Jo Miller examines new research showing the industry needs to explore new ways to communicate the rewards of protection products.
When you think of a brand known for developing comprehensive relationships with customers, protection insurance does not necessarily spring to mind.
It is hard to find examples of companies who fully exploit the relationships they have with their customers within our industry. However, recent research by The Syndicate suggested that there are huge opportunities for the protection industry to forge lasting customer relationships.
Consumers are confused about protection insurance and many have adopted a ‘casino mentality', seemingly prepared to take a risk of having no cover in place rather than think about the possibility of what may lay ahead.
A recurrent theme is that protection insurance is some way down the list of priorities for the largest majority of consumers, if it features at all.
Encouragingly, in terms of products, half of those asked by The Syndicate thought life insurance the most important type of protection, although 80% could not accurately identify how basic life cover works.
Perhaps unsurprisingly, the economy has had a significant effect on people's planning, 58% have abandoned plans to save in the current economic environment, to focus on monthly outgoings.
A third continue to save, despite the economic conditions, although a further third have resorted to borrowing to meet current outgoings.
There is certainly an opportunity for the industry to tap into the consumer mind-set and offer products to cover ‘essential expenses' and this has actually been discussed following research presentations.
People see their savings as performing a dual role - 77% are saving to fund pleasurable activities. As the average person only has savings of around £2,000, this suggests unrealistic demands being placed on savings, and an apparent acceptance that if misfortune hits, pleasurable activities would be at best deferred and more probably have to be cut out altogether.
Hierarchy of insurances
There is, of course, a hierarchy of insurances in the mind of the public. Half see life insurance as a top three priority; while a quarter see critical illness insurance as essential. This is followed by private medical insurance (at 23%) and income protection (19%).
Interestingly, when we look more widely, only 26% have travel insurance as a top three priority, with pet insurance lowest at 13%.
