Inside IP

A podcast from the Income Protection Task Force for advisers and insurers alike. On each episode we’ll be joined by a special guest who helps us get inside income protection, to build knowledge and provide training and sales tips – to help us all better communicate the benefits of IP. Hosted by Roy McLoughlin, co-chair of the Income Protection Task Force and Associate Director at Cavendish Ware.

Join us for a special episode where we talk to the legendary Jeff Prestridge, Personal Finance Editor at the Mail on Sunday, about how we can best get across the importance of income protection to the public, how we can better use claims statistics to increase sales, and why advisers and insurers shouldn’t be shy in shouting IP’s success stories from the rooftops.

Hosted by Roy McLoughlin, co-chair of the Income Protection Task Force and Associate Director at Cavendish Ware.

 

  • + Transcript
    • Roy McLoughlin:

      Hello, I am Roy McLoughlin and today I’m absolutely delighted to be joined by the legendary Jeff Prestridge, personal finance editor at The Mail on Sunday. In this episode we’ll talk about how we can better connect consumers with the need for income protection, hopefully learning from Jeff’s readership and his 20-plus years of holding our industry to account. Alongside, of course, his great support, particularly of the Seven Families campaign. Welcome Jeff.

      Jeff Prestridge:

      Good morning, it’s lovely to hear from you and it’s fantastic to speak to you on this glorious spring morning.

      Roy McLoughlin:

      Yes, fantastic weather outside. So how are you anyway, Jeff, are you busy at the moment?

      Jeff Prestridge:

      I am very busy, for somebody who has religiously gone into work every day of their working life for the past quarter of a century, remote working is quite strange for me, but I’ve adapted to it very well. And probably I’m more efficient as a journalist now than I ever was having to trundle into The Daily Mail office Monday to Friday and be held to account for every action. So I’m enjoying myself.

      Roy McLoughlin:

      Very good. And are you keeping up the running, hopefully?

      Jeff Prestridge:

      Yes, that’s one of the benefits of working remotely is that I am able to get out every day, which I could never do at work because I always found excuses to sit behind my desk and receive another berating from the editor of The Mail on Sunday. So yes, I’m enjoying it, and I think fitness is very important in these very difficult times because there are moments when I do get very low, even though I’m working. And I’m, I think, one of the very lucky people across this fantastic nation of ours to be able to work Monday to Friday, but I do have low moments and running is a great counterpoint to all the things going on in my mind, some of them which do ultimately lead to me getting depressed. But that is no different to, I think, a lot of people out there.

      Roy McLoughlin:

      Yeah, no, absolutely, it’s something I might touch on later if that’s okay, because I think it’s one of the by-products of this whole crisis, which is the whole subject of mental awareness and the fact that we’re not conditioned to normally working at home, and that proves to have different issues that I guess none of us could have anticipated. So yeah, I’ll return to that if I can. So if I could start off with, just by saying, income protection, obviously is the main subject of this podcast, what would you say the consumer image of income protection is?

      Jeff Prestridge:

      Well, I think it’s probably something that they don’t really know very much about, I think a lot of people are nervous about it. Many things with insurance, I think the first response of many consumers is that it won’t do what it says on the tin, which is it won’t pay out when they want to claim. And I don’t think the industry did itself any favours, certainly back in the 1990s, early 2000s, in terms of rejecting claims that looked on the surface to be A-Okay. But I think there’s a lack of understanding, and also I think there’s, it’s not seen as a priority, a financial priority, when it should be. And I think people like myself, as a media commentator, are partly to blame for this. That, as journalists, as personal finance journalists, we like to write about sexy things. So often we give priority to investment issues, about how you can make money from your investments. When really what we should be doing more of is writing about the financial building blocks, the financial foundations, that should really underpin every household or most households in this country.

      Roy McLoughlin:

      That’s really good to hear. It was interesting, I was doing some research and I found a fascinating article from your early days in the industry, when you were told by your then editor to go out and research, particularly, protection advice. And you referred to it as the Cruella De Vil of financial services, which is very amusing, and obviously we’d rather it be lovely, cuddly Dalmatians. But do you think that’s half the problem, that it’s the image within the industry, as well as the consumer?

      Jeff Prestridge:

      Yeah, so I think, I just think really, the insurance industry has created an image, which, it’s a difficult one then to break down. And I don’t think really coronavirus and economic lockdown has been a particularly good one so far for the insurance industry. We’ve seen a lot of claims rejected across the business front and the travel front, claims rejected by insurance companies. And that I think really filters right across the insurance spectrum.

      Roy McLoughlin:

      In that the customer won’t differentiate, they’ll say-

      Jeff Prestridge:

      Exactly.

      Roy McLoughlin:

      My travel insurance hasn’t paid out, or my cat insurance hasn’t paid out, or-

      Jeff Prestridge:

      That’s it.

      Roy McLoughlin:

      I think it’s general insurance at the moment that’s taken a real hammering

      Jeff Prestridge:

      Yeah, but I think it then applies right across the board-

      Roy McLoughlin:

      Across the board, yeah.

      Jeff Prestridge:

      And I have to speak to my editor every Wednesday morning, I have to tell him what I’m up to. And one of the most difficult sells that I have to make to him is if I’m writing about insurance, because his view, and I don’t think it’s a lone one, is that insurance never pays up in your hour of need. So there are those perceptions, those views, I think, held right across blocks of society, influential blocks of society, and they’re difficult ones to break down. And it’s taken, I think, a long time for me to be convinced that income protection, critical illness cover, are essential building blocks in a household’s financial armoury. And I do think, why has it taken long? Well, I think maybe you quoted me earlier about Cruella De Vil, ABI was the Cruella de Vil of the personal finance industry, when writing that, I probably felt everything was bad and was not good, that was my starting block.

      Jeff Prestridge:

      Now maybe I’ve mellowed a bit, but also I think the protection insurance industry has made a great effort to make itself consumer fit for purpose, but it’s taken a long time. But having said that, occasionally I get emails, I get letters from readers who have had a protection insurance claim rejected. And I think sometimes the insurance industry just doesn’t explain those rejections very well. And that then, I think, does the industry a lot of harm. I don’t think the insurance industry has much of an empathy some of the time with consumers.

      Roy McLoughlin:

      Yeah, that’s a great point on claims actually, which you’ve mentioned a couple of times. Generally the claim stats on income protection are actually quite good, it’s around 90%. But I guess the point you’re making is that it’s equally as important to explain when we don’t pay out, why we don’t pay out?

      Jeff Prestridge:

      Yes exactly, and I don’t think the insurance industry is very good at that. And I’ve seen some of these rejection letters, and I got one last week, and it was to do with somebody who had actually, I think, gone on and had massive heart problems, which ultimately would require a heart transplant. And I read the rejection letter from the insurer and there was wasn’t one ounce of empathy contained within it. Yes, of course, we’re talking here about financial business, but if I was working for an insurance industry, I would ensure that all correspondence had an underpin of empathy, was written in a way not to distress the person who received it, and was written in language that they could understand, and not written in insurance dialect.

      Roy McLoughlin:

      In terms of claims, do you think it’s very important that we do sing these claims stats from the rooftops because, is there an element of if there’s a natural cynicism with the public, particularly at the moment, and actually the claims stats are better than maybe people think, do you think there’s a message there for the industry to go back and actually keep talking about the vast majority of claims playing out, in terms of telling real life stories as well?

      Jeff Prestridge:

      I’m absolutely, a big believer in those claims statistics, I think they’ve been an essential part of restoring confidence in protection insurance. And there are some companies who do, who are very good on that, the Zurich’s of this world, and I think we need to go further on it. You’re absolutely right, I think it’s a fantastic message that something like 90% of income protection claims, I think a little bit higher isn’t it, for critical illness?

      Roy McLoughlin:

      Yeah, it is a bit higher, yeah.

      Jeff Prestridge:

      I think those messages keep, need to be sent out by the insurers. Not everyone is doing it, some companies are very tardy as well about it. I want companies to go an extra leg, to go a little bit further, to accompany those with case studies of people who have had claims accepted. And maybe also then explain why there is this core, this 10% core of claims that are rejected, and often for a very good reason, failure to disclose essential medical information. But I’d like the explanations, again, I’d just like that, I think it’s a brilliant initiative. I think it should be, by the way, a condition, I think it should be a regulatory requirement that all insurers produce claims data on a six monthly basis, and they produce that information within two months of the end of June and the end of December.

      Roy McLoughlin:

      I think you’ve got a willing audience there from advisors as well, because I guess one of the issues with income protection is that it’s not something that people wake up in the morning and necessarily buy. And therefore a sale, for want of a better expression, does need to take place. And obviously the advisor community needs complete faith in its products as well for all the reasons that you’ve said. So I think you’ve got a very sympathetic ear there. It’s also interesting, of course, we’re alluding to the PR side of income protection, I was pleasantly surprised to hear the chancellor actually use the expression, income protection, in parliament the other day, and using the words, life insurance, at a briefing. Do you think this is that there’s a bit of a seize the day moment here in that, because of the virus, suddenly these expressions are being used? Maybe not in a product sense, but in a generic sense, and we should latch onto this and use this as a good opportunity to talk to more people about these concepts?

      Jeff Prestridge:

      I do, I agree with you 100%. I think there’s going to be a lot of turmoil and employment grief that comes out of all this. We’re nowhere near that at the moment because of furloughing. But I do sense that there is a change in the mindset of many consumers, that they’re going to come out of lockdown and they are going to be far more prudent, I think, financially. And I think there’s going to be more of a safety first approach. And I think we will see products such as financial protection insurance come very much to the fore, that people will see them as the essential parts of their financial armoury, that they should be anyway. There’ll be less about investing in the latest racy company or investment fund. Yes, I think people will want to ensure they’ve got enough money put away for a rainy day, but also I really do think this is a moment for financial protection insurance.

      Roy McLoughlin:

      Great. So there’s an opportunity here.

      Jeff Prestridge:

      Absolutely.

      Roy McLoughlin:

      And I think that the two, hopefully, go hand in hand because as a, I’m a wealth manager as well, and I’m very shocked to see that the average person in the UK has, most of them have, is it six weeks of savings at tops?

      Jeff Prestridge:

      Yeah.

      Roy McLoughlin:

      And I think the furlough, whole situation, has reminded people of the fragility of one’s savings. And hopefully, as you say, that will be adjusted. But it’s no good just having the savings, at the same time people will become ill, alongside that you do need that protection. And I think that opportunity is something that does need to be taken out of this. Just going back to the furloughs scheme, obviously, it is staggering isn’t it, seven and a half million people on furlough presently. It has been described by some, weirdly, as a gigantic income protection scheme in itself. Do you agree with that?

      Jeff Prestridge:

      It is, albeit a short term one, it’s not going to pay out for everything, and that is my, it is my fear. I think there is a kind of air of complacency within some households, they’ve been furloughed, maybe they’re not spending as much as they used to do when they were working. And sadly, I think for many of those people, once they start to tumble out of furlough, there might not be a job for them to go back to. So I’m slightly scared on the one hand, but reassured on the other that I think a lot more people are going to be far more financially disciplined as a result of the lockdown that we’ve experienced. And just on a personal level, I think I am not going to be spending the money that I previously used to spend on going to live music shows once or twice a week. I think lockdown is a time that many people have used to reflect, and a lot of that reflection has concentrated on people’s personal finances. And I think prudence is going to be the mantra, isn’t it, for the coming months?

      Roy McLoughlin:

      Yes, no, I totally agree. Do you also think there’s a sense, when you’ve been talking to your readers, that maybe there’s always been an assumption that people have been covered by their workplaces more than they necessarily have done? In terms of being ill, in terms of sick pay schemes?

      Jeff Prestridge:

      I think so, I don’t think anyone really understands how they would fare if they suffered from long-term illness. And I think most people do live, sadly, on the basis that they will never suffer long-term illness.

      Roy McLoughlin:

      It won’t happen to me.

      Jeff Prestridge:

      It won’t happen to them, exactly, it will happen to the neighbour, but not to me. And I think it’s, a lot of good financial advisors out there, I think they do a fantastic job in selling to the public the virtues of financial protection insurance, but sadly, the nation doesn’t embrace financial advice.

      Roy McLoughlin:

      Yeah, due to the cynical reasons you already alluded to.

      Jeff Prestridge:

      And also because of, because they’re seen to be expensive as well, I think. And it’s quite a, I do think that often financial protection insurance is best bought through an independent financial advisor, rather than direct.

      Roy McLoughlin:

      It’s a great question, actually, I was going to ask you about this. B2C has obviously taken over certain swathes of various insurances, direct, et cetera, maybe life insurance, to a certain extent. But do you think that particularly with things like income protection, and critical illness to be fair, that actually advice is pretty imperative because of the complexity?

      Jeff Prestridge:

      I think it is, it’s complex, and I do think it requires the skills of a professional financial advisor to ensure that it dovetails with, maybe work benefits, and with, it dovetails within the whole household’s finances. So yes, I think most financial protection insurance, and correct me if I’m wrong, is bought via financial advisors. Sadly, I don’t think enough financial advisors sell it.

      Roy McLoughlin:

      Yeah, the vast majority is bought, but you’re absolutely right, the problem is, is that if there’s 20,000-plus financial advisors in the UK, a very small amount of them actually do protection insurance. And that’s part of our challenge as an Income Protection Task Force is to raise awareness within the community as much as with the consumer. And to that end, obviously, awareness was very prevalent in our minds when we pinpointed that awareness about your benefits for your employer, and also awareness about what you get from the state, were two issues. And as you know, five or six years ago, three or four of us came together and said, “Well, we need to do psych about this.” And hence the dream of Seven Families was … Now, you were quite vociferous in your support of Seven Families. Would you like to comment on your perceptions of that campaign?

      Jeff Prestridge:

      I just thought it was a fantastic campaign, it was imaginative, it was bold. What I loved about it, it was sprinkled with real life situations, seven families who had come upon hard times because of health issues, and here we had a campaign which allowed these people the opportunity to rebuild their lives, their financial lives through being helped by, what they would have got if they’d had income protection insurance. And I went to see the Clarkes, Tracey-

      Roy McLoughlin:

      Tracey.

      Jeff Prestridge:

      Yeah, in particular, who was suffering from sight issues. And I’ve spoken to her on more than one occasion, I’ve been to see her on her barge.

      Roy McLoughlin:

      With Oakley?

      Jeff Prestridge:

      With Oakley, yeah. And it was, to see the transformation that it made on her life, sent tingles through my body. And it takes a lot for that to happen to a hard-nosed journalist like myself. But I just felt it was a fantastic campaign, it brought to life the benefits of protection insurance. And not just from a financial point of view, but all the related counselling services that go with it, access to nurses for example, access to doctors. And I thought it was, it’s the best initiative that I’ve seen within financial services for many a year, and I think it did the industry a world of good. And I wasn’t the only commentator to latch onto it, I know Simon Reed did that as well, Simon Reed was a big supporter as well.

      Roy McLoughlin:

      Yeah, no, what was fantastic for those of us that were involved in organizing it was actually the reaction, particularly from your community, because there is a sense of cynicism sometimes, isn’t there, about personal finance journalists going, “Oh, what have they done now?” But I think the whole industry came together, the insurers, the re-insurers, you guys, there wasn’t really a bad word said about it. But you’ve just hit the nail on the head, the most important thing was the stories that the actual people told, and Tracy’s story, and hopefully you’ve seen the recent, Seven Families two, for want of as better expression, that we’ve put out. And she bangs the drum again about, she of course had income protection, and cancelled the policy because-

      Jeff Prestridge:

      Yes, that’s correct.

      Roy McLoughlin:

      She forgot how important it was. So what sort of message does that send out, do you think?

      Jeff Prestridge:

      Well, it sends a very strong message, doesn’t it? That when times are tough, you don’t cut things like that out of your financial-

      Roy McLoughlin:

      Your basics.

      Jeff Prestridge:

      Yeah, your basics. It’s not basics that you cut, is it? You might reduce your pension contributions, or you might reduce your contributions into an ISA but those are basics that you should keep at literally any cost.

      Roy McLoughlin:

      Yeah, and that is a fantastic message to portray to our listeners, because I think the danger here is that, quite rightly, certain people are saying, “Look, you need to go through your direct debits and cancel ones that you don’t need in these particular times.” But if people have forgotten how important some of these protection policies are, the danger is that another Tracey Clarke occurs, someone cancels it, and the Law of Sod says they’re going to become ill, we’re going to go for this whole process again. So it’s great to hear that message, and I think people listening in should be very careful in terms of keeping in touch with their customers and saying, “Look, don’t cancel things without remembering what you’ve got.”

      Jeff Prestridge:

      Absolutely.

      Roy McLoughlin:

      And obviously, where the industry has done some good things in the last few weeks, it’s given added flexibility whereby, instead of cancelling, maybe you could just reduce your premiums for a period of time, or take some sort of premium holiday, which is important.

      Roy McLoughlin:

      And I just want to go back to the added value benefits that you quite rightly alluded to with Tracy, and again, if you haven’t watched the videos, please do because there’s been some follow-up videos, particularly on the added value benefits. One of the subjects you mentioned earlier in the interview was obviously mental health subject. With what’s happening with the virus, do you perceive that that is therefore going to be a much bigger thing than people anticipated, and how important therefore is it that added value benefits look after people with those situations?

      Jeff Prestridge:

      Well, I think mental illness issues are very much to the fore, aren’t they? And before I spoke to you, I was going through the papers this morning and there was a fantastic interview in The Guardian newspaper with Lee Hendrie who used to play football for Aston Villa.

      Roy McLoughlin:

      Aston Villa, wasn’t it?

      Jeff Prestridge:

      That’s right. And he’s somebody I never particularly liked as a footballer, but the interview was so brave, and it was to do with the mental health issues that he suffered from at the end of his career, because suddenly he had lost his purpose in life. And he tried to take his life on at least three occasions.

      Roy McLoughlin:

      Wow.

      Jeff Prestridge:

      And it was one of the most moving sports interviews that I’ve read in a long time. Of course, there isn’t, well, there is a coronavirus link actually, because he has literally had a work transformation as a result of the work he now does for Sky as a football pundit. But of course that work has come to an abrupt end because of coronavirus, and he says that he still has days, despite the fact that he’s got a lovely wife, he’s got kids galore, but he can’t get out of bed. And I think there are, I think mental health issues are going to be one of the lingering consequences of the lockdown that gladly we are slowly emerging from.

      Roy McLoughlin:

      Yeah, and again, that’s a great example of a real life story that people can empathize with. And I feel, you’ve mentioned it a few times, but case studies and real life stories and what we need to keep telling, and keep telling, and keep telling.

      Jeff Prestridge:

      I think so, I really do, because it’s fine to explain what an insurance policy can do in very general terms, but there’s no better way to explain the goodness, the financial goodness, the financial reassurance it can give to a household. There’s no better way than doing it through a case study. And speaking as a journalist, speaking to somebody who has undergone massive health issues, but in the background has had the reassurance that they’re receiving, either a monthly income into the household from the policy, or they’ve received a lump sum as a result of a critical illness policy paying out.

      Jeff Prestridge:

      And I always enjoy speaking to those people because, obviously, they are overjoyed that they’ve overcome their health issues, but also they’re thrilled with the fact that their financial matters have been put on an even keel as a result of the insurance that they had. So, I always say this to people, personal finance, the emphasis is on the word personal, and we need to demonstrate the good things that are offered within the financial services industry, through personal experience. And I don’t think there’s a better way for financial protection insurance to show its mettle, it’s worth, than through individual case studies.

      Roy McLoughlin:

      Okay. So obviously you would encourage any of our listeners that have got stories where they can talk to maybe the recipient and say, come and tell the stories to people like your good self because that’s our greatest advert?

      Jeff Prestridge:

      Yeah. Or, I think also there’s a big role here for the financial advisor, because if they’re selling the cover, and often they will help people with claims. And I think there’s a duty upon financial advisors to come to people like myself with the stories of clients who have had financial reassurance as a result of a policy paying out. I think there’s a bit of a reluctance from financial advisors to do that. Understandably, there’s a reluctance from the clients because often they don’t want their neighbours knowing about the financial, in inverted commas, good fortune that they’ve received, but those messages need to be told.

      Jeff Prestridge:

      Otherwise, what happens is it is always the negative stories that get coverage in the press. And often I have fingers pointed at me from financial advisors who say, “You know, Jeff you always write about the negatives.” Well, I think it’s important to write about the negatives, to ensure that the industry remains sensitive to some of the problems that it still has, and it becomes a better industry. But I can’t write about the good things if no one tells me about them.

      Roy McLoughlin:

      No, that’s a very, very valid point. So if we start just picking up on, how do we therefore become a better industry? What are the giveaways here, in particular, relating back to what you said about some of the, I hate to use opportunities in an opportunistic way, but hopefully you understand, out of the virus, what are some of the things that we can learn that we can look at post-virus, in terms of making people more aware of how great our products are?

      Jeff Prestridge:

      Well, I think, Seven Families mark two, that will help, won’t it. I think you, as an industry, need to not be shy in terms of relaying your message to people like myself, to financial advisors and to the public. You shouldn’t be shy. I think you need to be proactive rather than reactive. I think there’s a reluctance within the insurance industry to demonstrate it’s worth to the public, there’s a shyness. And I see that in the backing for Seven Families, there isn’t the backing that you had first time round, is there?

      Roy McLoughlin:

      No, there’s not.

      Jeff Prestridge:

      And to me, I think that’s a discredit to the insurance industry. So I think you need to be on the front foot, I don’t think you should be shy about communicating the financial benefits, the financial reassurance that your industry offers to the general public, and I think there will be more ears out there willing to listen to those messages. Because we’re going to come out of this lockdown, I think, in a different mindset, I think we’re going to be more cautious as a nation, I think we’re going to be, I think safety issues will be to the fore, and I think the financial protection insurance story plays into that.

      Roy McLoughlin:

      Jeff, that is a very good note to end on because, as the financial advisor listening to that, I take the optimism out of that, and the fact that there is an opportunity, and there is definitely an element of seize the day. So thank you so much for your observations, carry on with the running and hopefully we’ll get you back to an office at some point. But just to finally finish with, if there was one magic wand wish that you could have for our industry, you’ve probably alluded to it already, but what would you say in one sentence maybe?

      Jeff Prestridge:

      Well, I think be proactive, speak in a language that people understand, I think it’s essential that you get your message across to a wider audience. I think it is one of the financial crimes of this century that income protection insurance still remains a minority purchase when it really should be a mainstream financial purchase.

      Roy McLoughlin:

      Brilliant. Thank you very much, Jeff. Thank you very much for your time, a big thanks to you for joining us. And thanks to all of our listeners for listening in. If you found this episode interesting, please subscribe to Inside IP, wherever you normally download your podcasts. See you next time. Thank you very much.