Sean Dunlop – Protection Account Manager at Scottish Widows
March 2020 marked my fifth year as part of Scottish Widows Protect having joined prior to our re-entry into the intermediary protection arena in 2015.
It has been fascinating to be involved in the launch of a new product into a competitive market and it certainly provided a steep learning curve. Now seems like an appropriate moment for reflection on the position our industry is in and potential next steps.
We should remember that the industry we are in does incredible things. When providers release their individual claims statistics each year it is worth considering the combined data which shows the magnitude of the work that we do.
This year has highlighted the financial vulnerability that many people find themselves in and we should not lose sight that the products we provide give individuals, families and businesses a chance for recovery at their darkest moments.
Additionally, the tireless and passionate efforts of the Access to Insurance working group and the Protection Distribution Group have made significant strides in increasing the accessibility and transparency of insurance for many.
However, in many aspects, we have seen the market become more complex. There remains a multitude of product tiers and coverage levels and while improvements have been made in underwriting processes, as an industry we still have work to do in creating fair underwriting outcomes for all particularly around the most common disclosure, mental health.
The coronavirus pandemic has forced underwriters to temporarily change philosophies which adds further complexity but also compounds the need for advisers to bring underwriting into the recommendation process and not just base advice on initial portal quotations.
The Insurance Distribution Directive (IDD) was initially praised as a fantastic initiative to shrink the protection gap. Although many firms and networks have taken this on board and adapted their business model to meet the requirements, we have not seen the significant market growth we had hoped for. Several firms have been unable to meet the requirements either due to lack of experience and knowledge of the sales and application process or simply not having the time to spend going through these effectively with clients.
We initially felt that the best way for firms to meet the IDD requirements was to educate advisers on protection but since its implementation, it has become clear that it is often more efficient to signpost clients to protection specialists to ensure they receive quality protection advice.
We need to remove the stigma of referring clients to specialists. In the medical profession, for example, this is common practice.
Finally, life insurance is still significantly undersold particularly when looking at the percentage of mortgages that are protected and the financial resilience of the continually increasing number of renters.
I believe much of this is due to a lack of understanding of the importance of protection. A recent Scottish Widows survey found that respondents believe insurers pay just 34% of claims when in truth it is over 90%. It would be fantastic to see providers collaborate and combine resources to create an overarching protection marketing campaign which could reach a wider audience.
We have a wealth of intelligent and creative people in our industry and as I highlighted at the start of my article, now more than ever, we need to support individuals, families and businesses through the financial and emotional adversities they face.