Advisers Express Concerns Over Complexity in Protection Products
According to a recent study by the Protection Distributors Group (PDG), nearly a fifth (18%) of advisers contend that protection products have become overly intricate.
The PDG’s inaugural ‘Protection Insights’ report reveals that 24% of advisers believe new market entrants face daunting challenges in competing on price, while 17% prefer to engage with insurers they are familiar with when conducting protection business.
Only 8% of respondents feel that establishing a brand in this sector is not prohibitively difficult.
In recent years, several insurers have retreated from the individual protection market, most notably HSBC Life, which was acquired by Chesnara in February 2026.
Chesnara has finalized a £260 million acquisition of HSBC Life UK.
Roy McLoughlin, a director at PDG, remarked to Money Marketing, “While it’s essential to evaluate the expansive market, it’s inevitable that we gravitate toward trustworthy brands that handle applications swiftly and fulfill claims promptly.”
“Advisers remain open to innovative offerings that are beneficial for customers, and once they recognize their value, they will begin to recommend them. This trend has been evident. Nevertheless, we require an industry-wide discourse on facilitating easier market entry.”
When queried about the principal obstacles to enhancing protection sales, an overwhelming majority of advisers (59%) identified underwriting delays as the primary issue.
The PDG asserts that this should serve as a clarion call for insurers striving to expand their market share and mitigate consumer risk.
McLoughlin further commented, “Insurers do provide updates, yet most advisers perceive these delays as frequently excessive.”
“The backlog of GP reports is substantial, and those that are submitted may exceed 100 pages, necessitating underwriters to sift through extensive data for pertinent information.”
“Moreover, insurers have indicated a deficiency of underwriters, attributed to a mass exodus from the industry, compounded by the lengthy recruitment and training process for new personnel.”
“We aspire for assurances that more underwriters are being onboarded and seek candid discussions with insurers regarding expediting these processes,” he added.
On a more optimistic note, 89% of advisers anticipate that the income protection (IP) surge will persist for the next five years.
Almost three-quarters (72%) attribute the uptick in IP sales to shifting consumer attitudes toward income protection, while 47% cite enhanced adviser knowledge and activity, and 34% highlight the emergence of more suitable products for contemporary needs.
However, advisers face formidable challenges, with tight budgets (68%) being the most significant hindrance, followed by the common misconception among consumers that they will not require claims (40%).
Additionally, 28% of advisers pointed out that consumers possess a limited understanding of protection benefits and perceive premiums as excessively high (34%).
McLoughlin explained, “The reality is that many consumers face financial constraints. The adviser’s role is to persuade clients of the necessity of protection, elucidate its merits, and tailor recommendations to align with their budgetary considerations.”
“Striking a balance between enhancing consumer knowledge and accommodating financial limitations is paramount. Often, some coverage is preferable to none. This paradigm underscores the superiority of advised routes over non-advised options.”
Emma Thomson, chair of the PDG, stated, “This survey provides invaluable insights into how advisory firms perceive our market. It is encouraging to see a degree of optimism surrounding protection, reflective of the commendable service our industry provides to countless clients.”
“Nevertheless, concerns persist, and there remains room for advancement.”
“A comprehensive approach from policyholders and regulators aimed at broadening coverage would benefit all stakeholders. We expect that this research will catalyze discussions concerning the future trajectory of the protection market.”
Source link: Moneymarketing.co.uk.
