Advisers optimistic for future of IP

Advisers are optimistic about the future of the income protection (IP) market despite overwhelmingly expecting fewer IFAs to be practising in the sector and fewer products being available, new research says.

The study from Cirencester friendly also shows they appear happy with the expansion of tele-underwriting but the majority do not know the difference between big-T and little-T.

The results show more than half of those advisers surveyed by the specialist IP provider expect a higher volume of more diverse products to be sold in the next three to five years.

It says 51% of respondents believe there will be more consumers purchasing IP products in five years time, compared to 29% who felt the opposite, while 22% were not sure.

A further 58% also expect the level of product innovation to grow, with 22% each being undecided or feeling it will decrease.

However, an overwhelming 88% believe there will be fewer protection selling IFAs, with only 3% suggesting an increase in adviser numbers.

And a majority of respondents also expect IP premiums to rise (58%) and the number of products available to shrink (53%).

When it comes to the growing spectrum of tele-underwriting, it seems advisers are more open-minded than some providers suggest and are now less fearful of losing control of their clients doing the process.

As the report suggests: "There is a perception that many IFAs don't like big-T because the calls can be rather lengthy, and that they lose control of some of the details of their client (ie. it is all discussed between the tele-interview and the client, and the IFA is excluded from this), yet the survey states otherwise."

However, while warming to the concept, the respondents still show no real compulsion to use it either, clearly indicating that having the choice is most important.

Only 2% of intermediaries would never choose a provider who used tele-underwriting, but equally so, just 1% only select insurers who offer the service.

More significantly, 42% said they would make the choice to use tele-underwriting depending on the client while 55% said they preferred to have the choice.

The survey also revealed that 70% of advisers do not know the difference between the big-T and little-t version of tele-underwriting.

Big-T tele-underwriting involves a simple application form, which includes basic contact details and all medical information is sourced on the phone, while little-T means the usual application process and a further phone call to tie up loose ends.