Here, you can find intermediaries' feedback on consumer attitudes towards protection during the downturn, and even some current sales and marketing tips.

Coping with recession - Paul Clark, Matt Morris, Karl Pemberton, Diane Saunders

Emotional rescue - Richard Thomas

Coping with recession

We asked 4 intermediaries for feedback on consumer attitudes towards protection during the economic downturn – and for some current sales and marketing tips.

Q: Has the recession created a noticeable increase or decrease in demand for protection policies?
Karl Pemberton, director of business development at Teeside-based IFA Active Financial Services: "For individuals who aren't borrowing I haven't noticed much of a difference but we've seen a 50% higher uptake of people taking out life and critical illness cover linked to new borrowings. Because they have seen a lot of friends and colleagues struggle during recent months they are increasingly appreciating the security that protection can provide. We’ve also had a lot of businesses wanting to rebroke existing policies, particularly those sold cover by banks 3 or 4 years ago."

Matt Morris, senior policy adviser at national specialist intermediary LifeSearch: "We have certainly noticed an increase in people phoning up for protection advice. A lot are contacting us initially about unemployment cover but this enables us to start talking about life cover, income protection and critical illness cover. It's now very hard to get stand-alone unemployment cover, so it will normally need to be sold as part of a broader protection package."

Diane Saunders, director of Leeds-based IFA Diane Saunders Financial Advisers: "I haven’t noticed much difference."

Paul Clark, director of city-based mortgage brokers City Mortgage Solutions: "Clients are increasingly wanting to review cover to make sure it's cost effective, and this is often triggered by a mortgage review. Life cover rates have been coming down and a lot of critical illness policies have been getting better in terms of definitions, so you can frequently find better value for people.

Often consumers approach the review with the intention of saving money but during the process itself they normally settle for better benefits for the same outlay. Our business has increased because we’ve been more proactive in doing reviews during the past year. A significant shrinkage in the number of other brokers and IFAs has also helped.”

Q: Have you experienced many cancellations?
Matt Morris: "We are getting the odd cancellation but we believe our lapse rates are lower than those for the industry as a whole because we build so much value into the sales process and explain everything very clearly."

Diane Saunders: "Three individual clients have gone bankrupt and received worryingly different advice from their trustees in bankruptcy as to whether the policy proceeds would benefit their creditors or dependants. The advice received has largely determined whether or not they have cancelled their policies. I've only had one client made redundant and they didn't cancel because they went self-employed."

Karl Pemberton: "We've had no businesses cancel yet but have had the odd individual cancellation, mainly from low-earners and those who have lost jobs. However, our commission clawbacks are only running at around 25% of what we had budgeted for."

Q: How easy is it to persuade those wishing to cancel to change their minds?
Karl Pemberton: "Some people are just hell bent on cancelling but others can be persuaded to meet on the middle ground and to accept a lower level of cover. They may, for example, have life cover only and go without critical illness cover, switch from level term to decreasing term or simply halve the sum assured so that they at least have some cover."

Matt Morris: "We manage to talk a lot of potential cancellations out of it, sometimes persuading them to take lesser cover. Our team leaders have been issuing more advice about how to hang onto existing clients who think they can't afford to continue protection cover."

Q: What sales /marketing methods have paid off for you for protection during the recession?
Diane Saunders: "I have done a regular monthly slot on Radio Leeds for the past 2 years and I get loads of clients telling me they've heard me on there. I've had the odd new enquiry from listeners who've made a note of my name but the main impact has been the picture of my expertise it has cemented in the minds of my existing clients. This has probably helped me get referrals, although I will never know for certain. We’ve also designed a stock letter detailing the different forms of protection available and are going to send it to anyone who does a mortgage with us, and we are currently in the process of designing another stock letter about trusts."

Karl Pemberton: "My best marketing effort has been to provide weekly columns in two local papers. In the 12 months I've been doing these they have secured me a good half a dozen new clients and have undoubtedly raised my profile with professional firms, some of whom have started giving referrals as a result. We have also spent £5,000 on our website during the last year, which is most of our marketing budget, and we have built at least half a dozen professional contacts as a direct result."

Paul Clark: "During the last 6 months we have purchased protection leads from Moneysupermarket to keep business up during the downturn. I meet brokers who maintain that purchasing leads is a waste of time but you only have to convert 2 out of 10 to make a profit, and we manage to do this comfortably. We also try to keep in touch with customers by sending them birthday badges and by promising to call them every 6 months, and contract end-dates provide a further opportunity to make contact. We get in touch 3 or 4 months before the end of a 2-year fixed-rate mortgage and a good month before buildings and contents insurance renewals."

Matt Morris: "Having a website that looks professional enough and does the job is very important, and not all IFAs take this sufficiently seriously. Virtually any consumer nowadays will look at your website before phoning you, and if it doesn’t look professional they won't bother to make contact."

Emotional rescue

Receiving an insurance pay-out in the event of serious ill health can certainly help, but it will never provide the entire solution says Richard Thomas, managing director of independent care advisory service RED ARC.

Those with health problems are invariably in need of emotional support, as are their nearest and dearest. These softer skills are, however, in lamentably short supply on the NHS because they don't contribute towards reductions in waiting list times and other targets that politicians tend to focus on.

"When someone is diagnosed with a serious illness the first thing they do isn’t normally to look in their drawer for their insurance policy. That may not come for weeks afterwards, so they will need the right kind of support.

"The impact of a serious condition also goes well beyond the individual suffering from it and can have a ripple effect similar to dropping a brick in a pond. The sufferer may be managing very stoically but those around them may be in bits. In many cases we don't even talk to the person suffering, just to their partner and children, both during the illness and – if it proves fatal – again after the bereavement. People's natural reaction is to shelter children but it's better to involve them, otherwise later in life they could have a chip on their shoulder about being excluded."

Those who suffer bereavements are often well supported by a network of family and friends in the initial stages but they can start to become badly in need of support a few months down the line.

Talking to a professionally-trained counsellor can give them a chance to explore their feelings in a safe non-judgmental environment and to come to terms with their loss. Complementary therapies such as massage can also be useful for relieving stress.

Someone who has received a terminal prognosis may require support at a much earlier stage and, although the best trained care adviser can't wave a magic wand to make them better, they can still provide a sympathetic ear, help them to implement some sort of coping strategy and provide practical information on issues such as funeral arrangements and how pain can be dealt with in the later stages.

There is clearly a limit to what any IFA dealing with a seriously ill claimant can do to help them directly other than by asking how they are feeling and by being prepared to listen for at least a while. But they can ensure that clients have access to a suitable support network if they recommend protection policies that provide RED ARC as an added value service.

RED ARC, which prides itself on doing "the warm and cuddly bits the NHS doesn't do," is actually used by 98%¹ of insurance claimants who have access to it. It uses qualified nurses to provide information and emotional support via a telephone-based service, and can also refer a range of specialist counsellors, complementary therapists and relevant charities.

Jan Dryden, Director of Nursing Services at RED ARC, says "The fact that advice is given on the telephone as opposed to face-to-face is important because people tend to find it much easier to discuss things with individuals they are not going to bump into at the supermarket. Our ability to offer access to a specific personal nurse adviser for as long as is needed is also very important because those going through treatment are often dealing with lots of different people and can find it a real strain to always have to start their story again from scratch.

"Each phone call can last for as long as the person wants it to, and every case is different. If someone is terminally ill we can even discuss religious matters, if required, but they are normally more interested in some of the more practical issues involved with the dying process. They may, for example, want to receive advice on how you explain to a teenage daughter that their father won't see Christmas."

Source: ¹ Bright Grey, September 2009