Changing the primary focus of a protection scheme to be about maintaining good health & wellbeing, with financial protection being a secondary consideration, would be a more engaging proposition for customers, according to RedArc, so should be the priority for the industry in the coming year.
Whilst the company acknowledges that more than ever before, added-value services are included in protection products (such as life, critical illness and income protection), RedArc explains that putting added-value services at the very heart of the product from the outset, would reduce the need for many future claims.
Christine Husbands, managing director of RedArc Nurses says: “When a financial payout is the expectation of the product, we’re already starting from the point of worst-case scenario, and for the many who don’t need to make a financial claim, the insurance can be seen as poor value, expensive or pointless.
“Customers are likely to be much more engaged with a product that is a set of useful, day-to-day, health-related services aimed at keeping them well and dealing quickly with issues – such as ill health, bereavement, trauma – with the financial payout being there should the worst happen. Focusing on positives seems a much more attractive use of money.”
Lack of engagement
Lack of engagement and loyalty are two of the biggest struggles for the protection industry – namely, how to prevent a policy document from collecting dust, and the value being appreciated. As the majority of people don’t make a claim, they won’t be in contact with their insurer during the year at all.
Husbands continued: “What if the number of people making claims was reduced, the average size of each claim was lower, but a much larger number of customers had a really positive reason to engage with their insurer, perhaps on multiple occasions? That has to be a good outcome for any insurer and is an approach already being embraced by some.
“This reverse thinking, by which we mean, protecting health and wellbeing first, payout second, is an obvious win-win for insurers who manage the lion’s share of claims: added-value services will improve the health of their customers as a whole, and early intervention support will nip many situations and illnesses in the bud, well before they reach the point of a payout.”
Improved view of insurer
Selling insurance solely based on price has limitations and may not always be completely to the benefit of the insurer, adviser or customer. However, when added-value benefits replace the cost as the main selling point, the negotiation is much easier, and research shows that the user has a much-enhanced view of their insurer: this is true in the case of 93* per cent of customers who accessed RedArc services via their insurer.
Husbands concluded: “We need to get to the point where all policyholders experience the benefits, not just those who are very unwell and eligible to make a claim. Major improvements can be made to the health and wellbeing of policyholders and their families, and many claims could be avoided, a real “win-win” We’re already starting to see this evolve, and insurers who don’t alter their approach risk being left behind.”
*Research conducted among 349 UK adults Q3 2019.