The third Protection Review Summit focused on whether we have the products and processes to recommend protection with every mortgage completion.
The summit, which took place on 9 November 2017, featured presentations from Nick Erskine, head of intermediary sales at AIG Life, Charlie Carrick, head of global markets at Lime Holdings, Mark Graves, sales director at Sesame Bankhall Group and Nick Rendle, marketing actuary at SCOR.
After that there was a debate between the four speakers and 40 attendees on improving the state of the market.
Nick Erskine, AIG Life
Erskine began by summarising some of the technology developments we’ve seen and how they have affected consumer behaviour.
We’ve seen the growth of voice search services such as Amazon’s Alexa, as well as fingerprint scanning, facial recognition, wearables and facial analytics.
Also young people are now spending 24 hours a week on their mobile phones.
He rhetorically asked whether, despite these developments, the industry has done enough to make buying protection easier.
We currently still have a protection gap of £2.4 trillion and 60% of people don’t have life cover.
He said people currently don’t buy protection because products are too expensive, complex, the process takes too long and there is a lack of awareness.
Erskine told the crowd the industry should use the KISS principle – keep it simple and straightforward.
Charlie Carrick, LIME (Life Insurance Made Easy)
Carrick declared that technology can go some way to solving the issues of why more people aren’t buying protection.
He said “digitising what you’re already doing is madness”, adding that a number of organisations are guilty of designing systems that copy existing organisations.
Carrick told the crowd there needs to be a better system of self-service for consumers.
He said there is a limited number of advisers in the market who cannot serve everyone. Indeed, he recommended for advisers who cannot deal with cases to point customers to self-service options.
He concluded that we need to create new processes to give customers access, control and choice.
Mark Graves, Sesame
Graves talked history, as we’ve gone from having over 200,000 advisers in the 1980s to about 20,000 now.
Back then he said advisers took their earnings from the protection products whereas now the mortgage proc fee delivers the income.
Product providers have cut their consultancy teams and their training budgets which led Graves to conclude that advisers have lost the skills to sell protection – they fear the application could be rejected.
Unlike with a home and a mortgage protection is not something people automatically want to talk about.
Graves said he hears arguments that after two or three hours of mortgage paperwork nobody wants to talk about protection, however with simpler processes it could be done in 15 additional minutes.
Nick Rendle, SCOR
Rendle began by provocatively asking whether the next financial services scandal would be “the great miss-not-selling protection” scandal.
He showed a video implying that various people in the supply chain are to blame for low mortgage protection sales.
Regulation is reportedly causing a ‘price spiral’ by forcing advisers to make recommendations on price.
Providers reduce prices which leads to more underwriting and processes which leads to fewer sales.
Rendle concluded that everyone has contributed to the current state of the market and it’s up to advisers, providers and reinsurers to remove complexity, create better processes and get back to selling mortgage protection.
Self-service and collaboration
The consensus was promoting self-service protection is a promising idea, but on its own that won’t overcome usual customer objections.
Carrick stressed that the industry must look to engage with different types of customers. Some will never seek financial advice; meaning self-service is potentially the only route they’d take.
The chief executive of an adviser firm talked about the service his company has launched where advisers can collaborate and refer their protection cases for them to deal with.
Carrick suggested that firms should put a specialist protection adviser in place to take responsibility for the mortgage protection recommendation.
However he warned that the protection conversation must happen in a specific window of opportunity.
Once the clients have exchanged contracts they become busy with all the activities of moving to a new house and are less willing to engage.
The consensus was protection is lagging behind other industries in terms of embracing modern technology.
The panel reckoned we shouldn’t see technology as a threat but a massive opportunity.
An adviser questioned whether firms’ product models are compatible with consumers’ expectations. He pointed out that many people aren’t willing to commit to two year phone contracts anymore and instead go sim only.
The adviser asked whether 25-year term assurances are relevant anymore and whether the focus should be on annual costed options.
The debate then focused on procuration fees, the regional variations and whether advisers should be paid more for mortgage protection work.
Mortgage protection versus general protection
Another adviser asked whether focusing on just mortgage protection is the right thing to do.
He talked about his own business practice of always having a follow up general protection planning meeting with all his mortgage customers. Because they set the meeting up quickly he said takeup is good.
He also suggested the lack of a protection trade body means the insurance is commonly seen as less important than other financial products in the eyes of some advisers.
Protection Review’s summary actions for the industry
The consensus is the extra paperwork and process generated by the Mortgage Market Review has affected protection sales.
However providers are working to introduce simpler products and processes to compensate.
What is more some adviser firms have committed to making sure they recommend protection with every mortgage completion.
Three takeaways from the debate are:
- Technology is the key to simplifying products and processes as well as engaging with younger clients. However this needs to be done from scratch rather than ‘digitising’ existing processes.
- If advisers don’t want to sell protection they need to either need hand off the protection advice or point the client to a self-service option.
- The industry need to improve some of the soft skills lost over the years such as selling, story-telling and empathy.