Emma Thomson: From protection gaps to growth

The protection market can be a challenging one. We offer valuable products that can make such a positive difference in times of real need, yet they are overlooked, misunderstood and/or invisible to so many consumers.

However, members of the Protection Distributors Group (PDG) are feeling optimistic about the impact of two key initiatives.

The government’s Keep Britain Working (KBW) review and the FCA’s Protection Market Study may have different objectives, but together they highlight the importance of protection insurance in supporting consumers, employers and the wider economy.

KBW is focused on reducing economic inactivity by helping more people remain in work. With long-term sickness continuing to impact the labour market, there is increasing recognition that early intervention and preventative support are essential.

This is an area where the protection industry is already delivering tangible value. While the group income protection market has long championed vocational rehabilitation as a benefit to employers and employees, the individual IP market also helps thousands of claimants back into work each year.

Added value service partners are strengthening insurer rehab and wellbeing provision too. Services such as virtual GP access, mental-health support and physiotherapy, as well as focussed rehabilitation, can help customers manage health conditions, recover more quickly and, crucially, stay in employment.

The UK is dominated by companies of 10 employees or less and it is vital that these businesses are taken into consideration

For advisers, this initiative could help stimulate more meaningful conversations around financial resilience, while employers may increasingly recognise the role that group protection products can play in supporting workforce wellbeing, reducing sickness absence and improving employee retention.

As a group made up of advisers that focuses on improving outcomes for consumers, we are embracing this new activity on behalf of our members. In partnership with CIExpert, which recently conducted research for us, we met with Treasury officials to discuss some potential developments and to convey our positivity to the KBW report.

We shared a paper with them illustrating the vast number of early intervention services in the individual market to support the work Sir Charlie Mayfield and his team are undertaking.

The UK is dominated by companies of 10 employees or less and it is vital that these businesses are taken into consideration, as well as larger organisations, in the messaging and outputs that KBW is creating.

The FCA’s concluded that while the market is working pretty well, the protection gap is a significant concern

We also discussed how advisers can help reduce the vast protection gap that the FCA has highlighted, utilising both group and individual protection propositions to achieve this.

It’s an unusual (but very welcome) position to see the government recognise the value our industry provides, with a keenness to understand more about what we can offer both employers and individuals.

At the same time, the FCA’s concluded that while the market is working pretty well, the protection gap is a significant concern. This may seem an obvious problem for those who work within our market, but we welcome that the FCA’s report has shone new light onto this issue, creating new debate and activity on how to address it.

So, rather than viewing the study as regulatory scrutiny alone, we see it as an opportunity to demonstrate the value that protection insurance delivers, and for insurers and distributors to collaboratively work with the regulator to get more consumers protected.

Emma Thomson: Sending a protection wish list up the chimney

We have been actively engaging with the FCA on how the protection gap might be tackled and discussions have been very encouraging. It’s important that we not only address the number of consumers that have no protection at all but also help those who have cover but who are under-protected.

Ongoing reviews of existing customers will help to remind and/or identify gaps in coverage. Providing flexible options to help consumers who are experiencing financial difficulties is also important to reduce the risk of policyholders cancelling cover.

For advisers, this creates an opportunity to increase client engagement through regular protection reviews, identify under-insurance and demonstrate the value of ongoing advice relationships.

Improving access to insurance as well as awareness is an important aspect that also needs to be addressed

We hope the combined effect of these initiatives will encourage further innovation across products, preventative health services and technology to deliver increased customer value. Improving access to insurance as well as awareness is an important aspect that also needs to be addressed.

By recognising the important role protection can play in helping people remain financially secure and economically active, both the Government and the FCA are creating conditions that could lead to market growth.

We should embrace this new focus on the good our market does and build on the momentum to strengthen the nation’s financial resilience, a role that has never been more relevant.

Emma Thomson is vice chair of the Protection Distributors Group