Consumer duty is an opportunity to address some of the known "barriers and challenges" around consumer understanding of protection, the Association of Mortgage Intermediaries has reported.
At AMI's in person protection workshop earlier this year, participants stated that consumer duty represented an opportunity to increase consumers' understanding of protection by addressing known barriers such as "jargon and documentation".
This workshop follows The Great Protection Shift report which was published by AMI last November and which reported on customers' barriers to protection polices, with the most common reason for not having any protection policies in place being a lack of a mortgage, mentioned by 38 per cent of respondents.
This was ahead of not being able to afford protection (35 per cent), not having dependents (21 per cent), and having sufficient savings (19 per cent).
Age was also found to be a factor as almost a third of people aged 18-34 without protection said that they think they are “too young” for protection.
The report also looked at consumer duty's impact, revealing that 44 per cent of advisers expected consumer duty to increase mortgage brokers’ focus on protection whilst only 31 per cent believed it would have no change on brokers’ focus.
The report highlighted a comment made by Vikki Jefferies from Primis who said: “Undoubtedly consumer duty is likely to create a focus on protection.
“Advisers will need to ensure that the outputs of consumer duty genuinely drive valuable and meaningful protection conversations with customers rather than being process driven.”
It’s an opportunity to remind clients why they took out protection in the first place Legal & General intermediary insurance director, Julie GodleyThe research also discovered that price was the most important thing to respondents when choosing which protection policy, a factor identified by 31 per cent of those surveyed.
This was ahead of quality of the product (29 per cent), name of the insurer or strength of the brand (7 per cent), and speed of application (4 per cent).
Additionally, the report found that, with the ongoing pressures on clients’ income and expenditure (such as the cost of living crisis), 37 per cent of brokers said that they were not doing anything at present to help customers keep existing protection policies in place.
This was compared to the 49 per cent said that said they were conducting regular reviews with customers, 19 per cent that are reminding customers about product flexibility, and 11 per cent that are writing to their customers about their cover.
The report also looked ahead for the protection industry as Legal & General intermediary insurance director, Julie Godley, commented: “There are positives on the horizon.
"We know remortgage and product transfers volumes are forecast to increase over the next couple of years, which provides new opportunities to re-engage with existing clients.
“It’s an opportunity to remind clients why they took out protection in the first place, to talk through the key benefits of their plan, and to look at any changes in circumstances.
“And for those who didn’t take protection out, it’s a chance to restart the conversation.”
tom.dunstan@ft.com
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