AMI claims only 44% of advisers expect Consumer Duty to increase protection focus

The Association of Mortgage Intermediaries (AMI) has today announced its third annual Viewpoint Report titled ‘The Great Protection Shift’ alongside qualitative research revealing only 44% of advisers believe Consumer Duty will increase the industry’s focus on protection.

Related topics:  Protection,  AMI
Tabitha Lambie | Editorial assistant, Barcadia Media
3rd November 2022
"We have to accept that it’s time to evolve, to look at things differently. How else are we to change the consistent findings over the past three years that 50% of consumers still think advisers are motivated by commission over ensuring they get best protection?"
- Robert Sinclair, Chief Executive, Association of Mortgage Intermediaries

New this year, AMI’s report, produced in partnership with Legal & General and Royal London, has been accompanied by qualitative research offering insight on protection conversations amidst the cost of living crisis and “too young” for protection assumptions.

“Our aim is to bring to life real consumer’s views and hear, in their own words, their thoughts and feelings towards protection insurance and ways the industry can make improvements,” said Robert Sinclair, Association of Mortgage Intermediaries (AMI) chief executive.

With the cost of living crisis seeing no sign of easing, financial resilience remains a major concern amongst consumers. Consequently, despite 62% of consumers claiming life insurance is important - Critical Illness (53%) and Income Protection (50%) - the percentage that have cover is much lower.

Over a third (35%) of consumers still perceive affordability as a barrier to protection, rising to almost half (48%) of those aged 35-44.

Scott Taylor-Barr, Carl Summers Financial Services felt this statistic seemed “odd” given that protection can start from £5pm. He believes it is “important to discuss protection from an early stage to highlight potential risks and agree a budget before speaking about prices.”

Other barriers include younger people (18-34 years) thinking they are “too young” for protection (30%), the belief that commission is the broker’s main motivation when suggesting protection (50%), and a lack of confidence in talking to a broker about physical and mental health (18%).

AMI’s research also revealed that advisers believe that lenders (84%), the regulator (84%), consumer groups (83%), government (79%), and their peers (86%) should be doing more to promote the importance of protection amongst consumers.

Currently, only 44% of advisers expect the Consumer Duty to increase the focus on protection.

Emma Thomson, Sesame Bankhall Group explained that “all parties have a part to play in working together to improve consumer financial resilience.”

“Lenders can be hugely influential in highlighting the value of protection to borrowers and helping fulfil Consumer Duty obligations to reduce ‘foreseeable harm’,” Thompson added.

Amongst those who hold protection policies, a worrying figure has experienced gaps in their protection journey with 20% of consumers noting that they have never discussed life insurance with their broker, rising to one in four for income protection (28%) and critical illness (25%), and a fifth of protected consumers (19%) having never reviewed their policies.

Furthermore, more than a third of advisers have done nothing to help keep their customers protected during the cost of living crisis, with a third (35%) of consumers experiencing zero contact from their broker since the initial meeting.

Naomi Greatorex, Heath Protection Solutions claims, it is important to keep in regular contact with clients during this cost-of-living crisis, and that the importance of retaining cover during difficult times “cannot be underestimated.”

Commenting on these findings, Robert Sinclair, Association of Mortgage Intermediaries (AMI) chief executive, has 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.

“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’.

“AMI plan to work with its Protection Specialists Group and in collaboration with the ABI, PDG, IPTF, our insurer partners, Legal & 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.”

Carrie Johnson, Royal London customer life stage director, commented: 

“As life gets more expensive, people are having to make difficult choices about their monthly outgoings and protection insurance may not seem to be an essential cost. Providers and advisers have a responsibility to continue to help people understand the benefits of having cover in place and the financial security it provides if they were to face a life shock.

“As an industry there is more to do to address the recurring issues around lack of trust in claims statistics, poor customer understanding of income protection, and the fact that the vast majority of consumers think life insurance is important but only the minority have it.”

Julie Godley, Legal & General director of intermediary, added:

“As the cost-of-living crisis continues to bite and people focus on getting by day to day, it’s easy for them to underestimate the value of their long-term protection. Protection can be hard to justify, but it can be a financial lifeline to cover essential living costs like mortgage payments or even food.”

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