I am an IFA and previously I was a tied agent for a bank. I am now considering setting up on my own. I have a lot of knowledge and experience in protection but I am considering branching out into private medical insurance (PMI). Is this a different mind-set and skill-set and what do I need to know to work on both?
Brian Walters, Regency Health
We debated whether advisers should sell both PMI and protection at the recent Protection Review conference and there was a divergence of opinion. There is nothing to say that good protection advisers can’t become equally good PMI advisers but it involves learning a different market.
The skills needed to advise on protection are transferable to PMI broking but PMI should not be thought of as just another product on the protection continuum. It is an annually renewable contract, uses different underwriting methods, has different product features and a different claims process.
IFAs looking to advise on PMI to a high standard will need to familiarise themselves with a broad range of providers and products. Working with only one or two insurers will result in sub-optimal recommendations (no insurer, however good, is right for every client) and put the adviser at a competitive disadvantage.
Would-be PMI advisers will need to learn about product design, moratorium and switch underwriting, hospital networks, cancer cover, no-claims discounts and fee guidelines. It is also important to learn about the claims proces.
When advisers don’t understand a market they tend to recommend the cheapest product or the provider that they’re most familiar with. The best health and protection brokers have an equal focus on both disciplines. If PMI is just a sideline to protection (or vice versa) it may be better to refer on to a specialist than dabble.
Dave Priestley, PruHealth
If I was having a conversation with an IFA in this situation, the first thing I’d ask them to think about is what is their proposition and how are they looking to differentiate themselves from other IFAs?
There are lots of specialist firms and as a consequence it makes it tough to compete with more established, bigger, more sophisticated firms.
One of the things you could consider is offering broader advice because that gives an advantage. If you’re already experienced in protection, that makes PMI a natural opportunity to broaden your advice and your value proposition.