Is the current trend towards after-the-event personal injury claims likely to put people off buying income protection?
We are witnessing a change in British culture that is moving towards the US mentality of seeking compensation at every opportunity. There is a new breed of legal firms who are running advertising campaigns aimed at encouraging people who have been involved in an accident to come forward and make a 'no win no fee' claim for compensation.
The trend towards this sort of culture could potentially make people even more complacent about taking action to protect their income against the risk of becoming incapacitated, especially if they believe this is only likely to result from someone else's negligence. However, it could also have some positive effects on consumer attitudes.
Historically two of the biggest barriers to selling income protection (IP) have been people's misconception that they are invincible, not at risk of becoming incapacitated and that someone will provide for them in the event of long-term incapacity.
I believe many of the testimonials used to publicise these legal services help to promote the need for IP on two accounts.
First, they help to highlight the real risk of becoming incapacitated following an injury. People can more easily relate to the risk of injury, although illness is the more likely cause of long-term incapacity.
Second, the settlements received in many of these cases are relatively small and unlikely to support someone's standard of living for very long, helping to highlight the fact that additional protection should still be sought.
However, the most important thing to remember is that it can take a long time before any settlement is reached, so any compensation payment may well be received too late.
Nick Homer
