The Financial Conduct Authority is working with industry, government and consumer groups in an effort to encourage more people to consider protection insurance, after research found that 58% of adults have no life insurance, critical illness cover or income protection.
The regulator said 59% of those without protection had never considered taking out cover, leaving millions of people potentially financially vulnerable following a death in the family, serious illness or loss of income.
The initiative follows the FCA’s Pure Protection Market Study and will involve the Money and Pensions Service, the Digital Property Market Steering Group, the Protection Distributors’ Group and the Association of Mortgage Intermediaries.
The Money and Pensions Service and the Digital Property Market Steering Group will look at ways of prompting consumers to consider protection at key life events, including becoming a parent and buying or renting a home.
The FCA said it was also exploring how other organisations could help raise awareness of protection at times when consumers may be more receptive to considering cover.
The Protection Distributors’ Group will lead a consumer awareness campaign aimed particularly at groups less likely to take out protection products, while the Association of Mortgage Intermediaries will lead work designed to help advisers improve conversations about protection with customers.
The regulator said the programme would pay particular attention to groups that are disproportionately likely to be without cover, including renters, self-employed people and gig economy workers, those on lower incomes and people with pre-existing medical conditions.
Graeme Reynolds, director of competition at the FCA, said: “Competition in protection insurance works well for existing customers. But we’re working with partners to increase coverage – so that more people are protected when they or their families need it most.”
The FCA is also calling for greater innovation in the protection market and plans to hold a webinar for firms to address what it described as misunderstandings about its rules and expectations that may be regarded as barriers to innovation.
It will work with the Association of British Insurers to reduce delays in obtaining medical records and is inviting firms to participate in a TechSprint. Firms interested in taking part have until 13 November to express an interest.
WIDER ISSUES
The FCA has also published findings covering switching, claims experiences and fair value in the protection market.
It said competition was generally working well, although firms had been reminded of their obligations and good practice under the Consumer Duty and product governance rules.
The regulator is not planning new market-wide measures but said it would take action where individual firms fall short of its requirements.
