Protection needs are still prevalent among Britons but what sort of innovations have the insurance market developed over 2017 to help meet these?
Protection sales have grown for the last three quarters and have now reached their highest level in five years.
At the same time, we’re seeing innovation and vibrancy in the market with the introduction of new products, tools and players.
The feeling at this year’s annual Protection Review conference and awards was one of optimism while, at the same time, a lingering sense that much bigger thing are yet to come.
Protection product sales in Q2 2017 rose by 4.9 per cent on the previous quarter, reaching just over £147m, the highest level in five years, according to analysis from Equifax Touchstone.
This was mostly driven by mortgage term policies, which were up by 20 per cent on quarter one, while critical illness experienced a 15 per cent increase and income protection (IP) 11 per cent.
Whether this growth was driven by a strong mortgage market, the emergence of online intermediaries, new technology, raised awareness thanks to initiatives such as Seven Families, or simply a growing understanding that the state won’t provide, we can’t be sure.
But it’s probably safe to say that a combination of all of the above is most likely.
What we do know for sure, as highlighted at the Protection Review conference, is that there are big opportunities for providers and advisers to build on this momentum just as long as all parties truly put customers first.
And by that I don’t mean the seemingly hollow ‘customer service excellence’ statement that appears on just about everyone’s list of USPs (therefore not at all unique by definition).
It is about really and truly getting to know customers, focusing on the whole customer experience, questioning existing products and practices and helping to drive change where needed.
On that note, here’s the 10 key take-aways for advisers, as I see them, from this year’s Protection Review events.
1. Embrace changes in business and society
Change can be concerning. That’s a given. But the combination of changes we’re currently seeing, such the economic backdrop to the UK, are helping to drive income protection awareness and, hence, market growth.
Such changes include:
- Austerity. The ongoing withdrawal of state support presents an opportunity for the protection market. Rumblings in the market about the potential future widespread use of so-called Protection Statements could help to greatly raise individual awareness of how little the state will provide in the event of illness or injury.
- Regulation and legislation. Imminent changes such as the introduction next year of General Data Protection Regulation (GDPR) and gender pay gap reporting are all helping to drive cultural change in businesses. Added to that, Brexit is expected to make finding and keeping the right people for the job even harder. In short, retention programmes are going to be key and benefits such as group income protection form a key part of that.
- Technology. James Tait of Pacific Life Re, said in his opening address at Protection Review that the next 12 months are going to be very important for comparison sites, such as UnderwriteMe. “Technology enables propositions that start with the consumer in mind,” he added. “Robo-advice presents the industry with an opportunity to engage with people who are not currently getting involved with traditional channels.”
- Personalisation. Personalisation represents a significant theme that, underpinned by technology, will influence the future of the industry according to commentators. Mr Tait highlighted Royal London’s diabetes cover and VitalityLife’s Wellness Optimiser as innovative attempts to “personalise” protection. He added that new brands getting involved in the market suggested there was much scope and appetite for growth, for example the recently announced life insurance partnership between BGL Group and Virgin Money, plus start-up company Gryphon Group Holdings raising £180m to design and build an “insurance challenger”.
2. Understand & better communicate what it means to be “impaired”
There’s a general understanding that work is good for us, so most of us will endeavor to work in some capacity even when faced with impairment.
The problem is that the nature of that work might change, and the salary accordingly, as we age and acquire more impairments. This needs to be better understood by providers and intermediaries then communicated to consumers.
Sammy Kornhauser of Disability Rights UK, speaking at Protection Review, said that 20 per cent of the UK population is currently declared as impaired.