CWC Research director Clive Waller believes commission for selling income protection must be increased and processing and underwriting times reduced if sales are to improve.
Speaking at the Osney Media Protection Summit in London last week, Waller warned that advisers will not look at the product until they are paid a fair reward for the time they spend with clients advising on the product.
According to Swiss Re’s latest Term and Health Watch report, income protection sales fell by 11.5 per cent in 2006 – the fourth consecutive year that sales have declined.
The report says fewer mortgage advisers are recommending protection because they could sell another mortgage for the same amount of time and probably less work and liability.
Waller said: “Many advisers will not bother selling income protection unless they get paid properly. You will sell a product if the need can be justified, the reward is attractive and the process is commensurate with the reward. Salespeople need the right incentives.
“If income protection provided the same rewards as payment protection insurance, banks would be selling it right now. Surely, if we can rework it to make the processing better and improve the rewards, it will be a winner.”
Direct Life & Pensions sales and marketing director Richard Verdin said large numbers of applications are being rated or declined and only 60 per cent of applicants receive the quoted premium. This means many advisers are doing more work that they are not being paid for.
Verdin said: “Quote properly and pay your distributors properly because a lot of them are doing work they are not getting paid for because you, the life companies, are rating and declining applications that they used to take on.”