Richard Verdin: How protection experts got it wrong

Five years ago no one imagined the combination of events which have led to the protection market being in the state it is now.
The surveys of experts at the time showed many were optimistic that customer engagemnet and new business volumes would both improve. I am certain that if back then you had added up all the business plans approved by the UK life company chief executives then you could have reasoned the market was going to grow by 50 per cent or more in volume and an even greater amount by value between then and now.

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I remember the conversations back then were along the lines of: RDR boosting advisers’ focus on protection sales, and banks being clear winners from the change and homing in on protection. Some thought a resurgence in property transactions would produce a like-for-like increase in protection sales. Of course, five years ago not many saw that the payment protection insurance debacle would land quite as heavily as it did. Absolutely no one foresaw Test-Achats and the gender pricing ban, and as for the removal of I-E, whilst a no brainier, most would not have bet on it getting to the top of the Treasury’s ‘to do list.
However it is not just the protection industry which suffers from getting the future wrong. Research undertaken by Philip Tetlock, professor of psychology and management at the University of Pennsylvania, illustrates that experts, when making predictions, fare only slightly better than chance and non-experts. And yet, we are significantly more respectful of, and swayed by, the opinions of experts. This is largely because with expertise comes confidence, a willingness to assert and persuade and the ability to hand pick facts to support what are really only guesses.
All of which drives another nail into the coffin around the value of surveys (and perhaps expertise), however it should also inform us about the fallibility of the business forecasts and projections we are all asked to develop and which others set so much store by.
I cannot see into the future, but I do have an assertion, and I have some hand-picked facts which help support my view. The hand-picked facts are these :

• The number of advising staff in financial adviser firms has reduced by 16 per cent in the last five years (according to Apfa);
• There has been a 75 per cent to 100 per cent increase in the number of hours it takes to advise on mortgages, thus reducing the time available to advise on peripheral protection needs
• It is these facts which cause the correlating decline in new protection sales by value, which over the same period are down 23 per cent (according to the ABI).

My conclusion and assertion is this; the only way to substantially grow the protection market is to increase the number of selling/advising hours spent on protection.
Whilst my conclusion may seem obvious, there comes a question from this that naturally follows: How many of those leading protection businesses are currently attempting to substantially grow the number of selling/advising hours spent on protection?
Richard Verdin is chief marketing officer, UK and Ireland at RGA