Nearly half, or 40% of borrowers aged 18 to 34, would consider income protection following the pandemic, the Association of Mortgage Intermediaries’ (Ami) latest protection report reveals.
This is nearly twice as many, at 19%, of the 35 to 54 years old cohort and 10 times as many as those aged 55 or over, of which 4% replied in the affirmative.
Additionally, the younger age group believes that income protection is ‘just as important’ as buildings insurance.
And when asked if they would be more open to a protection discussion if their mortgage broker saved them money, 73% of the 18 to 34 years old group responded positively compared to 57% of the 35 to 54 years old group and 41% of those aged 55 and older.
The report – ‘Protection: Moving Forward’ – produced alongside Legal & General and Royal London, surveyed 5,000 customers and 253 mortgage advisers. It is the second such annual report issued by Ami.
Among its other findings, the report discovered that 57% of advisers say that, overall, protection discussions have increased over the 12 months while 42% said their clients are now ‘more open’ to these discussions.
And whereas last year, one in seven advisers were passing protection business to a specialist, this has now increased to one in four.
The main reason borrowers do not buy protection from their mortgage adviser, which 37% of those asked answered, is that they feel they don’t need a protection product. This was followed by the cost of protection, at 26%.
Meanwhile, 22% said they arranged protection with another broker or insurer.
The biggest challenge for advisers, however, is customer perception of the incentives for bringing up protection.
Ami’s report shows that 42% of people believe protection is brought up only to increase broker commission whereas just 30% say the broker wants to ensure full protection for their client.
Unfortunately, 53% of people say there is nothing a broker could do to change this view. Of those remaining, however, 20% say an explanation of why a discussion of protection is important could possibly change their mind, 19% say more emphasis on how protection could help them do so, and 14% responded by saying they wanted their broker to take more time talking about it.
Ami chief executive Robert Sinclair says: “As with many reports there are both positives and negatives to draw on, with progress being made in some areas whilst others clearly show that we still have work to do.
“It’s positive that we are seeing consistent messages from consumers again this year, in the sense that we now have a clearer picture of areas that need our attention.
“Too many consumers distrust the motivations of their adviser. It’s important for us to have proper dialogue as a sector about how we overcome this – we hope it will be an area of priority for Ami’s Protection Specialists Group in 2022.”
Sinclair adds that brokers must provide “not just memorable protection conversations, but remarkable ones.”
Royal London Intermediary chief commercial officer Julie Scott comments: “This report puts a spotlight on the current opportunities and challenges we face, as we work together to deliver the very best outcomes for our customers in a post-pandemic world.
“One of the key issues is how to engage better with clients about the value of protection, and we all need to step up to the challenge of better equipping advisers so they can have more meaningful protection discussion and improve client awareness.”
To this end, Ami has produced a four-page consumer guide, ‘What should I know?’, in association with the Protection Distributer’s Group and Protection Review, which it says aims to explain protection in a short and simple manner.
