Bridging the Protection Gap

Reading the latest statistics from The Exchange regarding new protection applications and how they are significantly up on the same, nine-month time period as 2017, you can’t help wondering if we are seeing something of a small jump forward in terms of protection engagement from advisers, and whether clients are feeling increasingly uncertain about their future and what to ensure they have as much cover as possible.


I would guess that both are combining to deliver an improved protection market – according to the stats, 550,479 new applications were made between January and September 2018, compared to 450,930 in the same nine months last year. That’s a significant improvement – almost 25% up, and indeed it’s interesting to see that Q3 this year polled the best figures so far.


That perhaps tells its own story and therefore one wouldn’t be surprised to see a further improvement in both Q4 this year and Q1 next year, particularly as we get closer to the 29th March – the date when the UK is due to officially leave the EU although current negotiations appear to be heading towards a potentially lengthy transition period.


What this all delivers – certainly to mortgage advisers who might be looking to up their protection penetration levels – is another ‘conversation starter’ because one would think that only those clients who have had their heads in the sand, would not be (at the very least) slightly concerned about how Brexit will pan out.


Plus, of course, you’re engaging with individuals at a time when they are setting out , what is likely to be, their biggest financial commitment. Why wouldn’t you raise questions about the level of cover they currently have, whether this is sufficient, what do they think the future might hold for them, how would their family cope should they get ill or lose a job?


We’re not trying to scare people here but just set out the potential impact that could be felt and whether they have enough in the protection kitty to be able to cover themselves, potentially for a lengthy period of time. To my mind that’s a conversation always worth having, and (as mentioned) given the degree of uncertainty many are feeling, there has perhaps been no better time to have it.


We should also not forget that even with the progress that the stats above spell out, we are still some way behind the eight ball when it comes to bridging that protection gap. When you read other stats such as ‘more rabbits have pet insurance in the UK than people have income protection’, you tend to realise how far we have to go.


Clearly, mortgage advisers have a major role to play here and I would hope we have progressed from the argument that advisers are simply too busy with mortgage work in order to cover off their client’s protection needs. That simply doesn’t cut the mustard, especially when there are plenty of opportunities to refer clients on to protection specialists, or simply ensure that you make the time to cover it yourself.


So, while progress appears to have been made, there is a long way to go. As a start, all advisers should make sure they start the protection conversation, and where there is interest and applicability, to make sure they finish it as well. You might well be viewed as a life saver should those very same clients ever need to claim on it.


Richard Adams is Managing Director of Stonebridge Group