Advisers have reacted to claims by the director for intermediary business at Legal & General that they are failing to advise clients “properly” about protection, by saying providers are also to blame for jargon-filled marketing.
Steve Bryan said part of the way the protection gap could be closed would be for generalist advisers to “advise properly in every instance”.
He said: “Advisers have a responsibility to advise properly, so every time they do a mortgage, for example, they should have a conversation about insurance.”
According to Mr Bryan, these conversations can be quite emotive, but the fact all of the providers have a “direct presence in the direct-to-consumer market helps intermediaries and brings protection to the fore”.
He accepted firms such as Legal & General had a large part to play in helping advisers conduct what can be difficult conversations.
Technology can raise awareness, he said, pointing out that L&G’s early warning system, developed in 2010, has helped more than 63,000 customers stay insured over the last 12 months.
Mr Bryan continued that the “language of protection” ought to be simplified to help people understand the value of the policy they have bought, in order to prevent such cover being cancelled in the first place.
He explained: “Perhaps the word ‘protection’ needs to be rephrased. What is it people are protecting? This tends to be a colloquial, catch-all term and it may not be the right one.
“With term assurance, people are protecting their loved ones in the event of the worst. With critical illness, you are protecting the breadwinner and their family against hardship if he or she becomes ill.
“With income protection, you are protecting their lifestyle in the event of being unable to work.
“If we communicated this properly as an industry, then more people would understand the importance of cover.”
Could it be simplified? Certainly. But is all the information essential? Definitely Paul ReedMr Bryan added the industry should also reconsider how it talks about the protection gap, stating: “Maybe we should stop talking about the protection gap in terms of billions of pounds, and start talking about this in terms of people.”
The so-called protection gap in the UK has been estimated at more than £2.5trn by reinsurer Swiss Re.
Part of the onus is on providers to pay attention to their literature, according to Robert Harvey, independent protection expert at Brighton-based Drewberry Insurance, who commented: “I don’t think providers’ own marketing literature is up to scratch.
“Quite often, this is full of jargon. Customers are not clued-up to the same degree as advisers and brokers and it can be harder for them to properly understand the products.”
He added some insurers provide word-heavy documents with multiple pages. “We need shorter, snappier marketing materials, and more targeted, engaging advertising relevant to different groups of people, such as Generation Y.”
Paul Reed, protection specialist for Cardiff-based Vita, agreed that in some cases key policy conditions documents could be far too long for the average person to read “and many won’t read it from cover to cover”.
For example, AIG’s current key facts document is 20 pages long; LV’s life protection policy conditions is 15 pages; Friends Life is four pages “and gives all the pertinent summary and key facts”; while L&G’s whole-of-life document is seven pages of A5 “and nicely compact”, he said.
But some providers “go as high as 30-page brochures accompanying their policy documents”, which could be “overkill”.
Mr Reed added: “Could it be simplified? Certainly. But is all the information essential? Definitely. The consumer needs to know what their cover gives them.”
That said, both brokers agreed with Mr Bryan that advisers could also do more to discuss protection better with clients.
Mr Reed said: “We have been looking at the various terms used in the industry. For example: life cover, term assurance, life insurance. This is the same product, expressed in different terms.
“The industry must de-jargonise the language. However, it’s up to us advisers to explain what a certain policy means to clients.”
Mr Harvey“ agreed that using sterile terms such as ‘protection’ is not engaging, adding: “Drewberry works hard to bring the language to a more relevant level.
“It can be hard to get away from standard terms, but we need to explain that if you die, your loved ones will be able to pay off the mortgage.”
simoney.kyriakou@ft.com
