Many might consider 2015 as a largely uneventful year in terms of the protection market.
The need for the industry to adapt to new regulation took the spotlight, leaving little capacity for providers to focus on other developments.
While 2015’s challenges lay within adapting to regulation, the resulting changes to existing processes and the way in which policies are underwritten means that 2016 is, in many respects, an open book.
That said, one can deduce a number of ways in which the market may develop in 2016 based on the likely response to this changing landscape and emerging trends that we’ve seen in recent months.
Firstly, the look and feel of protection products is likely to become increasingly different in the coming year.
We’re currently seeing an increased drive towards the simplification of products to make them more transparent and easier to understand, in response to the removal of advisers’ protection sales targets.
Protection policies are largely sold and not bought, which means that advice is an integral driver of protection sales. Many consumers prefer not to think about the risks facing them, instead requiring a prompt from advisers to help them consider ways in which to prepare for unforeseen circumstances.
Processes are also likely to be sharper in 2016, reducing the amount of time needed to take out a policy. The emergence of more simplified products and streamlined processes will hopefully make broaching the subject of protection more easy and less time consuming for advisers, which will, in turn, boost the number of protection sales.
The usage of data is another emerging trend which is likely to further develop over the next year. Data is a powerful tool, which will influence pricing as well as the advice process in the future.
Greater availability of information on peoples’ protection needs will help to tailor advice to suit the individual, which is likely to give rise to more targeted products and advice that is more relevant to each person. The challenge in this is choosing the right data and ensuring that the customer is comfortable with the data being used.
The digital revolution is also likely to promote the usage of technology to deliver advice and product information to consumers. Mobile apps, video, web chats and robo-advice are all likely to become more prominent in the market, increasing the number of channels through which consumers and advisers alike can access information, and set up policies.
This will benefit advisers, due to the resulting increase in awareness of protection, making protection easier to sell.
The protection market is therefore likely to become more sharp, simple and tailored in the near future.
As this develops, protection sales are likely to bounce back from the recent dip in product take up rates caused by the changing market dynamics brought about by the new regulatory environment.
Mark Howleger is the managing director for partnerships at Legal & General
