Swiss Re calls for simplification of advice and products in protection markets

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A marked change in consumer awareness is causing consumers to take an "austere" self-assessment of protection needs, Swiss Re has said.

The reinsurers latest Insurance Report: "Facing life's responsibilities", reports a marked change in consumer awareness towards protection.

However it adds that consumers are delivering an austere self-assessment of their financial exposures.

When asked why they had not bought life insurance, consumers indicate affordability as a fundamental barrier to buying financial products.

Nearly half (46%) said they couldn't afford it (47% for critical illness and 39% for income protection), while only 10% (11% and 12%, respectively) replied they hadn't thought about it.

Many consumers see reducing their debt levels as a higher priority. In 2009, the main response was that people simply did not think they needed cover.

As a result,Swiss Re has called for an industry and government focus on access to straightforward advice and on simplifying products to build trust.

Russell Higginbotham, CEO, UK and Ireland at Swiss Re's, said: "Furthermore, there is a marked change in consumer awareness.

"We should build on this and help consumers address their uncertainty by offering straightforward advice and simple products which consumers will consider essential - through a medium which suits them - and bring them to buy financial protection and invest in pensions instead of the latest iPhone or other gadget".

The report suggests that improved product awareness will help. The Money Advice Service (MAS) is stimulating interest but consumers are unsure what to do next. Clear and straightforward propositions should, over time, build on and complement the interest MAS generates.

Ron Wheatcroft, technical manager at Swiss Re, said: "It is imperative that we develop better ways to engage with consumers through a simple or straightforward advice model. If we fail to do this, consumers may simply turn away - no matter how perfect the product.

"The issue of re-engaging with consumers as the state withdraws from provision is so fundamental that direct government involvement is needed. At the beginning of the RDR consultation process, the potential disengagement of, and detriment to, many consumers was a concern - and this issue remains."

 

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