible, simpler products are to be welcomed, but advisers’ role in making them meaningful to diverse communities is what can make the difference.
Poonam Khan, head of private health insurance at LifeSearch, tells Health & Protection: “Across many of these communities, the missing piece is a real human conversation.
“Someone taking the time to understand their circumstances, concerns, health history and expectations.
“Awareness often begins with a website, but a conversation can make PMI feel relevant and personal.
“We’ve seen that when someone talks it through with a real adviser, perceptions shift quickly. PMI becomes something they can access, not something meant for someone else.”
Khan maintains that when customers receive good advice supported by clear, plain-language explanations, PMI becomes much easier to navigate and outcomes are strong.
“The problem is that many people never reach that point,” she continues.
“Costs can seem opaque, product structures feel complex, and overall visibility of PMI remains low in many communities.
“There is still significant room to make products feel more relatable.
“Much of this clarity comes from better designed digital journeys and the quality of the human conversation behind them. A skilled adviser can unpack a product structure, check understanding, and translate the cover to a customer’s real life.”
Role of non-advised distribution
But this is not to say that non-advised distribution does not have a role to play.
Victoria Francis, protection propositions director at Aviva, says: “Two key areas are essential if the protection sector is to better meet future demand from diverse communities.
“First, the industry must develop more accessible, advised and non‑advised distribution models that meet customers where they are, rather than relying on traditional financial touchpoints that no longer reflect modern life.
“There’s also a need to focus on growing a more diversified financial adviser population, ensuring it reflects and understands the increasingly diverse customer base it serves.
“These priorities must be supported by ongoing regulatory openness to new forms of proposition and distribution, approaches that can reach the under‑served and help deliver on the aims of the UK’s Financial Inclusion Strategy.”
Affordability and awareness
Though ultimately as events in the Middle East threaten to reignite inflation spikes as oil prices spiral, providers must also take account of lower-income households in product design as Dawn Prescott, head of healthcare proposition at The Exeter, points out.
“To ensure the health sector meets the needs of a diverse population, both affordability and awareness must improve,” Prescott says.
“Lower‑income households and those in more socioeconomically deprived areas often face the greatest obstacles to accessing private healthcare, despite frequently having the most urgent need for timely support.
“Expanding employer‑funded healthcare options, offering more flexible and modular cover, and clearly communicating how private healthcare complements the NHS will be crucial in making access more inclusive and achievable in the years ahead.”