The protection market needs to have wide appeal if it is to stand any chance of increasing take-up of its products. To have that appeal, people need to feel it is relevant and meets their needs.
So does this mean we need more specialist products for niche areas of the market, rather than generalist products designed for mass appeal? Could specialist products improve inclusivity or could it be counterproductive in reinforcing negative stereotypes of difference?
The case for specialist products
Research from Emerald Life, a firm that launched last year with a range of insurance products aimed at the lesbian, gay, bisexual and transgender community, suggests many of these consumers are disengaged from the insurance and financial advice sectors.
Until 2005, insurance companies were allowed to ask questions about sexuality and lifestyle, while gay men applying for life insurance were automatically sent for HIV tests. The industry has clearly come a long way since then but the negative impact on this community remains.
Personal Finance Society chief executive Keith Richards believes products tailored to individual needs and circumstances will enable specialist providers to engage consumers who would not otherwise consider financial advice or insurance products.
He says: “The LGBT market is a niche market but there is huge potential for specialist firms and services. They will play a big role in bridging the current protection and advice gap,” he says.
Emerald Life, which offers LGBT consumers products such as term life cover up to 10 years, says the insurance world is not generally tailored towards the community and families who do not conform to the nuclear family unit. It says this leads to a lack of trust and engagement, which ultimately means LGBT consumers are under-insured relative to the wider population.
It found 80 per cent of LGBT people it surveyed felt the insurance industry did not understand their problems and issues. Chairman Steve Wardlaw says: “There were three big issues. They didn’t see themselves in the imagery and marketing; they have to answer ill thought out questions in call centres and they didn’t feel the policies were designed for them.”
Emerald Life chief executive Heidi McCormack says they have found discriminatory clauses in insurance policies (for example, home and contents cover that excluded the fashion and entertainment industries, which insurers used to associate with gay men) although she believes much of this is hangover wording from the past rather than deliberate.
Specialist advice, not specialist products?
But protection advisers do not think specialist products add value. Future Proof chief executive David Mead says: “We do not see the need for specifically designed products for the LGBT community. We believe it could inadvertently be counterproductive by highlighting that somehow the community is different and should be treated differently.”
Specialist LGBT IFA Compass Independent founder and practice manager at Unusual Risks Mortgage & Insurance Services, Chris Morgan, campaigned for decades to remove “the stigma and hard-line discrimination” the LGBT community faced from the insurance industry.
He says: “It’s been a long process that I’ve been at the forefront of. Insurers don’t discriminate against gay people now. They used to but that ended in 2005.”
Morgan has seen a fair number of providers with specialist products for the LGBT community come and go over the years. “They don’t last because the products they offer don’t generate the volume they need quickly enough to enable them to survive,” he says. “In the past these have generally been pension and investment products which haven’t taken off.”
White-labelling products as LGBT “because they have a few bells and whistles designed to appeal to gay people” does not make them more suitable than anything else in the wider market, says Morgan.
He says: “According to the last survey in 2016 by Compass, 76 per cent of life policies taken out by LGBT people were intended to cover a mortgage, normally 25 years – and 24 per cent were taken out to cover families over the long-term. If a 10-year term was the only option in the market it would be something the adviser would have to recommend but there are scores of policy options with a maximum term of 40 or 50 years.”
Instead of specialist products, Morgan thinks LGBT customers are better served by specialist advisers. “They will have access to the whole market and to the very best products available to meet their needs,” he says.
Comparecover.com business development director Mike Preston is also not convinced LGBT clients need specialist products, particularly in the advised market. But he does see a role for organisations like Pride to facilitate online quotes and applications for LGBT consumers who do not seek advice.
He says: “If the affiliate site has the capability to produce quotations online and complete online, LGBT people could buy into that service and that could help.”