Mike Preston, business development director at life insurance comparison website Compare Cover, argues that with fewer financial advisers available consumers are now much more comfortable buying all sorts of financial products online, and there has been a great increase in the amount of non-advised protection products being bought through aggregators (PCWs) or direct to consumer channels.
Buying life protection is different to most other insurance products. Typically, life insurance does not have a renewal date, which means that the consumer’s motivation for shopping around and buying life protection is very different to that of home or car insurance.
Most people who buy life cover are driven by a life event, such as buying a new house, becoming a parent or the death of a loved one.
As a consumer buying a product in this marketplace, it’s important that they feel confident about the options presented to them.
And that confidence extends across the board, from the language used, the simplicity of explanation or products, and most importantly, the clarity and transparency of information being presented to the customer.
In recent years, there have been numerous changes in the life protection market and the sale of life insurance in particular has struggled – there are fewer advisers available to offer advice, and more importantly, fewer consumers willing to pay for that advice.
The insurance market has changed markedly across the board and consumers are now much more comfortable buying all sorts of financial products online, so there has been a great increase in the amount of non-advised protection products being bought through aggregators (PCWs) or direct to consumer channels.
Online purchases have a much smaller market share than the traditional IFA route, but the increases across the board demonstrate that there is a willingness and appetite for consumers to buy life insurance and protection products directly online.
Evidently, the ease and efficiency of access, simplicity of messaging and straightforward purchasing model offered by an online solution is very attractive to many consumers.
To succeed in this new landscape, it is essential that distributors online can evolve and add value. For example, a simplified summary of critical illness conditions covered by each provider, allows customers to see immediately any differences in medical conditions that are covered; and importantly whether partially or fully covered.
It is not uncommon to see up to a 30% difference in prices between the cheapest and most expensive policy quoted, so adding this feature allows customers to consider carefully whether any additional cover provided is worth any extra cost over cheaper quotes.
Compare Cover has introduced a percentage figure to show acceptance rates for each provider.
This added value feature was implemented because of the different underwriting philosophies from providers.
The rate shown on the quote presentation page represents the percentage of customers offered life cover having fully completed the application process.
This allows customers to better understand that insurance providers do not have the same underwriting ethos and appetite for risk. It also helps encourage customers to consider that if they are declined by one provider, it doesn’t mean that other providers will follow suit – they may well get the cover they require through an alternative provider and they are not necessarily uninsurable.
Innovation and online expansion in the life protection market will continue at pace in the coming years.
The life insurance market has been a very traditional one in the past, with many providers still depending on the advice model for custom, but this is also changing.
Customers shopping around for financial and insurance products are now more digitally savvy and are quite capable and confident in making informed decisions and purchases online.
There is a drive in the sector to offer more “stripped out” products with less features in the protection products provided, however at Compare Cover we believe that there is still a strong demand for a full range to allow customers to make the choices they want, need and can afford.
We believe our task is to simplify the way these product features are presented, to allow customers to see clearly and easily what they are, whether they are what the consumer wants from the product and to so decide whether they are worth any extra cost.
For Compare Cover it is all about adding value to the customer’s experience while buying online, empowering them to make the right choice for them and their circumstances, and at a cost they can afford.
Digital disruption in this sector is only just beginning………there is lots more to come! Watch this space.