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Protection market is ‘gently dying’


CWC Research believes the protection market is “gently dying” and has warned that distribution and processes need to change dramatically if the market is to improve after the RDR.

The consultancy firm carried out 100 in-depth interviews with advisers, including 17 chief executives of big IFA firms, to examine their views on how profitable protection is, the current state of the protection market and the impact of the RDR on protection sales.

It found advisers are expecting that protection business will be key after the RDR. Over half of the firms interviewed said they are likely to offer restricted rather than independent advice.

But it also found that protection distribution is largely ineffective, as advisers have shifted more towards the wealth management sector. Advisers who do sell protection were found to often lack the appropriate product knowledge.

The research also found that application processes are inefficient, with half of applications completed on paper and then put on to systems.

CWC Research managing director Clive Waller says: “At the moment, the protection market is gently dying. That may be an exaggeration but it is going downhill. There has to be change and the change will have to be quite significant.”

Waller believes as more advisers move to offer restricted advice services, new distribution structures will emerge which will see insurers and larger distributors working together on boosting the protection market.

He says: “The research is saying advisers are going to look to protection for an income, the thought process then goes how are you going to restructure that. What I hope we will see is insurers and distributors partnering to major on protection.”

He adds that other avenues for increasing the protection market include simpler products with simpler underwriting and for the industry to invest more in TV advertising.

Le Beau Visage managing director Peter Le Beau says: “Unfortunately, in some respects, the knowledge of protection among some advisers is quite lacking. There is a big knowledge gap and advisers will not just be able to switch on to protection.

“I also think the industry needs to much braver and bolder. We need simple products with a simple message, with a one-page application form. We are light years away from that at the moment.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Sorry if I am missing the point here, but is protection not meant to be the first port of call for everything? ie before looking at investments, savings, mortgages etc. So why is it being treated as a secondary income and not a primary?

  2. Well said Robert. Obviously not enough scope to make big bucks on it!

    It would help the sales process if people actually believed (rightly or wrongly) that there was a slim chance it might actually pay out!

  3. At the risk of sounding positive… sales are flat, which is positive in the current economic environment, and if rates start to rise in the coming years (which is perhaps likely) the churning element will be a thing of the past, thus reducing costs and improving margins, which could create a more attractive and forward thinking market.

  4. I think the agenda of this article is being missed, namely that because “evil IFAs” aren’t promoting term insurance enough in competition with direct offer cut price cover, so the “good old insurers” will have to save the public from themselves by spending more on direct marketing and cut out the IFA distribution channel.
    That makes for a much more sensationalist headline than “IFAs don’t churn policies and charge fees for advice”. Nic Ciutti must be delighted that IFAs aren’t tricking the public into porotecting their dependants properly by using snealy salesmanship that highlights the consequences of not insuring themselves properly. He must have a ton of correspondence from widows bemoaning the fact their deceased partners bought so much life cover to provide security for their kids, the selfless swines.

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