Advisers believe critical illness and income protection will drive market expansion most, research suggests
Financial advisers are anticipating strong growth across the individual protection market and in their own businesses over the next two years, a study by HSBC Life has revealed.
The survey of 108 IFAs, conducted as the coronavirus crisis forced the UK into lockdown, found that specialist protection advisers forecasted 14% growth for the protection market by 2022. They also predict their own firm's sales will expand by the same amount during this period.
Almost two thirds (65%) of advisers surveyed said they believe there is an opportunity to grow the advised market ‘substantially' over the next two years, while almost all advisers questioned expect ‘some' growth in the market.
Critical illness is expected to grow the market by most of the advisers (50%), followed by 47% who think income protection (IP) will provide a positive contribution.
Term life was found to be the third strongest product in terms of growth potential in the eyes of advisers surveyed (46%), followed by mortgage protection (38%) and health cash plans (34%). Private medical insurance (PMI) sat seventh in the list of sales drivers (32%).
Interestingly, 61% said customers view cover to be very necessary. However less than two out of five (38%) believe policies are seen as affordable.
Gig economy
Advisers identified the increase in self-employment and the gig economy as a potential source of growth for the advised protection market in the next two years. According to the Office for National Statistics (ONS), nearly 4.7m workers are classified as self-employed while 2.8m are estimated to work in the gig economy.
More than two out of five (41%) advisers said they believed the growth of the gig economy will boost sales of advised protection products, while 30% believe the self-employed will fuel sales of protection cover over the next two years.
Optimism
Mark Hussein, CEO of HSBC Life (UK), said: "The cover that protection offers customers is increasingly seen as invaluable, with people recognising that looking after themselves and those they love is a vital investment. Recent events have only served to underline this thinking."
Hussein added that HSBC Life has recorded a 30% increase in visits to its life insurance webpages, indicating increased awareness and demand for protection products and reinforcing the opportunity for advisers, he said.
"It is interesting that so many advisers at this time are optimistic about growth in the advised protection market despite the uncertainty and that they believe critical illness and income protection are likely to be the biggest opportunities for growth over the next two years as the protection market expands," said Hussein. "Recent feedback and support of IFAs for our own protection offering has demonstrated that this opportunity is there.
"Advisers are resilient and adaptable and are seeing there is an opportunity to demonstrate their value and expertise to customers, while also growing their own businesses supporting customers in protecting what is valuable to them."
