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Insurance Watch: Changing the way customers think about protection

The conversation may be difficult, but customers need to be aware of the statistics

‘By the time you hear the thunder it’s too late to build the ark” is a truism tailor-made for the protection industry. Protection can only be bought in advance, by clients hoping for the best but preparing for the worst, and as an industry, we owe it to our customers to make that process as straightforward, engaging and reassuring as we possibly can.

We have work to do. According to YouGov, 16 million people in the UK are under- or uninsured and 11 million of these individuals have mortgage debt outstanding and/or a family at home relying on them as the main breadwinner. For hard-working people like these, the reassurance and peace of mind offered by being properly covered in terms of life, income and critical illness insurance should be compelling. If that is not the case, it is our duty to change the way these customers think about protection.

Advisers are on the front line when it comes to engaging clients and talking to them about the role and purpose that protection can play in their financial planning. Nobody is saying this stuff is easy – it is cancer, it is death, it is loss of income – and the uncertainty that these life-altering events portend can scare clients into inaction.

Having conversations about these issues is understandably tough. But these conversations are all the more necessary for that, highlighting not just the peace of mind, but also the treatments, services and support available to customers. Advisers can illustrate real-life examples where protection has made a real difference to people’s lives, as well as the compelling evidence from the providers that claims are paid. More than 90 per cent of critical illness claims were paid in 2017, but consumer trust needs constant nurturing.

The major insurance brands have work to do, too. There is no question that it is harder to engage people on issues surrounding life and death than it is to talk about cars, gadgets and meerkats – but we must try.

The insurance industry has a role to play, alongside healthcare, the government and the charity sector, to do more to raise awareness of the likelihood of getting a critical illness.

Critical illnesses strike consumers much younger than people think (the average age of a claimant is 49). Cancer strikes a wide range of individuals, with around 293,600 new cancer diagnoses every year. More than 400 people in the UK suffer from a stroke daily, over 30,000 of us need heart surgery every year, and around 100,000 individuals in the UK are diagnosed with multiple sclerosis, a disease that also afflicts the young.

Providers need to do more to highlight the likelihood of getting a critical illness and get the message across that there are solutions out there. Working together, advisers and providers can deliver a coordinated approach to highlight the need for cover.

That means advertising but it also means reaching customers via social media and traditional media outlets.

With an ever-growing population, and all of us living longer, the need for critical illness and income protection is only going to go one way, and the protection gap will keep growing if we do not engage the customer. Based on volume, we are seeing more protection cases than mortgages, which demonstrates latent demand.

Fintech is the current buzzword across financial services, but technology should be deployed sensitively in our sector. The human touch is vital in the protection process.

Digital has a role to play in terms of streamlining applications, storing documents for quick and easy retrieval and connecting the various parts of the industry – but sensitive human interaction will remain a key part of the claims process. How we deal with customers experiencing crisis or loss will define us as a sector.

While advisers may find protection conversations difficult, taking the time to discuss life, critical illness and income protection will help to ensure that clients are prepared for the rain.

Toni Smith is chief operating officer at Primis

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