we’ve got to remind customers that while they might be paying £5 a month to insure Tiddles and Fluffy the cats, they’ve failed to insure Mum or Dad.
dropped month by month, week by week, day by day and when you look at the protection industry as a whole it hasn’t grown in that time. Price is not the answer when it comes to expanding this industry. In fact quite the opposite because none of us knows what percentage of what we call new business is new customers who haven’t just had their policy with one of our competitors and moved across to us because they can get it cheaper. If premiums do rise brokers will have to work harder to get new business in. Providers will also have to set their stalls out in terms of why advisers should sell their products and how they differ from competitors’. Saying “we’re the cheapest” isn’t going to be as easy. P Brown: We’ve got the Retail Distribution Review, Solvency II, the I-E tax regime - lots of different things that push rates up. But there will be winners and losers. I think
When we talk as an industry we scratch our heads and can’t work out why people don’t see protection as important. Well the brutal reality is that life insurance, protection insurance, critical illness, premium protection, whatever it is, is not sexy from a consumer’s point of view. We have to illustrate this with examples of how bad things can be and remind people that £10 a month can give a peace of mind which I think is incredibly important. JB: I’ve recently got through the experience of redoing my life insurance. I’m three years older, I’m a little bit heavier and my eyesight isn’t what it’s used to be and yet my premiums will be cheaper. That doesn’t quite make sense. Actuaries have to price for risk but with advisers being encouraged to rebroke deals every three years premiums don’t always reflect that. I think providers need to look at educating advisers about why clients should stay with one provider for the term of their policy. There also has to be an incentive or trail in between that to encourage the product to run the course of its life.
THe ProTecTion gaP for PeoPle wiTH morTgages and no insurance To cover PaymenTs if THings go wrong is well known. wHy does THis gaP exisT and How sHould THe indusTry be Tackling iT? GH: Insurance, and in particular payment protection, is not a product that is bought - it’s a product that is sold. Clients don’t come to you and say I want to buy unemployment insurance unless they’ve been told they’re at threat of redundancy.
It’s up to the adviser to educate the customer and to sell them the need for protection. The adviser is there to ensure that they sell the right product for the need they identify. They should be asking: is there a gap in this client’s income? What is their gross monthly income? What do they spend that money on? What would they do if they lost their job?
On average a million people a year are long term disabled and receiving benefit from the government. The average government benefit is just over £4,000 a year. How on earth can someone survive on £4,000 a year, pay their mortgage, pay all their other expenses and have quality of life? This is about the adviser understanding this, educating the customer and giving that customer the opportunity to decide how they’re going to protect themselves. P Brodnicki: The customer needs educating and brokers have their work cut out or customers are going to spend their money elsewhere. Unless that broker is passionate about their job and what that job entails they’ll struggle with this product. It’s not just what protection
mortgage introducer JUNE 2011 39
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