The body launched its third annual Viewpoint Report on protection produced in partnership with Legal and General and Royal London. Some 3,000 adults in the UK and 250 advisers were asked for their views on the protection market.
Affordability main barrier to protection
More than a third (35 per cent) of consumers said affordability was a barrier to protection, rising to nearly half among those aged 35 to 44. Some 30 per cent of those aged between 18 and 34 felt they were too young for protection while half of all respondents said they believed brokers were mainly motivated by commission when they suggested protection.
Additionally, 18 per cent said they did not feel confident speaking with a broker about their health, while only 48 per cent of brokers said they felt comfortable about speaking with clients about this.
More than half, 56 per cent, of consumers said if they were buying protection they would go online, 27 per cent would buy it face-to-face and just three per cent via video call.
Raising awareness of protection
According to 84 per cent of advisers, lenders should be doing more to promote the importance of protection. Similarly, 84 per cent of advisers said it was down to regulators to raise awareness, 83 per cent said consumer groups, 79 per cent said the government and 86 per cent said this information should be gained through peers.
Some 42 per cent of advisers said faster systems and processes offered by protection advisers were most important, while 29 per cent valued access to underwriters. A further seven per cent said training was key.
Proctection misunderstandings and misconceptions
Consumers have misconceptions over around entitlements, as respondents believed they would get £123 a week through Statutory Sick Pay when the actual amount is £99.35 a week. Although the self-employed are not eligible, respondents on average believed those who work for themselves got £95 a week.
Over half (56 per cent) of consumers said they did not trust insurer claims about payouts, while a third incorrectly said they would not get income protection if they were self-employed.
A third also believed they would not get income protection if they suffered from a mental health condition.
Two-fifths also said protection cover was always the same regardless of whether it was purchased directly or through a broker.
For those who do have protection cover, 52 per cent said they were aware of the benefits and a fifth had made use of them.
Client communication
A fifth of consumers with protection admitted they had never reviewed their policies, with this figure rising to a quarter for women. Some 35 per cent of people who used a broker said they had had no contact since the initial meeting.
A fifth of consumers said they did not talk about life insurance with their broker, with this figure increasing to 28 per cent when it came to income protection. A quarter did not speak about critical illness, while the same percentage did not want to discuss their inability to pay a mortgage if they fell ill or were injured, and 26 per cent did not want to talk about this in the event of their death.
When advising clients, 67 per cent of advisers said they shared personal stories with clients and 52 per cent used insurer sales aid and tools. A further 35 per cent relied on insurer claims data.
Overall, 44 per cent of advisers expect Consumer Duty rules to increase the focus on protection.
Five-point protection plan
AMI’s plan to improve how protection is advised and sold includes asking advisers to consider and make clear the value of advice and firms to look at their approach in relation to Consumer Duty and think about third-party signposting. AMI also suggests that providers identify adviser pain points and work on addressing them, as well as increase the use of case studies to back up claims data.
The body also said it would work with the industry on tackling the barriers raised in the report and talk to lenders about their role in raising awareness.
Robert Sinclair (pictured), chief executive of AMI, said: “Against the current economic challenges, it’s never been more important to help consumers understand the vital role of protection and the benefits of advice.
“Now in its third year, this year’s Viewpoint brings new insight, delves deeper into views uncovered in previous years and highlights recurring trends. While we hope this report provokes active debate at both an industry and firm level, we also want it to bring the industry together, to take stock of what’s working well and what isn’t and result in action. This is why we have decided to introduce a five-point plan as a call to action to kickstart the ‘Great Protection Shift’.”
He added: “AMI plans to work with its Protection Specialists Group and in collaboration with the ABI, PDG, IPTF, our insurer partners, Legal and General and Royal London and the wider industry, to champion change. Let’s work together as one industry, as together we can shift the dial.”
