Retaining Protection Customers – and why it matters

Matt Usher, Protection Change Manager, discusses why retaining protection customers is more important than ever as the cost-of-living crisis deepens

The industry adage is that protection cover is often seen as a product that is sold not bought, which makes a lapsing policy even more of an issue.  Engaging customers in a protection sale, even when the need for insurance has been understood, means overcoming entrenched objections around cost and time, as well as busting myths about the likelihood of claims being paid.

Having worked hard to overcome those barriers and secure a sale, retaining the customer for the duration of their cover is important to advisers, as well as to the customers themselves.

This need is arguably heightened during periods of economic uncertainty.  Customers will naturally review their finances and scrutinise outgoings, questioning what they have and the value that it gives them.  Our annual adviser survey, conducted in October 2022, provided some comfort that insurance policies would not be the first casualties of reductions in household spending.  It found 61% of advisers thought the cost-of-living challenge hadn’t led to an increase in the number of existing customers enquiring about lapsing or lowering the cost of their protection products.  

That is mirrored by our own experience to date, with only a very slight uptick in lapse and cancellation events, which are still below pre-pandemic levels. Perhaps some of this is partly due to the additional policy benefits available to protection customers. Health and wellbeing packages, often including health checks, access to a nurse helpline, and mental health support services, are particularly usesful at times of personal or financial strain. It is important to remind customers of the additional support life protection policies can provide them with daily, rather than just at point of claim, and the benefits to maintaining cover. 

We carried out some research last year* which showed that one in three employees were just getting by financially and two in three employees believed that managing their own finances had become more difficult because of cost-of-living pressures. Against this backdrop, what measures are in place to help advisers hold timely conversations to support customers facing either temporary, or longer-term difficulties meeting their policy payments? 

The Protection Distributors Group (PDG), led by Ian Sawyer, is working to establish a ‘Client Retention Charter’.  It will suggest, amongst several measures, that insurers can help advisers by sending ‘daily notifications of failed payments, cancelled direct debits and policy cancellations’, while also ‘notifying advisers of direct debit reinstatement, change of contact details and changes to the cover’.

We are supporting this work and believe this level of reactive nudging, when available promptly, has value in alerting advisers to changing circumstances that may lead to customer cancellation, as well as cases in which action has already been taken.  Insurers operating a daily, automated, alert service provide an opportunity to advisers to contact the customer and understand the underlying cause.  Increasing levels of self-service digitisation are making it easy to take appropriate corrective action where required. 

Of course, true business retention starts well before warning signals of policy lapse or cancellation might be received.  The time invested in establishing ongoing relationships with customers, regularly checking in to ensure circumstances haven’t changed and that the policy remains fit for purpose is likely to pay long term dividends. 

Again, digital processing and data availability have an increasing role to play in supporting advisers with this aim.  The increasing breadth and depth of up-to-date customer information available through insurer platforms and provision of annual statements for use with customers, together with an increasing range of customer benefits provide regular opportunities for ongoing interaction, and education, with customers.

The good news is that more options and support are available to retain customers than ever before.  Payment deferral schemes, set up to help customers suffering financial difficulty during COVID, have had their eligibility criteria widened to help more people in short-term financial trouble. 

This year will also see the industry adopt plans introduced by the Financial Conduct Authority to bring in a new Consumer Duty.  This seeks to improve how firms serve customers and sets out rules to ensure communications are timely and provide clear, easily-understood information about products and services so consumers can make good financial decisions.  This is likely to lead to more regular contact between insurers, advisers, and their customer base - which can only be a positive, if carried out in a simple and engaging way.

Advisers remain best placed to take a leading role in ongoing engagement with their customers over the lifespan of their policy.  Having discussed and established the need for Protection cover during the initial sale, they can assess the impacts of changes to a customer’s circumstances.  The obligation and responsibility of the insurer is to provide clear and timely information not just to the customer, but also to the adviser.  If that can be delivered in a highly usable format that is consistent and, where possible, consolidated, then advisers will be in the best possible position to use their knowledge and experience to help customers make good decisions both before and after a sale. 

Ultimately, we are all invested in making sure customers understand their product, make informed choices considering all available information, and feel confident in the peace of mind provided during the lifespan of their policy cover.

Matt Usher

Change Delivery Manager

*Research conducted was contained in Aviva's 'Age of Ambiguity' studies -

Provided by Aviva Life & Pensions UK Limited.