The protection industry has been constantly lamenting the lack of sales of its products over the past few years. Sales of income protection have fallen by more than a quarter since 2005, according to the latest figures from the Association of British Insurers.
This amounts to a drop of £486m to £1.4bn. However, evidence suggests the industry is starting to realise it needs to do something to make its products more appealing.
It is no good constantly tweaking products, to add changes here and there to cater for minute differences in health.
Added complexity simply makes these products less tangible to the average person they are intended for, and render them less likely to purchase one.
The Seven Families project, which funds individual families affected by serious illness for a year on the basis of what they could have received if they had an insurance policy, shows that people do appreciate what these policies can do.
The challenge is for the insurance industry to market itself more efficiently, and make it easier to get a policy.
One improvement would be to make the products more simple - 90 per cent of claims on income protection cover five conditions.
Another would be to improve underwriting. If the providers could underwrite clients more intelligently, and be prepared to accept new clients with some history, then they could be more open about what they had suffered in the past and there would be less non-disclosure.
The average customer needs to learn to accept that bad things can happen to their health and that this can have a direct consequence on one’s ability to earn. It is up to the financial services industry to make people aware of this and to make it easy for them to take out insurance.