Ms Thomson says: “We do send more generic communications to our clients, but unless an insurer sends us policyholder information, we would never know if they had made any changes to their cover. After four years, when clawback ends, we would not even know if the policy was still live.”
There are plenty of benefits associated with sending out regular protection statements. For starters, it helps to ensure that clients’ cover keeps pace with their lifestyle. Flagging up the current sum insured and the guaranteed insurability options enables policyholders to increase cover for life events such as having a baby, getting married or taking on a larger mortgage. It is also a good excuse to remind policyholders of the benefits that are included with their policy.
As an example, Paul Roberts, head of protection at Old Mutual Wealth, points to the intensive care benefit on his firm’s critical illness insurance. This pays out the full value of the plan after someone has been in intensive care for 10 days.
“Very few people would remember every benefit they have, and even fewer would remember what was included on a loved one’s policy. By providing a regular statement, you help customers gain a better understanding of what their policy does,” Mr Roberts explains.
This also extends to added value benefits such as second medical opinion services and helplines that are commonplace on protection products. These can often be used by the policyholder and their immediate family, and are available regardless of whether or not they are making a claim. It also feeds into the treating customers fairly regime.
Nick Erskine, head of intermediary sales at AIG Life, points out: “We need to do everything we can to ensure that cover is really clear for our customers. They understand what they have bought on day one, but it is unlikely they will consider it again unless you remind them. This creates more trust and helps to build a better relationship.”
Consumers would also like to receive an annual statement. Research conducted by mortgage and protection adviser L&C Mortgages found that 95 per cent of those surveyed would be interested in receiving a statement each year, with 76 per cent saying they would like details of the free services included on their policy.
In spite of this support from customers, there is some resistance to adopting annual protection statements. This centres on fears that, once reminded, some policyholders will cancel their cover. While it is inevitable that some people will do this, the insurers who issue annual statements say it should not deter others.
Mr Timpson explains that when statements go out the firm receives calls from some policyholders asking whether they need the cover.