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Categories:Protection

Martin Werth: Reality has struck the protection market

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Last month I said that after December 21, protection will never be as cheap again. As at February 14, there are 217 working days to uni-sex pricing.  Allowing for 10 days lost for the Olympics, you’re down to 207.  But in reality there’s less time as no quotes or pipeline applications on single sex rates can be accepted from December 21. 

This means before then medical and financial evidence must be requested, received, processed, followed up and accepted. Insurers should inform their partners of when to submit applications to be sure to meet this deadline. My working assumption is that applications should be submitted by end-September (148 working days), but some commentators may say even sooner, given potential insurer and GP bottlenecks.  Mark your calendars and plan your time accordingly.

This limited offer period adds grist to the mill. And with time on my hands to read, I’ve concluded that the size of the opportunity is even greater than I first thought. Swiss Re’s Insurance Report 2011 showed a significant fall in the number of adults holding protection insurance.  Life assurance has dropped from 52 per cent in 2009 to 36 per cent and CI from 28 per cent in 2009 to 12 per cent.  Swiss Re notes that in these times of heightened insecurity, people are more realistic about their protection cover.  This is reiterated by the fact that over half of people - and twice as many as in 2009 - believed their families would struggle if they suffered an illness, disability or were to die. 

Could reality have struck?  The protection review report 2011 stated that since the financial downturn 49 per cent of people were more concerned about protecting themselves – again this has more than doubled since 2010.  This was also supported by the Syndicate report 2011 that showed more than 60 per cent of people have a greater awareness of protection products than 12 months ago.  The main reasons cited were economic uncertainty, concerns over the NHS and recent advertising. Yes, for many reality has struck!

This is a great opportunity for financial advisers.  One in two adults has no protection, the rest has almost certainly too little and awareness of the need for protection awareness is at an all time high.

There is still more positive news.  The Syndicate report determined that the biggest reason for not buying protection was that people have never considered it.  And when they do, 73 per cent bought life cover and 50 per cent critical illness. 

But a word of caution, consumer buying habits are changing.  The Swiss Re Insurance Report concluded that whilst 64 per cent of people would be comfortable buying from a financial adviser, 55 per cent would also be comfortable buying on the internet - with almost 70 per cent researching on-line.

Before the perfect storm blows in from December 21, 2012, set your sails to catch the perfect winds towards an even larger untapped market opportunity and heightened consumer awareness.  2012 presents a fantastic one off opportunity to maximise protection sales before rates increase and to expand your customer base ready for the post RDR world.  The simplistic, but relevant sales acronym, AIDA, sums up what we must do. First grab our customers’ Attention, then secure their Interest, develop their Desire and finally take Action, all before end-September. Use your time wisely. 

Martin Werth is managing director of Living Benefits

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