Protection is overwhelmingly a force for good in society, delivering a financial safety net to families and individuals in their time of need.
However, protection premiums do not always have an equal impact. For some, maintaining payments is a real financial burden, particularly with the rising cost of living.
Insurers have a duty of care to protect financially vulnerable customers, supporting those most in need and ensuring no one has to choose between premium payments and daily living costs. This is a particularly pertinent issue for the industry in light of the new Consumer Duty rules.
Of those with lower savings and income, 61% were female
Underwriters must lead the way in protecting the vulnerable and making insurance products affordable.
The first step in protecting vulnerable customers is identifying them. Looking at the common characteristics of financially vulnerable customers, our research found that of those with lower savings and income, 61% were female, compared with an approximate 50/50 gender split of non-vulnerable customers.
Further to this, providers also assess customer outcomes using post-transaction surveys. Customers are asked if they have any special needs or circumstances for which they might need support, and how well they have done so far in accommodating them. Results can then be shared with relevant areas of the business and intermediary partners to see what can be improved.
One way of providing this support is to offer payment holidays from premium plans
In the spirit of Consumer Duty, firms must go further to improve communication and ensure appropriate support is offered to financially vulnerable customers.
But it’s not just improved communication vulnerable customers need. For those struggling to meet premium payments at this time of high living costs, often more direct support is required. One way of providing this support is to offer customers payment holidays from premium plans. These can give vital financial breathing room during particularly difficult months.
There are also times when customers need immediate financial support. For example, when awaiting a life insurance claim payment and being faced with the upfront costs of a funeral. In these circumstances, we can offer advanced payments to cover funeral bills. Recently bereaved customers should never have to face the additional stress and pressure of struggling to afford their loved one’s funeral.
Protecting financially vulnerable customers must become a priority for the entire financial services industry
The ongoing wellbeing of vulnerable customers must also be a priority for insurers, so services such as debt counselling and support for physical and mental health conditions are extremely valuable.
Ultimately, protecting financially vulnerable customers must become a priority for the entire financial services industry. It is the responsibility of leading firms in the sector to promote good practice and set an example.
We will continue to work closely with other members of the Consumer Duty Alliance to ensure financially vulnerable customers have access to the best value for money policies and remain protected, despite these tough economic times.
Ali Crossley is managing director, distribution, at Legal & General
