However, with Covid-19 restrictions still in place, an uncertain winter lies ahead, and many people are understandably worried about the impact of the pandemic on their financial situation.
The crisis has taken its toll on the nation, with millions of UK borrowers taking advantage of financial support since the start of the pandemic.
Over 2.6 million mortgage payment deferrals have been approved to date and with the government’s furlough scheme representing the largest income protection (IP) scheme the country has ever seen: the fragility of people’s finances is clear to see.
Revealing the cracks
If the crisis has taught us anything, it is that the nation is unprepared for sudden financial shocks. Many people don’t have a safety net to fall back in case they experience a drop or complete lack of income.
In fact, research from The Exeter last year showed that nearly a fifth (17 per cent) of self-employed workers in the UK have no personal savings to rely on in times of financial crisis.
However, despite this picture of financial pressure and continued uncertainty, many working adults are still not turning to the insurance sector to protect their incomes.
If the crisis has taught us anything, it is that the nation is unprepared for sudden financial shocks.Given the financial hardship facing so many, there is a clear and concerning disconnect when it comes to engaging consumers with the protection industry and the cover they so badly need.
Initiating the conversation about the need for cover and communicating the benefits of IP can be difficult when many people adopt the ‘it will never happen to me’ attitude.
The crisis has taken its toll on the nation, with millions of UK borrowers taking advantage of financial support since the start of the pandemic.However, as an industry we also need to consider how we are talking about our products and how we can simplify the language we use to raise awareness of the features and benefits of insuring your income.
Speaking the same language
This crisis should make IP a more attractive proposition for many working families. New research from The Exeter reveals that 70 per cent of working adults say the Covid-19 crisis has made income security a bigger financial priority.
However, consumers are still largely unaware about what IP really means, and what a huge impact it can have in providing financial security should they be unable to work due to illness or injury.
In fact, nearly half of the UK’s working population (46 per cent) said they were aware of IP but didn’t know what it covers or how it works.
To address this and to drive real, sustainable change, we need to make the language used in the industry more straightforward and easier to understand in order to break down barriers and allow for more relatable and constructive customer conversations.
Our sector often uses technical terms or jargon which are not easily understood by customers.
If customers find insurance products difficult to understand they are less likely to engage with protection and understand the benefits of having cover.
Indeed, according to our new research, only half of working adults (52 per cent) think that the language used by insurers to explain insurance products is easy to understand.
Given the financial hardship facing so many, there is a clear and concerning disconnect when it comes to engaging consumers with the protection industry and the cover they so badly need. It’s not just jargon which is holding the industry back. When asked to consider the word “protection” more widely, more than half (53 per cent) said they associated it with protecting themselves from physical harm, while 48 per cent would associate the word with legal protection.
Clearly, the term “protection” has several meanings attached to it in the minds of consumers, so is it time our industry reconsiders how it describes itself?
Lasting change
Advisers play a crucial role in engaging and educating consumers about insurance policies.
By working together with providers, we can reshape the industry and make the benefits of what we do easier to understand. Providers have a responsibility to lead the way and reassess how we create and market products.
We need to give advisers the tools and resources they need to educate clients on the need for income insurance.
As we look ahead to 2021, The Exeter will be exploring ways to encourage change in the industry and help advisers to better understand the views and insurance habits of consumers.
The Covid-19 crisis has made income security a much more pressing issue and should be an opportunity for advisers to discuss IP with consumers.
Let’s not lose this once-in-a-generation opportunity to close the protection gap in the UK.
Steve Bryan is director of distribution and marketing at The Exeter
