L&G's Richard Kateley says 2015 was the year of Business Protection. Here's why.
Last year was certainly a noteworthy one for Business Protection, with a significant increase in awareness among advisers.
At Legal & General, we saw around 5000 advisers in 2015 to raise awareness of Business Protection and highlight it as an area of great opportunity for advisers who wish to expand their remit and overall earning potential.
This figure is a 40% rise on the number of advisers we saw as a part of our Business Protection training programme in 2014, indicating a heightened level of interest and engagement amongst advisers as more look to expand into this area of the market.
It's pleasing to see that more advisers are recognising the sales opportunities that Business Protection has to offer.
This upward trend is particularly promising considering the findings of our research, which illustrates the need for proactivity amongst advisers in this area of the market, as 89% of businesses with any form of Business Protection had a policy because they were advised to take one out.
Clearly, advice is key when it comes to Business Protection sales. Of the businesses that don't have cover in place, one of the main reasons for not having a policy was found to be because they have never considered taking one out.
It is therefore crucial that advisers highlight it as an option to their clients so that they can fully consider the value of it as a way to fortify their business against the impact of unforeseen circumstances.
We believe that this increase in interest in Business Protection has occurred as a result of a number of factors.
Firstly, Relevant Life Plan (RLP) products, which provide a common entry route to Business Protection, have become more popular.
With more providers launching and speaking about RLP and Business Protection products, awareness amongst advisers is increasing, and we're pleased to be at the forefront of these developments.
RLP is a relatively simple to understand for clients, rendering the market more approachable and encouraging advisers to talk to business owners and thus enter the Business Protection market.
That said, given the gulf between RLP sales and Business Protection sales, there are many advisers who are selling RLPs but not taking the next step with their clients, by discussing their Business Protection needs.
We hope that increased awareness of Business Protection, combined with our efforts in training advisers in this area of the market, will help to bridge this gap, bringing RLP and businesses protection sales figures broadly in line with each other in the future.
In addition to this, Business Protection can deliver lucrative outcomes for advisers. Firstly, the case sizes tend to be larger than the average domestic protection policy (in our experience, between two to three times larger).
Interestingly these policies also tend to stay on the books longer than the average domestic insurance. I believe that has a great deal to do with regular annual reviews being held with business clients due to the changing shape of their business', debts and profits.
This means that the clients are reminded why they took these policies out and how important they are.
These annual reviews can sometimes be more difficult with our domestic clients as their situations do not tend to change as much on an annual basis.
The introduction of auto-enrolment in October 2012 has also influenced uptake as it has prompted more businesses to seek financial advice.
This provided advisers with the perfect opportunity to initiate talks on wider business issues, including that of Business Protection.
The phasing of the introduction means that all businesses will be providing a workplace scheme by 2019, with more being enrolled each year.
Auto-enrolment is therefore likely to continue to boost protection conversations as time goes on especially now as greater numbers of smaller SMEs are being advised of their staging dates.
Ultimately, the main driver for advisers' increased interest in Business Protection is the raised awareness of the risks and solutions among both themselves and, perhaps more importantly, among their clients.
I believe that this can be helped by providers being an active voice on topics relating to corporate insurance. When this happens, advisers are emboldened to sell the products as a result of increased knowledge and confidence.
The aim of our training sessions is exactly that: helping advisers to talk to their business clients, go beyond selling RLPs, and advise on the wider Business Protection products.
This will, in turn, boost their revenue and help diversify their client base.
Richard Kateley is head of specialist protection at Legal & General
