The coronavirus could increase the risk of consumer vulnerability to cold calling in the protection market, advisers have warned.
Consumers are likely to be more vulnerable to businesses urging them to change their protection policy as a result of the economic and health stresses caused by the coronavirus, it has been suggested.
FTAdviser has learnt consumers are still receiving calls from telephone-based protection companies who claim to “make sure” they are on the “best policy”.
Alan Knowles, managing director at Cura, said: “There is absolutely a bigger risk at the moment. There’s a danger of people preying on the vulnerable, especially when there is an increased level of vulnerability due to the financial and emotional stress caused by the pandemic.
“If someone is in financial difficulty and is told, ‘I can save you £20 off your insurance policy’, you’re more likely to take it even if the new policy is less suitable.”
Such companies cold call consumers, telling them, for instance, that they work with ‘all the major life insurance providers such as Aviva and L&G’ and are ringing to review their current policy.
The caller can then say, ‘Your life expectancy increases and goes down, and because there have been so many changes it’s possible you could get more cover or cheaper premiums.’
Even if the consumer does not already hold a life insurance policy, the caller can often opt for one of the major providers and explain that the call is ‘regarding your [company name] policy’.
FTAdviser first warned advisers of the growing trend last year, when some IFAs and their clients received calls from companies working in similar ways.
At the time, advisers were concerned such calls could leave consumers worse off and hurt the industry, as the cold callers offered alternative policies which did not necessarily match the consumer’s needs.
Mr Knowles, who is also chairman of the Protection Distributors Group, added that “cheapest was not always best”, and that a consumer could see their critical illness protection “knocked off” in the process of reviewing their policy.
Alan Lakey, director at Highclere Financial, agreed, adding: “I imagine telesales companies have ratcheted up their calls to take advantage of the public’s fear of infection and subsequent greater focus on life and health insurance.”
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