By Mike Furniss, Head of Protection Sales at HSBC Life (UK) Limited
The protection insurance market has a proud record when it comes to the most important part of its business – paying out claims and ensuring it delivers on its promise to customers.
Association of British Insurers’ data for last year outlines how the industry is delivering year in and year out with a total of £4.64 billion paid out in 2022 on 287,000 Individual life insurance, income protection and critical illness claims.
Average pay-outs increased for the third year in a row to £15,448 and claim acceptance rates remained at around 98%. In more than half of the declined claims, customers had not told their insurer important details about themselves when they took out the policy.
It’s an excellent record and one the industry is rightly very vocal about – but the industry should be just as vocal on what it is doing for customers who do not claim. After all, customers in general do not want to be in a situation where a claim needs to be made.
The protection sector has long since recognised that protection is about more than just money. Non-financial needs can often be overwhelming, and when emotional and practical support is provided it can make a huge difference to customers and their families.
The ongoing expansion of value-added benefits, which provide vital support to customers, is a genuine opportunity for advisers to further enhance the importance of protection insurance.
- HSBC Life’s Mike Furniss is also featured in our IFA Talk Podcast, which can be found here , exploring the valuable extra benefits of modern protection policies – and how it isn’t always just new policies that can enjoy these valuable benefits.
The potential of value-added benefits
Value-added benefits are potentially transformational in the protection market for providers and advisers.
Providers such as HSBC Life (UK) offer a wide range of value-added services alongside protection policies with no extra consultation fees. Customers have access to medical support services such as second medical opinions, unlimited remote 24/7 GP appointments, prescription services, physiotherapy, mental health support and an annual health MOT.
At a time when NHS services are under strain and the cost-of-living crisis is stretching household budgets with knock-on effects on physical, mental, and financial health, value added benefits can provide help more quickly when it is needed.
The FCA’s new Consumer Duty rules are turning the spotlight on the value of financial products, their relevance, flexibility, and the value of advice. The FCA’s central point is that a “firm must act to deliver good outcomes for retail customers.”
Value-added benefits can play a key role in helping to demonstrate good customer outcomes and value for money. Just as importantly they should help advisers to promote the value of protection beyond the claims acceptance rates.
Pressure on medical services
Value added benefits are an important support service for protection customers in the current climate. To take the example of mental health support, recent research from the Royal College of Psychiatrists (RCP)* among adults diagnosed with a mental illness including eating disorders, addiction, bipolar disorder, anxiety, and depression showed access to these services can be difficult.
Over two fifths (43%) said that the wait between initial referral and second appointment when treatment usually starts had caused their mental health to worsen. Around one in eight (12%) said they had gone to A&E, while 7% had rung 999 and 16% contacted 111.
Waiting time for mental health treatment can be longer than six months for 12% of cases, while 6% of patients waited for more than a year, the study found. Long waits for NHS mental health treatment are largely down to a shortage of staff. There is currently just one consultant psychiatrist per 12,567 people in England, according to the RCP.
Value-added services from protection insurers typically offer access to access to therapists and psychologists and cover all treatment areas including depression, anxiety, and sleep disorders. The service will include up to eight consultations a year and referral to a specialist or face to face appointment if necessary.
Virtual GP services provided by protection insurers proved popular during the pandemic and typically offer unlimited consultations per policyholder each year and include consultations for children. Generally, there is no waiting time and appointments are available 24/7.
The Consumer Duty benefit
Protection product providers should see Consumer Duty as a win-win opportunity. The FCA wants to see firms fully embed good customer outcomes in proposition development and the development of customer-focused processes.
This should help drive a renewed focus on innovation which will continue the recent growth of value-added services underlining the need for advisers to get to grips with the range of services available.
For advisers, value added benefits play a crucial role in demonstrating value for money of protection products and good, quality outcomes for customers.
Clients who use the services can have life-changing outcomes if, for instance, they use second medical opinion services to check a diagnosis and get advice on treatment options. A second medical opinion can lead to an entirely different course of treatment.
Most value added benefits propositions will include consultation with a specialist matched to the diagnosis for a second medical opinion and offer up to two consultations per policyholder a year including consultations for children.
Second medical opinions are of course just one aspect of value-added benefits propositions. Other typical users can be parents receiving the reassurance their child is fine because they have been able to quickly use a Virtual GP service, or it can be people who have managed to return to work thanks to rehabilitation services.
The services deserve to be better known and valued by advisers and their clients which is the challenge that providers need to address.
Adding value for advisers
There is strong evidence that customers who do use value added benefits very much value them. Data from HSBC Life’s healthcare provider, Square Health shows that customers rated its services as 4.8 out of 5 and said it answered their questions in 95% of instances.
Services however need to be easy to access and to use. Technology plays an important role in achieving that by offering services through an app. Clients also need to be told how they can access these services so they can use them if they need them.
Providers need to simplify the range of services and providers – working with one specialist healthcare service provider rather than a range of providers makes it easier for customers. They only need to deal with one company to access the entire suite of services.
The industry has delivered a wide range of value-added services which can be of huge value to clients and offer a chance for advisers to engage with clients on something which can be genuinely life changing. As an industry we have the skills to make so much more of it.
Innovation is vital for the protection industry, and we need to be with our clients throughout the lifetime of their protection policies. Value added benefits can play a key role for advisers and providers to maintain engagement and meet the health and wellbeing needs of clients.