Mortgage protection gap fuelled by stamp duty rush

McLoughlin acknowledged with the pressure of the stamp duty holiday, “one would hope the conversation [of protection] was postponed rather than cancelled” altogether.

“The point is - that’s excusable as long as the clients are recontacted at the earliest opportunity,” he explained. 

“Brokers know they should be doing this. And if they haven’t had time, they need to go back and do it. Or if they don’t have time now, they can signpost.”

The industry pledged to do more signposting back in January 2020 in a bid to better serve UK consumers.

Further to this, the Income Protection Task Force is set to host an awareness week for advisers on the product later this month, but Bath is skeptical of how far the conversation has moved on in the last decade.

“These [IP awareness sessions] have been happening for over ten years, but almost every year you always hear the same script, because it's still not quite sinking in,” said Bath.

“Advisers still revert back to the easiest, quicker sell which is the transaction sale, despite the fact protection earns them more revenue over time.”

Platforms like iPlace Global’s Moveable, which claims to reach 30,000 of the UK’s house movers every month, was built in the last two years and goes direct to the consumer.

It also offers a white label solution to mortgage brokers, digitising the protection conversation.

But whilst there is a gap for digital solutions to fill, McLoughlin stressed the fact that protection products - particularly income protection - need advice, which makes automated digital solutions alone unsuitable to bridge this gap.

“It’s too dangerous without [advice]. It’s practically impossible to give direct-to-consumer transactions without advisers.”

Can’t paint all with same brush

Aaron Strutt, product and communications director at Trinity Financial, told FTAdviser one of the risks of waiting until after the mortgage sale to talk about protection was that the client may no longer have the budget for it.

He added: “Firms have moved on and got specific protection brokers. We’ve got two of our own protection-only brokers,” said Strutt.

“We work on an appointment basis. And one of our protection brokers is fully booked until mid-September.”

He continued: “There is a process in place, which takes into account a client’s budget.”

Strutt also highlighted how having in-house protection advisers had made it easier to spot gaps in clients’ current protection policies. 

“One of our clients was paying a policy which wouldn’t have paid out due to them not declaring something. Our adviser then rebroked it to another insurer.”