All this rain we’ve had lately has reminded me of the old saying about putting money away for a rainy day. But how much saving is really happening for that supposed rainy day? And would savings really be sufficient?
While having money set aside for emergencies is prudent, we know too few consumers are saving enough. But I doubt you’ll find many consumers who don’t understand the concept and benefits of savings, even though they may not be doing it.
But there is an alternative to savings for key emergencies: insurance. Again, most consumers will be familiar with home insurance, car insurance plus insurances for phones, electrical goods and much-loved pets.
Protection insurance, though, remains something too few consumers are aware of or properly understand, so not enough buy it. Engaging with consumers, particularly younger ones, remains a key challenge for our market.
Advisers have such an important role to play in educating consumers about protection. Protection specialists can only do so much though. There’s a huge opportunity for other advisers, such as mortgage experts and wealth managers, to increase focus on protection to ensure clients have a financial safety net in place. Yet many still do not, despite the implementation of the Consumer Duty.
Protection insurance remains something too few consumers are aware of or properly understand
I recently heard a former wealth manager say he hardly spoke to clients about protection because they were wealthy and ‘didn’t need it’. Anyone looking up the story about AMT Coffee will see that shareholder protection would have been advantageous, and we’ve recently heard stories about celebrities experiencing financial difficulties that could have been alleviated had protection been in place for loved ones.
The wealthy still need protection. Carefully arranged investments and pensions can go awry if there is no income to support them. Their children can also have protection needs – those Gen Z kids will likely have a requirement for income protection. Get them as a protection client now and they’ll be much more likely to come back when they need advice on investments or pensions. And chances are their parents will be keen to protect that all-important ‘Bank of Mum and Dad’ too.
For mortgage advisers, we know time pressures are a key barrier given the current mortgage market. But there’s still a responsibility to include protection alongside the mortgage advice, even if it’s to refer them to a trusted partner.
For busy advisers, there are time saving options available; Iress and iPipeline’s portals to make it easy to research best value cover, comparing individual plans vs menu options, and UnderwriteMe’s Protection Platform helps advisers place business without the need to do underwriting research with every individual insurer.
In addition, there are application delegate routes and tele-interviewing offered by insurers such as Zurich and British Friendly respectively, which avoid the need for the adviser to go through applications with clients themselves.
Over 70% of applicants for protection insurance are accepted without the need for additional evidence
There’s no denying that the protection journey is not always straightforward, but we should remember that over 70% of applicants are accepted without the need for additional evidence. Insurers also offer training to help advisers understand the protection process to reduce blockers, and the PDG are currently co-hosting a series of webinars with UnderwriteMe to increase advisers’ underwriting knowledge to help get clients covered more easily.
Insurers have been working hard to reduce some of the barriers such as accepting electronic patient records in place of General Practitioners Reports. This is positive, but more needs to be done to help consumers access cover faster and minimise underwriting delays, such as Royal London’s UnderwriteLater initiative. We’d welcome more of these developments to help both customers and advisers, and are encouraging insurers to explore what else can be implemented to underwrite clients more efficiently.
So what’s best for that rainy day emergency? While consumers should of course be encouraged to save what they can, our market needs to collectively ensure people have protection insurance in place for when a real downpour happens.
Emma Thomson is Protection Distributors Group member and chair of Women in Protection Network
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