The regulator investigates
Issues related to taking out insurance were recently highlighted by the Financial Conduct Authority (FCA) in its Call for Input (CfI) on Access To Insurance.
Although focused on the travel insurance sector in this instance, the FCA has already indicated that the findings of the CfI will also be used to inform their wider work on insurance pricing practices, as announced in the Business Plan for 2018/19.
The CfI came about following a ‘high level of interest’ in access to travel insurance for people with pre-existing medical conditions.
Feedback found availability to be very limited. There was also a lack of quality information about alternative options available to consumers after they’d received a high quote or been refused cover, causing some to assume they were uninsurable.
It’s not beyond the realms of imagination to consider the same might be said of the protection industry. But would this represent a fair summary? There seems a greater focus now on quality of cover and delivering clarity to consumers.
Up close & personal
Getting cover for the quirky cohort necessitates that advisers really get to know their clients and manage their expectations, says David Mead, chief executive at Future Proof.
“In our experience, advice is founded upon an adviser ‘knowing their client’, which should include gathering information about the client’s medical history.
“On the back of this, the adviser can speak to underwriters directly, as well as utilising technology such as UnderwriteMe. The additional research allows the adviser to manage a client’s expectations, giving them a clear indication of what the ‘real premium’ is likely to look like.
"This process allows the client to make a more informed decision and helps to avoid wasting time.”
Mr Mead adds that if clients with more high-risk needs use the direct route when looking for cover, it’s likely to end in disappointment. “Experience tells us that many insurers are driven by ensuring they appear in the top three on portals and price comparison sites.
"The premiums being quoted assume the client is in perfect health, only takes part in sensible hobbies and has an excellent family medical history.
“For the uninitiated, this approach can lead to a nasty shock once they start answering the medical questions. Frequently applications can end up being loaded and that can lead to customer irritation.”
Many will simply abandon the idea there and then. There are things that can be done about the cost, however, but that necessitates the experience of an adviser.
Emma Thomson, life office relationship director at LifeSearch, says an adviser will help guide a client through the options. “If they can’t afford the cover on offer, there are various things that can be done like reducing the sum assured, the term, or perhaps reducing or removing any CI element.”
