L&G: What distribution trends are we seeing?

Since the onset of Covid-19 at the start of the year, it's been a strange time for the protection industry.

Much of the market is down in terms of new protection sales for this year compared to last, but at the same time a number of brokers and advisers are optimistic about the future.

Across the industry, distributors write more protection business with Legal & General than any other insurer in the UK and we've been keeping a particularly close eye on how different types of distribution businesses are coping, or indeed even growing, since the pandemic began.

If we segment distribution firms into three general categories: telephone, mortgage and wealth, mortgage protection sales are down 30-40% and wealth protection sales are typically down, perhaps around 10-20% on average.

Telephone-based firms, however, are doing very well with some firms up 20-30% on last year. When talking to these firms, one of the main reasons simply seems to be that more people are at home, answering the phone and are generally more open to protection conversations at this time of heightened awareness.

Mortgages

New mortgages dried up in the spring, but the sector is showing signs of recovery. The businesses that are doing well tend to be those which already had a process in place and a strong culture for promoting protection sales, including those firms which hand the protection to a specialist where they don't want to get involved themselves. We're seeing more influence from networks here too, encouraging protection to be written alongside mortgages wherever appropriate, which is to be welcomed. 

Wealth

Protection for the wealth sector has been hit by capacity issues, especially around placing larger sums assured, as practical access to medical screenings was hampered by social distancing requirements. But as this has eased cover can still be placed in most circumstances. 

At the beginning of the crisis some of these firms reported a significant increase in enquiries for protection, which have since levelled out in some areas but still remain in line with 2019, if not higher. 

Technology & added-value services

Technology has become increasingly important in driving protection sales, with the likes of e-signatures, co-browsing software and digital trust processes helping advisers and brokers improve efficiencies and boost productivity as well as service and support clients in an environment where face-to-face contact is challenging if not impossible.

Added-value services that support physical and mental wellbeing have also grown in importance and it's probable that this type of benefit will be an even more crucial weapon in the protection sales armoury in the months and years to come.

While the full impact of the virus remains to be seen, it is encouraging that many distribution firms are continuing to innovate and write protection on a regular basis.

Craig Brown is director, intermediary, for Legal & General