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Cure for what ails IFAs?

IFAs face a rude awakening if the healthcare insurance sector finally becomes regulated. At least that is what providers are claiming.

Since the Government&#39s announcement in July confirmed the worst fears of those hoping the state would be picking up the healthcare tab, providers have been encouraging IFAs to seize the opportunity to sell more healthcare.

Yet IFAs still seem reluctant to adopt products which they see as complicated, unwieldy and unfamiliar. Providers claim they are doing their best to help IFAs with advice on every aspect of healthcare.

PPP Lifetime Care head of retired market development Jacqueline Langford says: “IFAs need to be told how to sell the product but they also need to be able to target the appropriate clients, know the area and the issues involved, such as the legal framework, and the state benefits the customer would receive if no healthcare were taken out.”

Providers say there are a variety of measures already in place to provide this education, including seminars, roadshows, mailing and personal consultations.

Within this supposedly extensive support network, why are IFAs reticent to adopt and promote healthcare?

Glasgow-based sole trader William Maclean says: “There is not an awful lot of information from providers on healthcare. The biggest problem is that marketing of healthcare, in particular, income protection, is inadequate.”

Many of the smaller IFAs share a similar view and feel unsupported by providers which expect them to sell what they consider to be a complex product. The result for smaller firms is a referral to a bigger IFA with specialised knowledge. They have to be content with an introducer fee or the promise of a future referral.

IFAs also point out providers have not always been prepared to deal with individual policies. However, providers say IFAs are simply passing the buck, masking an underlying fear of selling products outside their traditional experience.

Langford says: “IFAs still depend on their main source of business – investments and pensions. They are nervous of long-term care. Regulation would focus minds on the product.”

IFAs are also being accused of neglecting their obligation to clients, who need to be aware of the threat to their investments.

Langford says: “IFAs work hard to help clients build assets so they should help to maintain them by informing clients of potential risks to their money, in particular, long-term healthcare.”

But LTC has long been regarded as a sensitive product to sell by IFAs.

Age Concern Financial Services technical manager Chris Elliott says: “The products are not that complicated so it seems reluctance to adopt LTC has more to do with the IFA&#39s desire not to alienate elderly clients.”

Providers claim IFAs are going about selling healthcare the wrong way.

Permanent Insurance sales and marketing manager Rod Macdonald says: “LTC needs to be seen not just for the eld-erly but as part of financial planning when clients are much younger. It need not just be a knee-jerk reaction when illness occurs.”

Many providers have implemented programmes with the focus on helping IFAs understand the issues involved in healthcare, including state benefit provisions and the advantages to clients of protecting their assets through healthcare cover.

The scale and nature of this education drive varies. Some are only passive measures such as call centres which deal with IFA queries. Others take a more extensive and proactive approach. Unum ran a roadshow for IFAs to educate them on key issues surrounding disability protection and claims the reaction was so positive it is considering doing it again in the new year.

Permanent Insurance has an in-house team to promote healthcare and to help IFAs with sales initiatives.

It says sales of income protection policies have increased, as have critical-illness policies, but LTC has remained at a similar level for some time.

However, there remains frustration among providers at the pace and impact of change regarding healthcare, which is viewed as an under-exploited market.

Unum director of marketing Eugene McCormack says: “Income protection is something of a Cinderella product, with only 10 per cent market penetration.”

Providers say they are seeing progress but still believe that IFAs are not punching their weight in the healthcare market. They also acknowledge, however, that they have a pivotal role to play in supporting IFAs.

Langford says: “We still have a lot more to do to help IFAs sell LTC like more seminars, more support and a need to educate the public on the need for LTC.”

But some providers suggest it will be the introduction of stakeholder pensions that will kickstart IFAs&#39 focus to healthcare. McCormack says: “IFAs&#39 interest in income protection will be driven by the introduction of stakeholder. A significant income stream may just dry up.”

Nevertheless, sales increases suggest IFAs are doing more than they are being given credit for. IFAs can only sell to the clients put in front of them and the responsibility for that should fall on many shoulders.

Macdonald says: “There needs to be collective responsibility. Providers, press, IFAs and the Government should all be doing more to educate the public on healthcare.”

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