The Rugby World Cup is kicking off this month and is set to be one of the most interesting and least predictable tournaments in its history.

France and Ireland have a chance to claim the prize for the first time while South Africa looks the strongest from the Southern Hemisphere. The England team are well off the pace but may spring a surprise if they can pull themselves together.

The protection market seems to be steadily growing and innovating at a time when the mortgage sector is unpredictable

‘Protection’ is a word you hear a lot in rugby. Whether it’s the equipment, the rules or the job the big forwards are given — to protect the playmaker — it’s a crucial part of the game. Without it, even the toughest player will find their body breaking down under the strain.

The word ‘protection’, as used in financial services, still sounds weird to the layman who tends to understand ‘insurance’ instead. Protection sounds like a gangster racket. But it makes sense in that it’s there to guard the rest of your flashier finances from collapsing under stress. It’s the slow, heavy forward with the gnarly ears that’s stopping your mortgage or investment from being quashed.

Strong performance

The protection market is performing well at the moment. The Pulse Report from Gen Re shows a 2% annual increase in the number of income protection (IP) policies written in the first half of 2023. Average premium equivalents rose 31% during the same period.

The sector is innovating in the technology arena

This could be for a few reasons, from Covid and the economy making people less risk averse, to a renewed push among advisers to expand their product repertoire as a reaction to the Consumer Duty.

It should be noted it follows a 7.8% fall in new individual protection sales in 2022, according to this year’s Term & Health Watch report from Swiss Re.

Meanwhile, new figures from UK Finance showed borrowing for house purchases was down nearly a third in the second quarter (Q2) of 2023 compared to the same period last year. First-time buyer purchases and homemover purchases were down 28% and 30% respectively on Q2 2022.

If, as seems likely, a twin storm of a failing health service and an economic recession descends upon the UK for months, if not years, the protection conversation should become easier and ever more relevant. And the sector is innovating in the technology arena to make it easier and quicker to sell policies.

A group of advisers, the Protection Distributors Group, have set out to ensure best practice is followed by insurers

A lot of protection sales come on the back of a mortgage sale as one of the two big life events, along with having children, that make protection — particularly IP — an important purchase. So building tech that makes advising on protection simpler for IFAs and mortgage brokers is crucial. It’s great it’s happening.

Making protection more immediately relevant is also key. One of the reasons added benefits have proved so popular in recent years is they give the customer an immediate practical use for their policy. It could be a Health MoT or discounted gym membership; a range of extras helps to sell a policy and retain it. Protection doesn’t need to be intangible and these innovations are also helping to make protection easier to sell.

Poor tech

While added benefits and technology are helping to improve brokers’ service levels, poor technology can hinder service levels among insurers. Some insurers, just like some mortgage providers, have been challenged on their speed in paying claims.

Protection providers publish their claims statistics every year and the results tend to be in excess of 90%, but some of those insurers take too long to do it.

Protection is the slow, heavy forward with the gnarly ears

The good news is a group of advisers, the Protection Distributors Group, have set out to ensure best practice is followed by insurers, announcing recently they were disappointed with the overall time taken to assess claims. A protection market where brokers help to lead the way is a healthy one.

Overall, the protection market seems to be steadily growing and innovating at a time when the mortgage sector is unpredictable — albeit not as unpredictable as the Rugby World Cup.

Andre Botes is co-founder of Austin Friars Financial

This article featured in the September 2023 edition of MS.

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