Protection is sold not bought – how often have you heard that? And while we are at it, hands up everybody who wants to work in an industry producing/developing/managing something nobody really wants?
Perhaps though, the universally accepted ‘truth’ of protection being sold not bought is simply a self-serving, self-fulfilling prophecy. Maybe the scale and importance of the adviser market has made it more obvious, and certainly easier, for everyone concerned to simply address the needs of those being sold to.
Inertia is one of the most powerful forces in the protection market.
There have been some successes in breaking through the sold not bought barrier, but in truth they have delivered such relatively small volume as to persuade most others that the opportunity is ‘niche’ – an unhelpful word in a traditionally high fixed cost industry.
But I do not think the niche argument has been either proven or disproven because the problem really has not been exposed to sufficient intent, ingenuity and entrepreneurial enterprise.
In the beginning most tried to break through using a life insurance product designed for advisers. The result being any ‘buyer’ had to understand and then decide if they wanted waiver of premium and/or guaranteed insurability/lifestyle options (which even advised customers take up in really tiny numbers). So already anybody other than the most confident and determined potential customer was beaten by the buying experience and fell back into procrastination.
Even with these add-ons removed customers struggle because, for non-mortgage cover, the market still offers a general utility product which buyers have to shape to their circumstances themselves. One of the hardest questions for buyers to answer confidently is how much cover they want. So whilst the provision of a utility is great for advisers, it is not for consumers looking to buy of their own volition. Consumers need to be able to immediately identify the cover that is relevant for them, explained in a language ‘normal people’ understand.
If advisers were meeting the increasing needs of the market then none of this would really matter, but that is not the case. The market is declining at the top end and is declining at an even faster rate at the bottom end because we have an extremely competitive market for advisers’ business, where price drives the majority of volume.
But price does not drive consumer demand, as we can see from continually decreasing prices and reducing sales. To be bought our solutions need to answer genuine consumer concerns, for example “why would I?” and “why should I?”
The fundamental proposition of ‘if you become really ill or you die, we pay’ remains a good one. So it must be the interfaces we design and build which are falling short. For inspiration you only need to look up from your screen long enough to see that everyone else is spending most of their time looking at their screens too.
There is a need to design what protection products can be bought, to sit alongside, rather than replace, those products that must and will continue to be sold. That need, and the likely payback for those willing to invest in ingenuity and entrepreneurial enterprise, has never been greater.
Richard Verdin is chief marketing officer, UK & Ireland at RGA