New year, new opportunities for protection

New year, new opportunities for protection

A new year presents the opportunity to look ahead to opportunities that new year brings. No doubt, emerging detail on what Brexit means in practical terms will occupy the minds of all protection firms, but there is plenty more to do, irrespective of the course Brexit takes. 

Early in 2017, responding to the Green Paper on work and welfare from the Department for Work and Pensions and the Department of Health is a must. It is clear that the government is in listening mode as it sets out its 10-year vision for reform with an objective to halve the disability employment gap.

It is very encouraging that the consultation includes positive references to the role that income protection, and specifically group income protection (GIP), can play in supporting people in work.

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There is plenty in the consultation that is very relevant to the products and services we can offer, with a big focus on jobs actively supporting and nurturing health and wellbeing. This plays to our strengths in providing access to rapid health and financial support to keep people in or restore them to work. 

A specific question asked in the consultation relates to better ways to support SME businesses. While some providers and advisers serve the SME market well, the overall average GIP scheme's size is growing, increasing from 102 members per scheme in 2006 to 123 in 2015. The consultation questions whether there are non-traditional ways to reach more SMEs. This is interesting as we know that SME protection coverage, such as business protection, remains low. Low levels of protection is an issue with the self-employed too, a growing market sector, where we estimate that no more than 10 per cent have any income protection cover.  

The consultation presents a great opportunity for the protection industry to set out its own vision of how it can work with the government to create an integrated structure leading to greater financial resilience. New ideas and new ways of collaborating will be crucial. Repeating the same things as before is unlikely to unlock the potential to increase coverage, irrespective of employment status.

A key area is how welfare benefits and income protection payments impact on each other. This is a complex area ripe for reform. The industry will need to develop models which set out why and how structures might be reformed, being very clear about the fiscal benefits of doing so.

Consumer engagement has to be a big theme for 2017. This will include building on the positive lessons learnt from the 7 Families project, taking that forward, and if and how it could be utilised or adapted to communicating other financial needs better. One key learning has been that using real life case studies can be very powerful.

We need to start to think about how the protection market can work with the new financial guidance body combining the Money Advice Service (MAS), the Pensions Advisory Service and Pension Wise. There is a continuing role for an independent information source easily accessible by consumers – directly or through their employer – to create the awareness and engagement so often missing today. We should also learn from the experiences in other countries, such as in the USA and Australia.