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Emma Thomson: How to tackle the protection apathy problem


The protection industry has two main challenges: consumer apathy about the need for cover and lack of trust, which means even the best advisers can find it challenging to help clients understand why they need our products.

There are lots of statistics available but many clients find them too generic, and advisers are met with the ‘it’ll never happen to me’ attitude. And even those who see the need for protection often worry claims will not be paid.

To help tackle the apathy problem, LV= has launched the Risk Reality Calculator, a simple tool that makes statistics more personal.

Advisers enter a client’s age, smoker status, sex and planned retirement age, and in a matter of seconds the results show the probability of that client being off work sick for more than two months, being diagnosed with a serious illness and dying before retirement age. The results clearly illustrate that bad things can happen more often than consumers think.

This helps advisers focus more on protection because if they see a client has an 81
per cent chance of being off work long term, it’s less likely they will just sell them life cover. 

The Finance & Technology Research Centre recently launched Claims Comparison, designed to educate and increase consumer trust. 

The Protection Review’s 2013 survey shows consumers believe fewer than 40 per cent of claims are paid, but this tool provides advisers with information to help demonstrate that policies are worth having and more than 90 per cent of claims are paid. 

This useful comparison provides a wide range of extra data including claimants ages and reasons for claims.

Aviva’s new radio ad campaign addresses the issue of apathy and trust and its efforts are to be applauded. There is a huge call for other insurers to follow suit with marketing as consumers typically don’t know what is available to them. 

In addition, insurers need to make it easier for clients to actually buy their products. But we must also look further afield at perhaps our biggest barrier – the Government.

Despite state benefit cuts, too many consumers rely on the Government due to lack of engagement with our industry and poor awareness, which for many creates hardship.

But while the Government wants to reduce welfare expenditure, it does little to encourage people to self-insure and, to make matters worse, those who do self-insure may find themselves penalised as claims paid could be subject to means testing.

Tax incentives and excluding claims from means testing would encourage more clients to take out cover, reducing their risk of relying on inadequate state benefits. 

Apathy and consumer trust are big challenges we must try to tackle ourselves but the biggest challenge of all is getting Government support. As we emerge from recession, all industry bodies should be lobbying for this.

Emma Thomson is life office relationship director at Lifesearch



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Over the years and particularly of late there has been much said and written about the paucity of life cover for the Great British Public. (GBP)

    Let me state that I am a believer in life assurance – I think it’s a ‘good thing’ and I have always had cover more than sufficient for my circumstances. (Unlike many in the business of whom I have personal knowledge).

    However I do find so much of this heartrending hyperbole rather hypocritical. Those that make the most noise patiently have most to gain. It isn’t so much that they worry about the circumstances of the GBP, but their own bottom line. Allay this to the fact that life cover still pays commission and that this commission is (to be polite) invariably over generous.

    Entreaties would be far more believable if there was a fixed commission for life cover entirely divorced from the amount of premium paid. For example a flat 0.75% for the first £50,000 of cover reducing as the sum insured increases. Even better – no commission at all and just charge a fee.

  2. Harry, it is possible to sell something for a commission and not only be considering the bottom line!

    Have you seen the bottom line of any protection brokers? If not, how can you allude to the fact that protection advisers are being paid in an over-generous way? Also, to expect a potentially low earner to pay a fee of several hundred pounds for advise (based on what you see as being reasonable for a flat commission rate) is quite frankly ridiculous.

    In regards to the article, a Risky Reality Calculator would be an extremely useful tool. As someone who is not particularly comfortable or natural at “selling” being able to show statistical risks and discuss these with a client is extremely useful.

  3. Like Harry I too believe in life assurance and I absolutely love selling it. Dont seem to have the problems with apathy described above. It all depends on how you sell it. Half the problem is that a lot of IFA’s have forgoten the art of selling, especially life insurance. For joe Average I think it should be deemed bad practice to sell an investment without first (or at the same time) selling protection. Invest £1000 less and use this to fund life cover. The £1000 will go a long way if the premium is £10, £20 or £25pm and the client will soon get used to it. Some of the commission may seem a bit “over generous” however I dont see the problem with this. Lets not forget we are in business to make money by offering a service, nothing else and if that is by way of “high commissions” for selling protection, then happy days. Personally I have started taking non-indemnity commission on 2 out of each 5 cases I write. I will increase this over the next year to 100% of protection cases. It has hit cashflow somewhat now but is a great way to build up longer term steady income and no need to every worry about clawback again eventually. Best Part is that I also get and additional 25% commission by the end of the 4 years. A £50pm term plan earns me (to the neaest £19) £1000 indemnity commission or £26.05pm for 48 months. I find that when clients see how I explain how much they need and why, I get referred to a lot of others because I go back to basics and keep it really simple. Our profession has a habbit of making thins very complicted but there is nothing difficult about term or phi. I have no issue with going to sell £25 or £30 life policies and am quite happy if the only thing these people want to discuss is protection as long as they sign a waiver to that effect. In this part of the world it is very common to get a call along these lines “You sorted out Jimmys life cover, can you do the same for me? And I dont want to hear any “owl” guff from you about pensions or wee savings plans”. I love these calls. Just my own thoughts for today

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