"We need to move beyond compliance and embed customer reconnection into the DNA of how protection products are sold, managed, and maintained."
The UK has a dormant asset problem - and it’s bigger than most people realise. More than £89bn lies forgotten in bank accounts, pensions, and investments. Of that, £8bn is believed to be tied up in unclaimed Life Insurance policies.
The Financial Conduct Authority’s (FCA) recent review and guidance, particularly regarding vulnerability and bereavement, should prompt the protection market to take a more proactive approach to customer service.
“With a huge amount of value locked in unclaimed policies, there is an obvious requirement for that proactivity to include dormant assets and disconnected customers.”
In many cases, policies aren’t lost because of fraud or failure, but because of everyday life - moving house, changing job, getting married or divorced. Many families aren’t aware that their loved ones have these policies, while others are simply unable to access them.
As an industry, we can do more to ensure policies can be found and claimed. The alternative is millions of people unknowingly left out of pocket, often at the worst possible moment.
There isn’t one specific reason for dormancy. It’s the product of a perfect storm: increasingly fragmented financial lives, outdated customer contact systems, and digital disengagement. Add to that the market’s legacy infrastructure, historic M&A activity, and inconsistent data standards, and it’s no surprise that policies fall through the cracks.
“Lost policies aren’t just an administrative headache; they are a regulatory risk.”
While digital transformation is high on the agenda for many providers, reconnecting with legacy customers remains an area that is often neglected.
When protection policies go unclaimed, it undermines confidence in the market as a whole. After all, what good is Life Insurance if the people it’s meant to support never receive a payout?
With the FCA’s Consumer Duty framework extending to legacy and back-book products for 2025, the industry can no longer afford to sideline this issue.
What can be done?
- Proactive customer engagement: Advisers are uniquely positioned to maintain long-term relationships with customers. Regular check-ins, policy reviews, and contact updates can prevent policies from drifting into obscurity,
- Improved data management: Insurers need to prioritise the cleansing and consolidation of legacy customer data. Inaccurate or incomplete records are one of the primary causes of dormancy,
- Embracing fintech collaboration: Technology can play a vital role in solving this issue. By partnering with fintechs, insurers can make it easier for policyholders and beneficiaries to reconnect with their assets,
- Building awareness: Many people simply don’t know that Life Insurance policies can become ‘lost’. Educating customers about the importance of keeping records updated can help prevent problems further down the line.
While some firms have adopted new technology to great effect, most of the industry is lagging behind when it comes to reconnecting with lost customers. I believe a more coordinated approach would significantly reduce the number of policies lost each year.
“It’s time for the protection market to mind the gap - and close it for good.”
We need to move beyond compliance and embed customer reconnection into the DNA of how protection products are sold, managed, and maintained.
In doing so, we don’t just reduce dormancy - we improve outcomes and strengthen the fundamental promise behind every protection product: to be there when it really matters.
