The protection market is in flux but the upturn in mortgage activity provides an attractive point for advisers to reconsider their strategy in the area. Avelo's Dave Miller explains.
The first half of 2013 has witnessed major fluctuations in the protection market, presenting advisers with challenges and opportunities in equal measure.
In terms of volumes, the market is in a state of flux. For instance, a 7% fall in overall income protection quotations in the first half of 2013 in comparison to 2012, has been partially offset by a 14% rise in new business for income protection over the same time period, according to the latest figures from Avelo Exchange.
Furthermore, despite the slight dip in overall activity on the individual side, the group side of the market is seeing slight improvements.
How to offset the income protection downturn
The change in fortunes of the income protection market can be down to a number of factors. The complex nature of the sale is one. Advisers need to be aware of the potential stumbling blocks a protection sale may face, such as age having an effect on the pricing of products following the removal of the default retirement age.
Equally, providers must price products sensibly and correctly in order to help advisers make sales to the right consumers. In the present market, pricing remains a key challenge.
However, with the income protection market sluggish, advisers recognise the need to adapt and we have seen many broaden their offering to compensate. Several have moved into private medical insurance and annuities from a non-advised perspective.
Advisers have also begun to focus on D2C business over traditional lead-sellers in order to offset the difficulty in selling other protection products.
While it is important to note that those advisers who specialise in income protection generally sell it very well, the key to future success will be to educate consumers about its benefits and how vulnerable they may be financially without it.
Utilising the mortgage market
While it seems as though the industry is struggling to cover the protection gap as consumers shift away from seeing the need to protect themselves and their family financially, there are still points of growth. An upturn in mortgage activity could potentially see an increasing rich seam for advisers to tap.
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