The Association of Mortgage Intermediaries (AMI) has launched its fourth annual report on protection within the mortgage industry – entitled The Perception Gap.

It delves into current hot topics facing the industry, including the value of advice, building trust, consumer buying habits and generational views and attitudes.

The report, produced in partnership with Legal & General and Royal London, asked 3,000 UK adults and over 400 mortgage advisers their views on issues relating to the protection market, alongside qualitative research involving a bespoke community of consumers.

Back for a second year is AMI’s ‘call to action’ – a five point plan – refreshed with the key areas it believes the industry should focus on to help shift perceptions.

Lack of online protection presence is a potential missed ‘millennial opportunity’. for advisers.

In a new area of research for 2023, the AMI study found that:

One in three (34%) adviser firms have no online presence when it comes to protection.

A firm’s website is its online ‘shop window’, however just over half (53%) of adviser firms have a protection section on their website and only a fifth (18%) have online guides or articles on protection related topics.

Only one in four (24%) adviser firms post about protection on social media and 5% have an online quote form.

Just over one in 10 (13%) of advisers personally create protection related content on social media.

Facebook (88%), LinkedIn (59%) and Instagram (59%) are the most popular platforms used by advisers active on social media. Just 11% use TikTok or YouTube and only 18% post on X (formerly known as Twitter).

Advisers’ choice of social media platforms could mean they are failing to reach the protection customers of the future. AMI found that younger generations (Generation Z in particular), who are heavy users of digital and social channels across all walks of life, see protection as being more important than older groups; 78% Gen Z and 76% of Millennials think it’s important to have protection (compared to 66% of Gen X and 58% of Boomers).

Around 90% of Gen Z use TikTok and YouTube, platforms both used by only a minority of advisers to raise awareness of protection.

Buying habits may be shifting amongst the younger generations:

One in three (31%) of all consumers say they’d prefer to buy protection via a price comparison website, the most popular answer, but younger generations (22% of Gen Z and 26% of Millennials) are less likely to prefer this route compared to older generations (33% of Gen X and 35% of Boomers).

Nearly one in four (24%) Gen Z consumers said they would prefer to purchase via face to face, compared to 21% of all adults.

All this highlights the importance of advice firms blending tech with the human touch.

Encouragingly, there has been a rise in the number of consumers that recall an adviser-led protection conversation – 50% versus 36% in 2020.

However, when asked about the benefits of using an adviser to purchase protection insurance, nearly a quarter (22%) of consumers answered, ‘don’t know’, while top reasons were knowledge, ability to speak to a human and their regulatory status.

One third (37%) of consumers view price comparison sites as independent or impartial — more than those that view advisers as the same (27%) and only 16% of consumers view advisers as unbiased towards one type of product or insurer.

Almost one in two (47%) of consumers think advisers’ main motivation if they advised them to take protection was earning commission (2022: 50%, 2021: 42%, 2020: 52%), although there are green shoots amongst the younger generations who are less likely to hold this view (37% of Gen Z and 45% of Millennials vs 47% and 51% of Gen X and Boomers respectively).

The study also found that younger people are typically more trusting of insurer claims stats.

Some 66% of Gen Z and 65% of Millennials say they trust them; compared to just 44% of Gen X and 37% of Boomers.

But it’s clear the industry needs to evolve its approach as nearly one in three consumers (30%) say neither percentage nor monetary based claims figures gives them reassurance that a protection claim would be paid.

AMI chief executive Robert Sinclair insists there are some positive indicators that present a reason for the industry to feel optimistic, including a higher proportion of Gen Z respondents viewing protection insurance as important compared to older consumers.

However, he argues: “There is work to be done to fully realise this potential. As part of this year’s five-point action plan, we call on advice firms to assess whether it’s clear to consumers the role they play in the protection advice process and the value of good advice. Our recommendations also include actions for advisers, providers and AMI itself, as we all need to commit to making a difference if we are to fill the perception gap.”