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Tom Baigrie: Protection success is good for us all

Tom Baigrie

Last month I noted that my business is finding consumers are engaging more with our efforts to explain income protection than they were. We have an idea as to what is causing that happy change.

To follow our logic, you must first realise that, at any one time, the number of consumers with any interest at all in buying protection products is very small. And none of those really want to. So to get people interested in even thinking about it is a real challenge.

The scale of that challenge was so clear to me that, some years ago, I tried to get the industry to join up and spend £5m or so a year on increasing consumer awareness.

While all were kind enough to take me seriously, the idea was voted down by the biggest players, who felt their smaller competitors would enjoy more benefit from increased awareness of their little-known brands relative to those the most famous.

But one of those smaller competitors went it alone. Vitality’s approach linking a rewards scheme to healthy lifestyles has created an entirely new set of profit metrics to those the rest of the industry must still use.

It has courageously allied that to a brand and awareness-spend vastly bigger than I dreamt of and, in a wonderfully contrarian stance, invested in building up the biggest tied agency and IFA account management team in the market, just when its competitors did the opposite. It has also built a very different product set.

Ask any marketer what results from having a positively thought of brand offering a well differentiated product through an energetic sales force, all supported by a successful loyalty scheme, and they will tell you it is real success through pricing power allied to rapid sales growth. The double-win.

But Vitality’s success helps the rest of us too. Thanks to its ongoing large scale media campaigns, many more consumers are engaging with the idea of health and life insurance. Many more, in fact, than go to buy a policy from Vitality.

Increased consumer awareness of messages linking protection to fitness, fame, movies and even funny dogs makes all our lives easier. And as the Vitality message is all about health, so it is that income protection is enjoying far more of the halo effect than its lowly historic sales might lead one to expect.

Then there is the Seven Families campaign, which has got more financial and mortgage advisers talking about income protection. As mentioned, consumers’ personal interest in protection is transient. But those times often coincide with when they want to talk to an adviser. And while advisers that would talk protection were getting ever rarer, consumers now have an ever improving chance of bumping into one.

In short, an improvement in supply-side behaviour is meeting an improving buy-side attitude. The combination is how a bandwagon gets rolling. Jump on it.

Tom Baigrie is chief executive of LifeSearch  



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Tom,

    I must admit the single biggest problem with protection I’ve always felt is the way that it’s sold, as well as the way it’s explained to clients.

    Couple that to the fact that most people simply don’t want to think about “bad things” happening and you have the situation where the clients, the adviser and even the providers actively avoid talking about what is good about protection, what it does.

    If however you tie this back to clients “attitude to risk” and bearing in mind most people tend to be cautious to balanced, you can have some very good conversations.

    What is the single biggest risk to anyone’s desire to have a comfortable retirement? It’s the same as the risk that they might not be able to buy the house that they want, or have the holidays that they want, buy the car, the TV, the computer that they want.

    It’s the risk that their income may stop/reduce through, accident, ill health or death. It’s a massively bigger risk than any investment risk and it applies to everything.

    We have started making inroads into getting our advisers to talk to clients about “risk” in this way and the reception so far has been very good. Suddenly where clients were always “don’t want to discuss protection”, they are suddenly interested in finding out more.

    Protection is the foundation of good financial planning and frankly anyone that doesn’t talk about it properly isn’t much of a financial planner.

  2. I agree Duncan, it’s all about risk assessment from a wealth planning or financial advice perspective Income Protection should be everyone’s first consideration. The very wealthy and very poor can do without it, but for the vast majority it does seem weird that people save and spend before insuring the source of those good things. Keep working on those advisers, it’s how we get to do the most good we can do!

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