According to the Association of Mortgage Intermediaries, signposting rose to 25 per cent among advisers in 2021, compared with 14 per cent last year.
Bodies such as the Protection Distribution Group and the Income Protection Task Force have long advocated for brokers to become better at signposting their clients, in a bid to close the protection gap.
That is, the gap between those who have a mortgage, and those who have taken out protection to insure their mortgage payments.
“We knew that it wouldn’t happen overnight, and it has taken a lot of hard work from all corners of the industry,” said Alan Knowles, who heads up PDG.
“Seeing the increase in the number of advisers engaging in signposting is brilliant and is a testament to those who have worked so hard to embed it as a core part of financial advice.”
Some experts had worried the rush in property transactions sparked by the stamp duty holiday meant advisers were spending even less time addressing protection.
Roy McLoughlin, associate director at Cavendish Ware, said: “The improvement in signposting is extremely welcome news not only for the industry but more importantly the consumer.
“Signposting will result in such a bigger reach resulting in 100s of thousands of protection conversations which previously went unheard.”
‘Disconnect’ in conversation
Post-pandemic, of the 250 advisers AMI surveyed, 21 per cent said they now place more importance on protection conversations, and 17 per cent have reconsidered how to structure them.
But as Andrew Montlake, AMI’s chairman, pointed out: “There is still a clear disconnect between brokers who believe they adequately discuss protection with their clients, and the understanding of the clients themselves.”
Montlake’s conclusion is based on other research in the trade body’s report, which found the main reason 5,000 consumers it surveyed didn’t take out protection in the last year was because they didn’t feel like they needed the product (37 per cent).
“This is an area we need to work on to ensure that no client ever comes away from a conversation without a clear idea, or memory, of the protection discussion, whether this is something the adviser does themselves or refers onto a specialist,” Montlake continued.
“The structure of our conversations and the clear signposting for the protection discussion in many cases looks as if it needs more work.”
Brokers’ awareness of income protection, compared to life insurance and critical illness, is also still down following calls for change.
AMI found just 5 per cent of brokers said they focus more on IP compared to life insurance and critical illness.
This is in spite of more than half (53 per cent) of women saying a first home was a good reason to buy IP, and 39 per cent of men.
“Encouragingly, these numbers show that demand and understanding is there among young families,” said Ian Sawyer of Assured Futures
“Yet many are being let down by the industry because advisers are sometimes uncomfortable or reluctant to tackle what must be tackled.”
Insurers can help
Craig Brown, Legal & General’s intermediary insurance director, recognised an “obvious gap” between what people are hearing and what’s being said.
“Insurers can do more to help intermediaries have more memorable conversations with all their customers so that, even if they say no thanks, they at least had the opportunity to think about it and make an informed decision,” said Brown.
“Curiously, after being made aware of the need for protection some customers went online to buy it without expert guidance to help them choose the product that best suits their individual circumstances.”
Brown concluded: “What this says to me is that insurers can do more to help intermediaries have more memorable conversations with all their customers so that, even if they say no thanks, they at least had the opportunity to think about it and make an informed decision.”
When AMI asked advisers, the top three things they said they valued in a protection provider was quicker processes and systems (33 per cent), access to underwriters (28 per cent), and training (17 per cent).
Adam Higgs, head of research at Protection Guru, also thinks advisers need better data via platforms.
“Compared to the wealth sector where platforms and providers supply advisers with real time up-to-date data, the protection industry makes it far more difficult for advisers to create annual statements, especially where a client has multiple plans from different insurers,” he said.
ruby.hinchliffe@ft.com
Photo: Wooden Earth Ltd
