Around 58% of adults have no life insurance, critical illness cover or income protection – and 59% of that group has never considered it. This means that millions could be left vulnerable in the event of a death in the family, serious illness or loss of income.
To help more people consider whether protection insurance is right for them, the FCA will join forces with partners from industry, government and consumer groups. Actions include:
The Money and Pensions Service and the Digital Property Market Steering Group will prompt people to think about protection at key moments - such as becoming a parent or buying or renting a home. The FCA is also exploring how other partners can help put protection on people’s radar when it matters most.The Protection Distributors' Group will lead a consumer awareness campaign, targeted at groups who are less likely to take out protection products.The Association of Mortgage Intermediaries will lead work to help advisers improve how they discuss protection with their customers.
The work follows the FCA’s Pure Protection Market Study. The work will focus on groups who are disproportionately unprotected – such as renters, the self-employed and gig economy workers, those on lower incomes and people with pre-existing medical conditions.
Graeme Reynolds, director of competition at the FCA, commented: "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 wants to see greater innovation in this market. It will hold a webinar for firms to address any misunderstandings about its rules and expectations that may be seen as barriers. It will also work with the Association of British Insurers to reduce delays in obtaining medical records and is inviting firms to take part in a TechSprint - they should express their interest by 13 November.
Wider issues
The FCA has also published findings on switching, claims experiences, and fair value in the protection market. Generally it found that competition works well in the market, but it has reminded firms of requirements and good practice under the Consumer Duty and its product governance rules. It isn’t planning new market-wide measures, but will take action where firms fall short of requirements.
Firms should review the examples and findings in the report and consider whether they need to improve how they deliver, and evidence, good outcomes for consumers.
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