Provider apathy is the biggest threat to the development of the income protection market and behind the current sales slump, according to Defaqto.
In the research company’s latest report, Income Protection Insurance 2007 – A time for action not words, Defaqto urges insurers to innovate and simplify their products and take definite action to widen income protection’s appeal.
According to Defaqto the market is currently dominated by complex and inconsistent products which stifle any consumer enthusiasm.
It claims simple and non-advice channels, where income protection is sold alongside a primary sale, require an uncomplicated low-cost product while advisers require a more advanced income protection plan.
Defaqto head of life and protection Nick Telfer says: “Providers must lead the way and show greater enthusiasm and commitment to this essential area of protection. If they do advisers and consumers will follow and the income protection gap will close. Doing nothing is no longer an option.”
Telfer says many of the current products do not recognise that consumer demands are more sophisticated and the distribution landscape is becoming increasingly complex.
He says continual tinkering will only make things worse and that the industry should start again.