The Association of Mortgage Intermediaries has launched a five-point protection action plan to ‘propel the industry forward, at a time when the UK consumer needs our advice and solutions more than ever’ .
The plan is part of the body’s third annual report on protection in the mortgage industry, called The Great Protection Shift, produced in partnership with Legal & General and Royal London, which asked 3,000 UK adults and more than 250 advisors their point of view on the protection market. .
Ami chief executive Robert Sinclair says the report highlights “clear messages about what we need to change and how to reach consumers differently. The Financial Conduct Authority Consumer Duty requirements are a great accelerator.
“It will force all companies to think about their service proposition, how to position the protection conversation, and deliver it in plain language the consumer can understand.”
He adds: “We all face multiple challenges. Post-pandemic issues; the energy crisis, the escalating cost of living, rising interest rates and insidious regulatory pressure. Despite this, it is our duty to ensure that our consulting industry thrives this decade and into the next.
Here is a summary of the Friend’s five-point plan:
- Advisors should “consider whether they are clearly and confidently articulating the value of protection advice to consumers” and should “shift the overall protection conversations from price to price and quality”
- Company/network managers should “review their approach to protection in light of the FCA’s consumer obligation and incorporate Ami Viewpoint’s findings into their consumer obligation work.” When companies are unable to advise on protection or are unable to help a customer, they should refer them to a third party
- Providers must “commit to working with counselors to understand pain points and seek to address them where possible”. A practical example of this is advising brokers on how to discuss medical conditions with clients.
- Providers should also “consider ways to supplement complaints statistics and expand the use of case studies, such as sharing customer opinions on their experience of the complaints process and sharing real stories about reasons why customers have protection coverage, featuring various customers from a range of backgrounds”
- And the Friend “will work with its group of protection specialists, Royal London, L&G and the wider industry to develop thoughts on how we can overcome the barriers highlighted in the report”
The report raised wide-ranging issues and perceptions regarding insurance coverage.
It reveals that 35% of consumers perceive affordability as a barrier to protection, with this figure rising to 48% among those aged 35-44.
If consumers were to buy mortgage protection today, 56% would go online, compared to 27% who would buy it in person, and only 3% would do so by video call.
The study indicates that 19% of customers never saw their insurance policies again, rising to 24% of women, while 35% of people who used a broker to buy a plan no longer had contact since the first meeting.
For three consecutive years of this report, 56% of consumers this year “don’t trust insurers’ claims statistics.” This figure increases among older people, with only 72% of them believing that life insurance claims are paid, falling to 60% who think the same about income protection.
Carrie Johnson, Stage Manager of Royal London Customer Life – Protection, says: ‘As life becomes more expensive people have to make tough choices about their monthly outgoings and protection insurance may not seem be an essential cost.
“Providers and advisors have a responsibility to continue to help people understand the benefits of having coverage in place and the financial security it provides should they face life’s shock.”
The Intermediary’s General Counsel and General Counsel, Julie Godley, adds: “As the cost of living crisis continues to be felt and people focus on their day-to-day survival, it is easy for them to – estimate the value of their long-term protection.
“Protection can be hard to justify, but it can be a financial lifeline to cover essential living expenses like mortgage payments or even food. Life insurance does not replace the loss of a life, but it does protect families from an incredibly difficult additional financial burden.