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