According to a Mortgage Solutions poll, approximately 31% said that there had been a fall in protection sales compared to last year, and 22% said there had been no change.
Brokers speaking to this publication said that the implementation of Consumer Duty, along with the fall in mortgage activity putting more onus on the sale of other services, meant that the results were not surprising.
Karl Wilkinson, CEO of Access Financial Services, said that it was “no surprise” that most had indicated a rise in protection business compared to the prior year.
“During a time of high costs, economic volatility and increasing arrears and repossessions, clients appreciate the peace of mind that protection affords them. Plus, it’s a useful way for advisers to keep the pipeline full during a dip – or, in the case of 2023, deep trench – in mortgage transactions.
“Typically, in times of austerity we see the public thinking about protecting themselves, which drives an increase in protection business. Conversely, in times of prosperity, we see the opposite,” he explained.
Wilkinson added that companies were “looking to drive other revenue streams in times of hardship”, which included setting up referral agreements with accountancy and general insurance firms.
He noted that the onset of Consumer Duty had also had a “positive impact on the increase in business” as, since July, mortgage brokers have been obligated to offer protection policies.
However, he did say the fact that a third of brokers had reported a fall was a surprise and “contrary” to the firm’s experience.
Claire Madge, sales director at Primis, agreed with the finding that most brokers were seeing an uplift in protection sales as it reflected its own experience.
She said that, in its survey in April, 65% of Primis brokers saw an increase in demand for protection sales over the last 12 months, and a further 73% of brokers expect demand to increase further over the coming 12 months.
Madge continued: “We know brokers are instrumental in delivering financial wellbeing for their customers, and the Consumer Duty rules mean that insurance discussions and sales are an important part of planning against foreseeable harm.
“Additionally, insurances will help protect firms from future market shocks. In an uncertain interest rate environment and a softening labour market, protection is more important than ever for brokers and their customers.”
Chris Reed, executive director of marketing at Protect Line, said that the results showed a “mixed landscape” for protection sales in the last year.
He said that there had been a decline in protection enquiries as the immediate concerns brought by the Covid-19 era have dissipated, which he said “speaks volumes about the evolving consumer sentiment towards protection insurance”.
Reed added: “The increase in advertising costs since 2021, fuelled by various macroeconomic factors, including legislative changes and the impact of technology updates on marketing channels, has undeniably tightened the market.
“It’s been a period of significant adjustment, with protection businesses navigating through GDPR’s complexities and the ripple effects of Apple’s iOS 14 on digital advertising efficacy.”
Consumer Duty has been ‘line in the sand’
Sebastian Murphy, group director at JLM Mortgage Services, said that since Consumer Duty was introduced, it had seen a 20% rise in protection business.
“Consumer Duty has been something of a line in the sand in that regard, and the importance we place on protection, and what we require our advisers to do in terms of protection discussions, quotes, advice, etc, has moved on from the pre-Consumer Duty approach,” he said.
Murphy continued on to say that the company had already been focusing more on protection needs with clients, having four full-time protection advisers within the wider time, but Consumer Duty had “ramped this up” and been a “real catalyst” for its advisers.
He noted that a lot of growth in this sector had come from “multi-benefit policies”, such as term assurance, critical illness, income protection and private medical insurance, coming from conversations offering a “bespoke offering/solution to each client”.
“We also want to ensure that, at the very least, every single client is provided with a basic life quote, even if they choose not to move ahead with it. It’s important we show that the protection conversation was had, that product details/costing were provided, and that the client was aware of what they might need and how much it might cost them to have a basic level of cover,” Murphy said.
Reed said that the introduction of Consumer Duty had “weeded out entities less committed to consumer-centric practices”.
He continued that, for the firm, embracing Consumer Duty was “more than a regulatory necessity; it’s a cornerstone of our belief in fostering trust and delivering value to our clients”.
Reed added: “It’s evident that the market is undergoing a phase of self-correction, weeding out opportunistic practices and underscoring the importance of integrity and consumer trust.
“In this period of transformation, our focus remains on leveraging these shifts as opportunities to reinforce our commitment to quality service and consumer protection. The path ahead demands not just adaptation but a proactive reimagining of how we engage with and serve our clients, ensuring their financial resilience in an ever-changing world.”
‘Protection should be a priority for customers’
Wilkinson said that, despite the results showing an increase in protection sales, for nearly half of brokers, an insufficient number of customers were protected.
He continued: “Protection should be a priority for customers and, therefore, brokers. For example, income protection is a critical back-up mechanism so customers get help keeping up their household if they can’t work due to illness, redundancy or serious injury.
“Offering holistic protection advice is vital for advisers because they are satisfying the Financial Conduct Authority [FCA] and Consumer Duty regulations while protecting their customers and their families, receiving fewer complaints and earning better commission.”
Wilkinson continued on to say that, for brokers who want to improve protection sales, they can “take advantage of training opportunities so they find out more about products and approaches”.
He pointed to the Access Protection Academy, with entrants doubling from 10 to 20 people per month. Advisers start training with a focus on the “importance of protection” and offering a “client-tailored approach”.
Nathan Blissett, principal mortgage adviser at Dwello Mortgages, said that protection had been “undervalued and served over the last three years”.
He said that the near third of brokers reporting a fall in protection sales was a “worrying statistic”, as it could leave borrowers “open to potential financial harm in the future”.
Blissett said that, while cost was an important factor, brokers needed to emphasise the “long-term financial security that protection offers [and] can help clients see beyond the initial expense”.
He said: “Advising these issues tends to be a fine line between prospecting clients and upselling a mortgage, but in truth, it really is about educating our clients to make informed decisions in one of the most crucial purchases of their lives.”
