"My Dad is 83. He keeps his policy documents in a box at home. ‘This is my mortgage. This is all the investments, son. If anything happens to me, this is the box.’ But if anything happens to the house, where are those boxes?"
- James Slater, CEO of ST&R Insurance
According to exclusive data from Gretel, there are an estimated 3.4mn dormant policies in the UK, valued at £8.1bn. The average policy value is £2,366. Recent figures from Zoopla show the average monthly mortgage repayment for a house is £1,154.
Therefore, the average value of an unclaimed policy is the equivalent of two months of mortgage repayments – that could have been a lifeline for a grieving loved one.
In many cases, policies aren’t lost due to fraud or failure, but rather because of everyday life - moving house, changing jobs, getting married, or divorced. Families often aren’t aware that their loved ones have insurance policies, while others are simply unable to access them.
“One of the most difficult and time-consuming elements of sound financial planning is obtaining details about any existing plans or provisions. Why can’t customers obtain details of their protection policies in one place? Surely this helps people engage with their plans,” Paul Yates, product strategy director at iPipeline, told Protection Reporter.
He stressed that it would also help people locate lost or forgotten plans, preventing “unnecessary churn […] In the absence of such a service, it’s down to adviser firms to look at their customers’ documentation and see if they can help aggregate policy information in one place - alongside the plans and provisions they supply.”
Adam Higgs, head of protection (proposition delivery) at St James’s Place, agreed that helping customers “understand what they have, ensure that it remains suitable as their lives change, and realise the value of plans when needed is important to achieve good customer outcomes.”
“It’s a potential Consumer Duty problem for insurers and advice firms when, for whatever reason, the original adviser is no longer around. If these customers aren’t being serviced, then their protection policies may become unsuitable or worse, that they’re entitled to claim but don’t realise,” he warned.
In 2016, the Financial Conduct Authority (FCA) issued guidance on the fair treatment of long-standing customers in the Life Insurance sector, to ensure ‘closed book’ customers are treated fairly and don’t receive less attention than customers who have recently taken out a policy.
Discussing how firms can take effective action to locate and contact ‘gone-away’ customers, the FCA said respondents to its guidance consultation highlighted a reduction in the number of advisers and an overreliance on paper communication by firms as significant contributory factors. Digital propositions were suggested as a means of improving customer engagement.
Chorley-based firm ST&R Insurance, which launched in 2012, sells protection and general insurance (GI) products, accompanied by its unique online storage platform.
Speaking exclusively with Protection Reporter, James Slater, CEO of ST&R Insurance, explained that, “Originally, we had our vault storage; when you purchased a policy from us, we would store it online, give you an account, and off you went. If policies were due for renewal, we would send alerts, so it became a good retention tool.”
To improve accessibility, ST&R Insurance rebuilt its online storage and developed a next of kin process to ensure loved ones can access policy documents in one place. The ST&R Store’s ‘My Products’ folder displays policies purchased via the firm, but customers can also create personal folders for products brought from other financial institutions.
Illustrating the importance of its next of kin functionality, James said, “My Dad is 83. He keeps his policy documents in a box at home. ‘This is my mortgage. This is all the investments, son. If anything happens to me, this is the box.’ But if anything happens to the house, where are those boxes?
“Now he’s got his policy documents in online storage, I don’t need to worry about the house. He has the power because he can remove me as next of kin at any time.”
Earlier this year, MetLife UK reported that 21% of people who have experienced bereavement in the last two years didn’t know what insurance policies, bank accounts, or debts had been left by their loved ones. Almost a third (29%) didn’t know where important documents were stored.
To support customers who don’t engage digitally, ST&R Insurance’s gold card provides a ‘tap and go’ alternative for accessing digital storage: ‘Your policies may be new or old, so don’t forget to pocket your gold’.
James explained that “It works much like an organ donor card. Not to give organs away, but if the car breaks down or you need a claim number, you’ve got instant access to all your policy documents. You can tap the gold card on your mobile phone or scan the QR code to access your account.”
ST&R Insurance’s online storage platform demonstrates that firms can do more to locate and contact ‘gone-away’ customers, and ultimately, reduce the risk of unclaimed policies.
