31st May 2011

LV= Protection Insight

I went to seminar recently on a technical topic I was very interested in.The main speaker was obviously an expert in this field and certainly came across as one. So what's the connection with the saw above? Precisely that he did come across asanexpert-Iwasleftinnodoubtof his knowledge on the subject while my own was scarcely different after the hour was up.This had nothing to do with his abilities or confidence as a presenter. His performance was assured. It was all about the purpose of the session. If it was to impart knowledge or drive me to action, it failed as it had no structure to achieve that. The focus of the presentation became the presenter rather than the audience.

Good advisers tend to be excellent communicators. It is one of the essential skill sets when success involves interacting with people.The statement'people buy people' is an absolute truism. Only when someone is fully engaged are they likely to take the journey through confronting the risks they run, assessing their financial needs and committing to mitigating those risks through insurance - and full engagement is more likely to come through good communication rather than a dull monotone - however appropriate the language.
I think most of us will agree that UK consumers are under insured.

One of my (many?) hobby horses is the extent that income protection is undersold even relative to other forms of protection.

It seems so intuitive that it is income that allows you to live your life as you do and take on the commitments you have and so should be protected before those commitments, but apparently it isn't so obvious. Even when you talk to them about the fantastic money-making machine they own that gives them a monthly income and how it's surely logical to insure that machine against injury, they seem more interested in insuring their new Nokia mobile phone or even their cat.
Another truism is the one that says insurance is sold not bought.Very few consumers will decide independently that they need to purchase protection. Which implies that it is us, the experts, who as a collective are facilitating the choice of insuring debt over income? When I've discussed this with advisers they often explain this apparent paradox by saying the product is too expensive and/or too complex.

Very few consumers will decide independently that they need to purchase protection.

I accept that to cover a high proportion of your income at older ages in some occupations does come at what appears a high price, but surely that just reflects the risk.We seem capable of explaining that for lump sum cover to older customers or those who present higher than average risk but less able for IP.
Is that because of being less comfortable with a more complex product? I challenge this basic assumption. IP is not complex. If you're too ill to work the policy pays out, it's much simpler than critical illness. The difference is the product has evolved to have many options to get to a solution that best fits a customer's individual circumstances.

To refer back to the presenter I saw the other day. Maybe the trick, for all of us in the industry - advisers and providers alike, is to step back and concentrate on the basics. Maybe we should start by assuming little or no knowledge, and maybe we should be concentrating on avoiding showing the customer how clever we think we really are?

Mark Jones is Head of Protection at LV= mark.jones@LV.com

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