Recognising the importance of protection products as part of an adviser’s skillset can pay dividends in the post-RDR world, Peter Hamilton has said.
The head of retail propositions for global insurer Zurich said a key challenge for the insurance industry was to develop consumer awareness and demand for the products, and to help moreadvisers become experts in the sector.
That way, he said, “we can also help advisers develop new business opportunities”.
He added: “Protection is the most important part of our business at Zurich. It’s all about helping people to manage the risks that they face during different stages of life, both as individuals or employers.
“We want to help consumers understand the benefits of protection, from mortgage and family and critical illness, to income protection, business protection, and advisers can play an important part.”
Mr Hamilton said arranging protection was not as expensive as some people imagined as people live for longer – contributing to a drop in the price of cover.
“Lots of people overestimate the cost of protection by as much as 30 per cent, or even more. It’s not at the level people expect it to be.”
One country where the UK can learn from when promoting protection is Australia.
“Products like superannuation have built a great deal of awareness among consumers. This product obviously includes compulsion, which we don’t have in the UK, but it has also built an awareness that we dont have in this compeny, as it includes an element of protection.
“I would hope that the same would eventually happen here in the UK, with the logical next step to offer a protection element like Nest for auto-enrolment – a default, which gives people a basic level of protction would definitely take us in the right direction.
“In the current climate however, we have to build awareness with the tools we already have at our disposal. When you look at the impact when something serious does happen, it can be huge, so it’s very important that we get people to recognise the need for protection, and to accentuate the benefits of coverage.”
One way of doing this has been to publish claim statistics.
Zurich recently announced it paid out on 94 per cent of customer claims for critical illness cover for the first half of 2012, with the value of payments amounting to £34.5m, an increase from 90 per cent and £32.7m for the same period in 2012.
Just five per cent of claims were declined because the definition of the applicant’s condition was not met – compared to 7.5 per cent during the first six months of 2012.
Furthermore, just 0.7 per cent of claims were declined for non-disclosure of medical information, compared to 1.5 per cent last year.
Rhys Dudding, European chief claims officer for Zurich, said: “We are incredibly proud of these statistics which show even more valid claims have been paid out to our customers.
“Work across the industry, with advisers and our customers, to simplify claims and stress the importance of sharing as much information as possible when buying a policy, is paying off - with fewer claims being declined.
“The difference that these payments make to our customers’ lives often mean their being able to focus on their recovery while their finances are taken care of -instead of the burden of financial worries brought about through being seriously ill.”
Mr Hamilton added: “There has been an industry-wide effort to really look at the claims records we have received, and to do a lot to reinforce importance of disclosure.
“The perception is that those nasty insurers wont pay out because they haven’t been told everything, but this is a simplified argument, there are cases when someone has deliberately not given us the information we need to make a fair assesment, but this is very much in the minority.”
A key role in improving the understanding of protection is by engaging with advisers, according to Mr Hamilton.
While Zurich has promoted the Life Navigator and online tools and supporting material to specifically target consumers and help them engage with all facets of protection, it also aims to further develop relationships with protection advisers and to help them build their knowledge on protection as part of their advice proposition.
Mr Hamilton said: “We work with the Chartered Insurance Institute and the Personal Finance Society to support their protection training intitiatives, and work closely with both specialist protection advisers and newcomers to the sector to help enhance their propositions.
“To enable this we have a a great team of consultants out on the roads undertaking presentations around the country.
“Our wesbite www.zurich4protection.co.uk also delivers an invaluable resource for advisers, offering eductation materials, videos and case studies on how to present yourself as a protection adviser.”
The site covers all aspects of family and mortgage protection, critical ilness, business protection, relevant life and IHT planning.
Mr Hamilton said: “On the critical illness side, the site has case studies which study the impact payments have on the lives of policy holders.
“It also offer a great depth of information on relevant life policies, which can often proivide the bridge for advisers between personal finance clients and corporate .
For business protection, a lot of advisers can be reticent when it comes to gaining credibility with directors of small businesses.
“However, Our business assurance tool provides advisers with a set of the right questions to ask, and creates a list of recommendations for them.
“The benefit to the adviser, especially independent advisers, is that it doesnt specifically recommend Zurich products – it’s a completely an independent resource, but once they have thjose recommendations they can calculate and identify the potential business protection needs of their client.”
He added: “Half the problem is getting people to recognise there is a need for protection. Once they realise this, we are here to help them understand that need and quantify it.”
