05 SUMMER PROTECT NEWSLETTER Continued on next page... The cost of living crisis we have witnessed over the past 2 years or so has highlighted the need for financial resilience more than ever before, and there are more telling statistics to help us understand the behaviours of clients as a result. In the FCA Financial Lives Survey published in April this year, their report focused on: people’s financial situation as at January 2024, on some changes since a year ago and on general perceptions of how things have changed since the cost of living started to rise. You can read the FCA’s findings here. The results show that: • More than 1 in 4 (28%) UK adults either not coping or finding it difficult to cope financially • 11% of UK adults in the 12 months to January 2024 cancelled (6%) or reduced (6%) the level of Insurance cover • 12% had chosen not to buy an insurance policy to save money or because they could not afford the insurance premium Mortgage holders were slightly less likely than the national average to be struggling in January 2024, but still 24% were not coping financially or were finding it difficult to cope. Some 5% had missed paying one or more domestic bills or credit commitments in the previous 6 months. Given more than one in three mortgage holders had seen their mortgage payments increase in the previous 12 months, this statistic is not surprising. What it does show is that consumers are very aware of their financial position, probably more than at any other time in the past two years. What they are seemingly less aware of based on survey results we have seen, is how little it can cost to protect their mortgage payments in the event of illness. If there is one message to highlight of Consumer Duty it is to make clients aware of the risks they face in not taking out cover to support them through illness and incapacity and the cost to them to do so. You may have seen that Beagle Street recently surveyed 2,000 UK adults aged between 18-40 on their attitudes and behaviours towards life insurance. Nearly three in 10 (28%) adults with a mortgage do not have life cover, with 23% of these saying they do not currently see it as a priority expense. Of those with a mortgage, one fifth (22%) had never thought about life insurance, while the same proportion (22%) said the cost-of-living crisis has meant they do not have enough money to pay for it and 19% said they cannot afford life cover. This is a statistic that, given other items of expenditure in our ‘weekly baskets’, I cannot understand, and the burden of responsibility lies within our community to help to change this view. Finally, I would point you to a great piece of work done by The Exeter, which gives an excellent background to similar consumer thoughts across protection, which may be of great value in developing your own strategies in engaging with past, current and prospective clients. In short, if we don’t understand what consumers are thinking we cannot plan to help them. Claims As mentioned in the introduction, we are very much in ‘Claims Season’. Increasingly, claims stats should be important in determining product recommendations to clients. Some Providers will have more autonomy in paying out claims than others, and sometimes this can depend on how much of the cover provided is reassured or kept within the Provider’s own fund – claims stats are a good way of analysing which Providers have a better track record of paying claims, and therefore could influence where your business is placed. It’s also important to look at what percentage of claims weren’t paid as a result of ‘misrepresentation’ (incorrect information passed to the Provider when making their decisions – usually in the underwriting section), as again, this may paint the statistics in a more positive light. Many Providers now ask advisers to ensure
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