Consumers won’t engage with protection until brokers do
If the last 10 years have taught us anything it’s that, in financial services, things can and do go wrong. The hangover from the economic crisis lingers on, with stagnant wages and job insecurity the reality for many people. Yet despite this it seems consumers still haven’t learnt the value of protection.
According to the latest Fairer Finance report on the insurance sector customers are “largely disengaged in the insurance buying process” and often consumers “misunderstand the product features offered by general insurance products”. In some cases, customers expect policies to cover them where no cover is offered. And in other cases, customers are unaware that cover exists.
Furthermore, while many customers are disengaged, those that are seeking protection are overwhelmingly choosing to do so via comparison sites. The report revealed some 85% of people with access to the internet have now used a comparison site at least once, and the number of insurance brokers has fallen by around 70% over the past three decades.
And therein lies the real trend. Consumers are not engaged with protection because by and large for the most part the only exposure to these products they’re getting is through a computer screen. Typing in your details and picking the cheapest option out of the results is hardly likely to promote engagement.
And this is where we, the broker community, can have an impact. Given the financial chaos of the last 10 years, consumers now value sound advice more than ever before. Everyone is acutely aware of the problems that can arise when borrowing but too few people understand what can be done to cushion the blow.
As advisers we can use the unique position we have to ensure our clients are properly protected in any eventuality. We can identify the clients’ needs even if they can’t.
The FCA’s Treating Customers Fairly initiative is central to the work we all do and if one of its core principles is to use expertise and knowledge to ensure the safest and most suitable outcome for clients then this has to include protection products.
Insurance may be a harder sell than some other financial products but remember, you’re essentially selling peace of mind - and you can’t put a price on that.