Few industries can cite the low levels of penetration that we see in the protection sector.
This offers a tremendous opportunity for inter-mediaries to grow their businesses at a time when we have become accustomed to uncertainty in the financial markets.
Intermediaries operate across a wide range of markets to meet their clients’ needs, ranging from the provision of mortgages, pensions, investments and more. Many of these are linked to providing a return of money, improving financial efficiency or the opportunity to acquire a new home.
The value of protection is somewhat different.
Over a number of years, the value of protection in the eyes of the consumer has been eroded.
There are a myriad of reasons for this – life and health insurance are products that generally need to be sold. Few people have the urge to buy life and health insurance without a push.
The reduction in the number of intermediaries over the last two to three decades has certainly reduced the access and the opportunity to demonstrate the need to consumers.
So where are the opportunities you may ask?
Almost every client seen by an intermediary will have protection needs. The two groups that may fall outside of this are those with very low earnings that may be reliant on the state, and those at the opposite end of the spectrum who are extremely wealthy.
It could be argued, however, that even these two groups will have some protection needs and that there are solutions that can be provided for these customers.
Consumers that fit between these two categories offer tremendous potential, both to the intermediary in terms of growing their business and, of course, to the consumer.
Providers have made huge strides in making life easier for advisers in placing protection business, particularly with the success of tele-underwriting, where underwriting specialists can take more of the burden.
Insurers also provide support materials, sales aids and financial calculators to support advisers and make the sales process easy.
Protection is the cornerstone of all financial planning and can be a very easy sale. Almost every individual has protection needs that need fulfilling.
A bold statement you may say, but there is considerable research by a number of leading insurers, reinsurers and data from the ABI that shows there are large groups of consumers with no protection insurance and that those who do are often underinsured.
One of the many myths surrounding the protection market is that consumers believe cost is an issue, although when asked to estimate they often overestimate cost by two to three times.
I have come across many advisers who state that they do not do protection. I would suggest to them that they consider protection for their clients, given its value.
This may not fit with all business models but I would urge these advisers to at least make their clients aware of protection and to point them in the direction of a protection-only specialist, or to forge a link with a protection specialist.
When you look at the claims that are paid out on a daily basis and the impact they have on the people covered and on their families, it really shows the value that protection brings society and the important role intermediaries can play in this process.
Deepak Jobanputra is actuarial & product director at PruProtect